Accounting for Managers
Exam Answer Key
Course Introduction
Accounting for Managers introduces the principles and practices of accounting tailored to the needs of managerial decision-making. This course covers essential topics such as financial statement analysis, cost behavior, budgeting, and performance evaluation. Emphasis is placed on how accounting information can be used by managers for planning, controlling, and strategic decision-making. Students will develop the skills to interpret financial data, apply accounting tools in real business scenarios, and communicate findings effectively to support organizational objectives.
Recommended Textbook Managerial Accounting 4th Edition by Karen W. Braun
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) SOX do not allow CPA firms to provide certain non-audit services to companies during the same period of time in which they are providing the services.
A)True
B)False
Answer: True
Q2) Oral and written communications skills are considered among the skills that are critical to management accountants.
A)True
B)False
Answer: True
Q3) Managerial accountants are now considered to be similar to internal consultants and business advisors.
A)True
B)False
Answer: True
Q4) Discuss at least four differences between financial accounting and managerial accounting.
Answer: 11ea7fd5_6646_833a_99dd_2fd8089c57d5_TB1766_00
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Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) Average variable costs
A)remain the same as production decreases.
B)remain the same as production increases.
C)remain the same no matter if production increases or decreases.
D)go down as production decreases.
Answer: C
Q2) Which of the following statements is correct concerning product costs?
A)Product costs are expensed in the period the related product is sold.
B)Product costs are expensed in the period incurred.
C)Product costs are shown with operating expenses on the income statement.
D)Product costs are shown with current liabilities on the balance sheet.
Answer: A
Q3) Which of the following is an example of a fixed cost for a manufacturer?
A)Income Taxes
B)Machine Repair Expense
C)Fire Insurance on buildings
D)Delivery Fuel Expense
Answer: C
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4
Chapter 3: Job Costing
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Sample Questions
Q1) Manufacturing overhead would include
A)all manufacturing costs except direct materials and direct labor.
B)indirect labor costs only.
C)all manufacturing costs.
D)indirect materials only.
Answer: A
Q2) The ________ substantiates the total of the raw materials inventory account shown on the company's balance sheet.
A)bill of materials
B)raw materials records
C)materials requisition
D)labor time record
Answer: B
Q3) An overallocation of manufacturing overhead is typically corrected by decreasing Cost of Goods Sold on the income statement.
A)True
B)False
Answer: True
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Chapter 4: Activity-Based Costing, lean Operations, and the Costs of Quality
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Sample Questions
Q1) The estimated total manufacturing overhead costs that will be incurred in each department in the coming year are often referred to as activity cost pools.
A)True
B)False
Q2) Value-added activities are activities that could be reduced or removed from the process with no ill effect on the end product or service.
A)True
B)False
Q3) All of the following statements regarding total quality management are true except A)TQM emphasizes educating,training,and cross training employees to increase and broaden their skills.
B)TQM is a formal effort to improve quality throughout an organization's value chain.
C)TQM extends horizontally across business functions in the value chain.
D)TQM increases time spent on rework and warranty work.
Q4) One key element of lean production is to produce large batches.
A)True
B)False
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Chapter 5: Process Costing
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Q1) The existence of ending Work In Process Inventory necessitates how much of the total manufacturing cost should be assigned to units still in ending WIP Inventory,and how much of the cost should be assigned to units completed during the period.
A)True
B)False
Q2) If all direct materials are added at the beginning of the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is 100%.
A)True
B)False
Q3) Prime costs include direct labor and direct materials.
A)True
B)False
Q4) If conversion costs are added evenly throughout the production process,and the units have made it 50% of the way through the production process,then the percentage completion for conversion costs is 50%.
A)True
B)False
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Chapter 6: Cost Behavior
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Sample Questions
Q1) Sugartown Corporation has total sales revenues of $930,000.If its total fixed costs are $182,000 and its total variable costs are $267,000,then the total contribution margin is
A)total revenue minus total fixed costs.
B)total revenue minus total variable costs.
C)total variable costs minus total fixed costs.
D)equal to operating income.
Q2) A basic tenet of variable costing is that fixed manufacturing overhead costs be currently expensed.What is the rationale behind this?
A)Fixed manufacturing overhead costs are generally immaterial in amount.
B)Fixed manufacturing overhead costs occur regardless of level of production.
C)Allocation of fixed manufacturing costs are arbitrary at best.
D)Fixed manufacturing costs change as production changes.
Q3) Using account analysis,what type of cost is the rental of a space at $6,000 per month?
A)Mixed
B)Fixed
C)Step
D)Variable
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Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Electric Jet Skis operates a jet ski rental business.Assume the jet skis rent for $55 for 6 hours.The variable costs are $33 per 6 hour rental,and its fixed costs are $80,000 each month.What is the contribution margin per 6 hour jet ski rental?
A)$33.00
B)$0.40
C)$22.00
D)$2.50
Q2) All of the following would be considered a company with high operating leverage,except A)retailer.
B)golf course.
C)theme park.
D)hotel.
Q3) To calculate the weighted average contribution margin,divide the sum of the individual product contribution margins by the sales mix in units.
A)True
B)False
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Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) If a product has a negative contribution margin,it should not be discontinued.
A)True
B)False
Q2) A drug store decides to discontinue its health and beauty section of products because it has been unprofitable.This strategy could backfire because
A)the store can readily fill the available space.
B)the store's sales may suffer by not having this convenience category of products.
C)it has automatically saved that department's fixed costs.
D)none of the above.
Q3) Which of the following best describes "target costing"?
A)An approach to pricing that begins with revenue at market price and subtracts desired profit to arrive at target total cost
B)A factor that restricts production or sales of a product
C)All costs incurred along the value chain in connection with the product or service
D)An approach to pricing that begins with the product's total cost and adds desired profit
Q4) Buy the part and use facilities to make another product
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Chapter 9: The Master Budget
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Sample
Questions
Q1) Kennedy Enterprises has budgeted sales for the months of September and October at $120,000 and $150,000,respectively.Monthly sales are 70% credit and 30% cash.Of the credit sales,20% are collected in the month of sale and 80% are collected in the following month.What are the October cash collections from customers?
A)$133,200
B)$66,000
C)$189,000
D)$88,200
Q2) Managers may intentionally build slack into the budget
A)to gain the resources they need in the event of budget cuts.
B)to make their performance look worse.
C)because they are uncertain about the future.
D)to accomplish all of the above.
Q3) In which of the following company types does a manager use a sales budget?
A)Manufacturing
B)Merchandising
C)Service
D)All of the above
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Chapter 10: Performance Evaluation
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Sample Questions
Q1) Decentralization allows top management to concentrate on long-term strategic planning.
A)True
B)False
Q2) The ________ approach recognizes that both financial and operational performance measures should be considered when evaluating company performance.
A)financial and operational
B)total
C)complete
D)balanced scorecard
Q3) Reardon Enterprises has operating income of $90,000.Its return on investment (ROI)is 40%,while its target rate of return is 15%.The total assets of Reardon Enterprises may be closest to
A)$36,000.
B)$621,429.
C)$225,000.
D)$90,000.
Q4) Describe the four types of responsibility centers.Give a specific example of each of the four types of responsibility centers.
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Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) All variances discovered by management must be investigated.
A)True
B)False
Q2) The Southside Corporation budgeted 4,400 pounds of direct materials to make 2,600 units of product.The company actually used 4,800 pounds of direct materials to make the 2,600 units.The direct materials quantity variance is $1,500 unfavorable.What is the Standard Price (SP)per pound of direct materials?
A)$0.59
B)$2.22
C)$6.35
D)$3.75
Q3) The total variable manufacturing overhead variance is composed of the rate variance and the efficiency variance.
A)True
B)False
Q4) The variable overhead efficiency variance tells management how efficiently manufacturing overhead was used during the period.
A)True
B)False
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Chapter 12: Capital Investment Decisions and the Time Value of Money
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Sample Questions
Q1) The profitability index equals the present value of net cash inflows from the investment divided by the cost of the investment.
A)True
B)False
Q2) One dollar to be received in the future is worth more than one dollar today.
A)True
B)False
Q3) The ARR is the only method that uses accrual accounting figures and thus making it important to financial statement users.
A)True
B)False
Q4) The ARR allows managers to compare the present value of future cash generated by a project against the cost of investing in that project.
A)True
B)False
Q5) Capital budgeting is done when common stock is issued. A)True
B)False
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) The operating activities section of the statement of cash flows is the most important section of the statement of cash flows.
A)True
B)False
Q2) Which of the following sections from the statement of cash flows includes activities that increase and decrease long-term assets?
A)Investing section
B)Operating section
C)Financing section
D)None of the above
Q3) A company's inventory account increased $26,500 and its accounts payable account decreased $18,250 during the year.The accounts payable relates only to the acquisition of inventory.Sales were $789,500 and cost of goods sold was $532,700.What was the amount of payments to suppliers of inventory?
A)$550,950
B)$577,450
C)$540,950
D)$834,250
Q4) Identify and describe the three sections of the statement of cash flows.
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Trend analysis is the same thing as a vertical analysis.
A)True
B)False
Q2) Which of the following is the formula to compute inventory turnover?
A)Net credit sales/average inventory
B)Average net accounts receivable/one day's sales
C)Net credit sales/average net accounts receivable
D)Cost of goods sold/average inventory
Q3) The managerial accountant at Managerial Funding Resources reported in 2014 its earnings per share were $6.20 and the market price per share of its common stock is $75.In 2013,the managerial accountant reported $3.10 earnings per share and the market price was $40 per share.
Compute the price/earnings ratio at Managerial Funding Resources and discuss why the managerial accountant is interested in the price/earnings ratio.
Q4) The formula to compute the rate of return on net sales is
A)net income/net sales.
B)net income/average common stockholder's equity.
C)net income + interest expense,then divide by average total assets.
D)net income/interest expense.
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Chapter 15: Sustainability
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Sample Questions
Q1) The cost of monitoring pollutants in the waste-water discharged from a manufacturing plant would be categorized as what type of cost by an environmental management accounting system (EMA)?
A)Prevention cost
B)Waste and emission control cost
C)Intangible cost
D)Research and development (R&D)cost
Q2) Sustainability is concerned not only with the impact on the environment,but also with the impact on people and profit.The "triple bottom line" measures an entity's impact on profit,people,and planet.A Fortune 500 company that encourages its employees to use reusable mugs as opposed to Styrofoam cups is impacting which element of the triple bottom line?
A)Economic
B)Social
C)Environmental
D)None of the above
Q3) Physical information has not been a traditional component of managerial accounting systems.
A)True
B)False
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