Accounting for Managers Exam Practice Tests
Course Introduction
Accounting for Managers introduces students to the fundamental principles and concepts of accounting with a focus on the needs of managers. The course covers the interpretation and analysis of financial statements, budgeting, cost-volume-profit analysis, and the use of accounting information in planning, decision-making, and control processes. Emphasis is placed on how accounting information supports strategic business decisions and enhances organizational performance. Through practical examples and case studies, students will learn to assess company financial health, allocate resources efficiently, and understand the financial implications of managerial decisions.
Recommended Textbook
Management Accounting for Business 6th Edition by Colin Drury
Available Study Resources on Quizplus
15 Chapters
1373 Verified Questions
1373 Flashcards
Source URL: https://quizplus.com/study-set/3579
Page 2
Chapter 1: Introduction to Management Accounting
Available Study Resources on Quizplus for this Chatper
78 Verified Questions
78 Flashcards
Source URL: https://quizplus.com/quiz/71072
Sample Questions
Q1) Management accounting and financial accounting differ in that management accounting information is prepared
A) following prescribed rules.
B) using whatever methods the company finds beneficial.
C) for shareholders.
D) to summarize the whole company with little detail.
Answer: B
Q2) The planning process includes
A) setting objectives.
B) identifying means of achieving the objectives.
C) making decisions.
D) all of the above.
Answer: D
Q3) Total quality management emphasizes A) zero defects.
B) continual improvement.
C) elimination of waste.
D) all of the above.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: An Introduction to Cost Terms and Concepts
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/71073
Sample Questions
Q1) Which of the following costs is an example of product costs?
A) selling commissions
B) nonfactory office salaries
C) direct materials
D) advertising expense
Answer: C
Q2) If production volume increases from 8,000 to 10,000 units,
A) total costs will increase by 20 percent.
B) total costs will increase by 25 percent.
C) total variable costs will increase by 25 percent.
D) mixed and variable costs will increase by 25 percent.
Answer: C
Q3) A steep slope in the variable cost line indicates a
A) low variable cost per unit.
B) high influence of activity on total variable costs.
C) low influence of activity on total variable costs.
D) large amount of fixed costs.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Cost-Volume-Profit Analysis
Available Study Resources on Quizplus for this Chatper
121 Verified Questions
121 Flashcards
Source URL: https://quizplus.com/quiz/71074
Sample Questions
Q1) Briefly explain the terms contribution margin and contribution margin ratio.
Answer: Contribution margin is defined as the difference between total revenues and total variable costs. Unit contribution margin is defined as the difference between the unit selling price and the unit variable costs. In either case, contribution margin identifies the portion of revenues or selling price that goes toward covering fixed costs and providing a profit. Contribution margin is widely used in sensitivity analysis, which is the study of the responsiveness of a model to changes in one or more of its independent variables. When expressed as a ratio to sales, the contribution margin is identified as the contribution margin ratio. It is the portion of each pound of sales revenue contributed toward covering fixed costs and earning a profit. The contribution margin ratio is especially useful in situations involving several products or when unit sales information is not available.
Q2) Assuming all other things are equal, fixed costs must have _____ if there was a decrease in the break-even point.
A) remained the same
B) increased first, then decreased
C) increased
D) decreased
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Measuring Relevant Costs and Revenues for Decision-Making
Available Study Resources on Quizplus for this Chatper
82 Verified Questions
82 Flashcards
Source URL: https://quizplus.com/quiz/71075
Sample Questions
Q1) Which of the following costs is NOT relevant to a make-or-buy decision?
A) £10,000 of direct labour used to manufacture the parts
B) £30,000 of depreciation on the plant used to manufacture the parts
C) the supervisor's salary of £25,000 that will be avoided if the part is purchased from an outside supplier
D) £15,000 in rent from leasing the production space to another company if the part is purchased from an outside supplier
Q2) What is an opportunity cost? Under what circumstances are opportunity costs relevant to a decision? Construct an example of an opportunity cost. Briefly discuss why you think financial reports for investors and managerial reports for mangers may or may not differ in their treatment of opportunity costs.
Q3) Which of the following costs is NOT relevant for special decisions?
A) incremental costs
B) sunk costs
C) avoidable costs
D) All of the above costs are relevant for special decisions.
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Pricing Decisions and Profitability Analysis
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/71076
Sample Questions
Q1) A target cost is computed as
A) the cost to manufacture plus a desired markup
B) the cost to manufacture plus the designated selling expenses
C) the market willingness to pay less the cost to manufacture
D) the market willingness to pay less the desired profit
Q2) Refer to Multiple Products Co. What is the manufacturing cost markup needed to obtain a target profit of £100,000?
A) 100 percent
B) 67 percent
C) 50 percent
D) 25 percent
Q3) Which of the following stages has revenues for the entire industry decreasing?
A) Introduction
B) Growth
C) Maturity
D) Decline
Q4) Provide a short critique of cost-based pricing. What are the four major drawbacks to this pricing approach?
Q5) Discuss the limitation of profit measurement.
Q6) List some of the pros and cons of target costing.
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Capital Investment Decisions
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/71077
Sample Questions
Q1) Future cash flows expressed in present value terms are
A) compounded cash flows
B) extended cash flows
C) budgeted cash flows
D) discounted cash flows
Q2) A firm is considering a project requiring an investment of £14,150. The project would generate annual cash inflows of £3,300 per year for the next seven years. The approximate internal rate of return for the project is
A) 6%
B) 8%
C) 12%
D) 14%
Q3) Refer to Figure 2. The net present value of the project is
A) £24,500
B) £36,411
C) £44,200
D) £46,220
Q4) What types of non-quantitative factors can influence the final decision concerning approval of capital expenditures?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Cost Assignment
Available Study Resources on Quizplus for this Chatper
81 Verified Questions
81 Flashcards
Source URL: https://quizplus.com/quiz/71078
Sample Questions
Q1) Which of the following methods of assigning costs is based on convenience or some assumed linkage, and reduces the overall accuracy of the cost assignments?
A) direct tracing
B) cost driver tracing
C) allocation
D) all of the above
Q2) Refer to Figure 1 above. What was Harrison Company's total cost to produce product AB?
A) £870,000
B) £910,000
C) £900,000
D) £890,000
Q3) Which of the following would be the most appropriate base for allocating the costs of the maintenance department?
A) machine hours
B) direct labour hours
C) number of employees
D) square feet
Q4) Why is it important to have an accurate and reliable product costing system?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Activity-Based Costing
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/71079
Sample Questions
Q1) An activity-based costing system uses which of the following procedures?
A) Overhead costs are traced to departments, then costs are traced to products.
B) Overhead costs are traced to activities, then costs are traced to products.
C) Overhead costs are traced directly to products.
D) All overhead costs are expensed as incurred.
Q2) Which of the following items would be classified as flexible resources?
A) salaried employees
B) depreciation on building
C) fuel to generate electricity internally
D) lease on machinery
Q3) If activity-based costing is used, setups would be classified as a A) unit-level activity.
B) batch-level activity.
C) product-level activity.
D) facility-level activity.
Q4) If activity-based costing is used, product inspections would be classified as a A) unit-level activity.
B) batch-level activity.
C) product-level activity.
D) facility-level activity.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: The Budgeting Process
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/71080
Sample Questions
Q1) Arlo Company uses an annual cost formula for overhead of £72,000 + £1.60 for each direct labour hour worked. For the upcoming month, Arlo plans to manufacture 96,000 units. Each unit requires five minutes of direct labour. Arlo's budgeted overhead for the month is
A) £12,800
B) £18,800
C) £84,800
D) £225,600
Q2) Gerald Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2. Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months. How many units of A1 does expect to use in production during the second month?
A) 12,000 units
B) 12,500 units
C) 10,000 units
D) 10,750 units
Q3) In what ways does a department orientation hinder traditional budgeting?
To view all questions and flashcards with answers, click on the resource link above.
Page 11
Chapter 10: Management Control Systems
Available Study Resources on Quizplus for this Chatper
83 Verified Questions
83 Flashcards
Source URL: https://quizplus.com/quiz/71081
Sample Questions
Q1) When budgets are used for control,
A) budgeted amounts from different years are compared.
B) actual amounts from different years are compared.
C) budgeted amounts are compared to actual amounts.
D) None of these is correct.
Q2) Myopic behaviour occurs when
A) actions improve budgetary performance in the short-run but are harmful in the long run.
B) there is uncertainty.
C) there is focus on immediate costs.
D) actions improve budgetary performance in the distant time horizon.
Q3) Define responsibility accounting and describe four types of responsibility centres.
Q4) If the static budget variance for materials is £200 F and the budgeted cost for materials is £52,000, then the actual cost of materials is
A) £52,000.
B) £52,200.
C) £51,200.
D) £51,800.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Standard Costing and Variance Analysis
Available Study Resources on Quizplus for this Chatper
95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/71082
Sample Questions
Q1) If variable overhead is applied based on direct labour hours and there is an unfavorable labour efficiency variance,
A) the materials usage variance will be unfavorable
B) the labour rate variance will be favorable
C) the variable overhead efficiency variance will be unfavorable
D) the variable overhead spending (expenditure)variance will be unfavorable
Q2) The labour efficiency variance is calculated as
A) (Actual direct labour hours used - Standard direct labour hours that should have been used) x Actual direct labour hours used
B) (Actual hourly wage rate - Standard hourly wage rate) x Standard direct labour hours that should have been used
C) (Actual direct labour hours used - Standard direct labour hours that should have been used) x Actual hourly wage rate
D) (Actual direct labour hours used - Standard direct labour hours that should have been used) x Standard hourly wage rate
Q3) How are standards developed? What is the difference between ideal and currently attainable standards?
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Divisional Financial Performance Measurement
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/71083
Sample Questions
Q1) _____ is the delegation of decision-making authority to successively lower management levels in an organization.
A) Decentralization
B) Centralization
C) Optimization
D) An unfavorable overhead variance
Q2) Discuss the differences between centralized and decentralized decision making. Why would a firm decentralize its operations?
Q3) Why do firms decentralize?
Q4) Dizzy Company's Asian Division employed capital of £250,000 last year. If the weighted average cost of capital is 15 percent and if last year's after-tax income was £50,000, then EVA for the Asian Division last year was
A) £2,500
B) £37,500
C) £12,500
D) £7,500
Q5) Compare and contrast decentralization and centralization.
Q6) Compare and contrast return on investment (ROI) and economic value added (EVA).
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Transfer Pricing in Divisionalized Companies
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/71084
Sample Questions
Q1) In most cases, _____ transfer prices achieve the optimal outcome for both the divisions and the company as a whole.
A) cost-based
B) market-based
C) negotiated
D) all of the above
Q2) Refer to Figure 3 above. The effect on firmwide income if 40,000 components are transferred internally at £56 each instead of purchased from an external supplier at £80 per unit would be a
A) £1,920,000 decrease
B) £1,280,000 increase
C) £960,000 decrease
D) £960,000 increase
Q3) The opportunity cost approach to setting a transfer price would set the maximum transfer price as
A) the opportunity cost of the firm as a whole
B) the opportunity cost of the selling division
C) the opportunity cost of the buying division
D) none of the above
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Cost Management
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/71085
Sample Questions
Q1) For nonvalue-added activities that are unnecessary, the standard quantity is A) one.
B) zero.
C) actual quantity minus standard price.
D) actual quantity plus standard price.
Q2) A technique for improving performance of activities and processes that searches for best practices is called
A) value-added reporting.
B) kaizen costing.
C) trend reporting.
D) benchmarking.
Q3) Each unit of product requires 16 pounds of material. Due to scrap and rework, each unit has been averaging 18 pounds of material. The material costs £6 per pound. If the company wants to reduce nonvalue-added costs by 25 percent next year, the currently attainable standard for material would be
A) 16.00 pounds.
B) 16.80 pounds.
C) 17.50 pounds.
D) 18.00 pounds.
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Strategic Performance Management
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/71086
Sample Questions
Q1) From the customer perspective, which of the following might be considered a core objective rather than a performance value?
A) decrease price
B) increase customer retention
C) improve image
D) improve product quality
Q2) _____ is the use of cost data to develop and identify superior strategies that will produce a sustainable competitive advantage.
A) Strategic decision making
B) Strategic cost management
C) Competitive advantage
D) Customer value
Q3) Which of the following would be a lag measure?
A) budget forecasts
B) sales per employee
C) plant investment
D) employee training hours
Q4) Define value chain. What is the relationship among a value chain, processes, and activities?
To view all questions and flashcards with answers, click on the resource link above. Page 17