Accounting for Managers Final Exam
Course Introduction
Accounting for Managers provides a comprehensive overview of essential accounting concepts and techniques tailored for managerial decision-making. The course emphasizes the interpretation and use of financial information rather than the mere preparation of accounting statements, enabling managers to critically assess organizational performance, budget effectively, and make informed strategic choices. Topics include financial statement analysis, cost behavior, budgeting, performance measurement, and ethical considerations in accounting. By the end of the course, students will be equipped to analyze financial reports and apply accounting data to solve complex managerial problems, supporting effective leadership in diverse business environments.
Recommended Textbook
Managerial Accounting 3rd Edition by
Charles E. Davis
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Page 2
Chapter 1: Accounting As a Tool for Management
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Q1) Just-in-time inventory can be traced back to
A)Toyota Motor Company.
B)Henry Ford.
C)Microsoft.
D)Wal-Mart.
Answer: B
Q2) One of the planning activities that occupies managers is inventory planning.Which of the following is not an input into this planning process?
A)Projected sales forecasts
B)Variance analysis of actual versus budgeted inventory
C)Projected supply and prices
D)Anticipated manufacturing capacity
Answer: B
Q3) A company that wants to be successful needs to know
A)what it wants to accomplish.
B)how it is going to achieve it.
C)both what it wants to accomplish and how it is going to achieve it.
D)neither what it wants to accomplish nor how it is going to achieve it.
Answer: C
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Page 3
Chapter 2: Cost Behavior and Cost Estimation
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Sample Questions
Q1) The amount of income presented on a contribution format income statement
A)will always be greater than that shown on a traditional GAAP income statement. B)will always be less than that shown on a traditional GAAP income statement. C)will always be the same as that shown on a traditional GAAP income statement. D)may or may not differ from that shown on a traditional GAAP income statement depending on the level of production and sales.
Answer: D
Q2) Assume you are planning a spring break ski trip to Colorado.You are preparing a budget of your costs.You are staying at a lodge that has a special where the lodge charges you $25 for the first 30 ski lift rides and an additional charge of $5 for each ride in excess of 30.You believe you will ride the ski lift 40 times during the week,so you budget $75.The ski lift charge is an example of a A)fixed cost.
B)variable cost.
C)mixed cost.
D)step cost.
Answer: A
Q3) Assume a selling price of $20 per
Answer: 11ea84e3_90aa_8bef_abcc_e7ef813f4d82_TB3446_00
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Page 4
Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) Using the following
A)1,120 Product A; 1,120 Product B
B)0 Product A; 2,000 Product B
C)1,000 Product A; 1,000 Product B
D)2,000 Product A; 2,000 Product B
Answer: D
Q2) Which of the following is not a step in calculating the breakeven point?
A)Put everything into "constant" form - sales price per unit,variable cost per unit,total fixed cost.
B)Subtract fixed cost from sales revenue.
C)Calculate the contribution margin per unit.
D)Solve by dividing total fixed cost by contribution margin per Answer: B
Q3) On the breakeven graph,any level of sales to the left of the breakeven point represents a profit.
A)True
B)False Answer: False
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Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) Work in Process Inventory increases when
A)raw materials are purchased.
B)raw materials are used.
C)products are finished.
D)products are sold.
Q2) After the entry is made to record the overhead applied,if the balance in the overhead account is a debit,more overhead was actually incurred than was recorded in the Work in Process account during the period.
A)True
B)False
Q3) Leisure World produces folding padded hammocks.The hammocks are heavy duty and weather resistant.Each hammock comes with steel tubing frame.Give three specific examples not categories of products costs that are incurred in the production of the hammocks.
Q4) If the cost of goods sold is less than the cost of goods manufactured,then
A)Finished Goods Inventory increased during the period.
B)Finished Goods Inventory decreased during the period.
C)overhead was overapplied.
D)overhead was underapplied.
Q5) Predetermined overhead rates and manufacturing overhead application
Page 6
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Chapter 5: Planning and Forecasting
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Sample Questions
Q1) Which of the following is one of the major reasons that small businesses fail?
A)Inadequate cash flow
B)Inadequate net income
C)Inadequate earnings per share
D)Inadequate assets
Q2) The master budget is a collection of smaller budgets that lead to pro-forma financial statements.
A)True
B)False
Q3) The standard price of direct labor includes which of the following items?
A)FICA taxes
B)health insurance
C)retirement contributions
D)All of these answer choices are correct.
Q4) The formula for the production budget is Budgeted Sales + Budgeted Beginning Inventory - Budgeted Ending Inventory = Budgeted Production.
A)True
B)False
Q5) Haygood,Inc.is a manufacturer of cast iron fire pits.Budgeted production is 20,000
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) The direct labor efficiency variance is that part of the direct labor flexible budget variance that is caused by using more or less direct labor than the standard allows.
A)True
B)False
Q2) Which of the following is a method companies use to reduce their labor costs?
A)Paying overtime to get a job done in fewer days
B)Offshoring
C)Both paying overtime to get a job done in fewer days and offshoring.
D)Neither paying overtime to get a job done in fewer days nor offshoring
Q3) The difference between actual sales volume and budgeted sales volume has an effect on
A)price variance.
B)quantity variance.
C)both the price and the quantity variance.
D)neither the price nor the quantity variance.
Q4) Variable overhead cost consists of indirect production costs that are expected to vary with production activity.How is the variable overhead spending variance calculated and list potential causes of the variance?
Q5) Amos,Inc.uses a standard cost system with the following labor standards for one
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Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) Which of the following is not a consequence of poor management of an organization's activities?
A)The company may see an increase in costs
B)Employees may experience a decrease in job satisfaction
C)Non-value added activities are generally eliminated
D)The company may see an increase in costs,employees may experience a decrease in job satisfaction,and non-value added activities are generally eliminated
Q2) Which of the following characteristics relate to non-value-added activities?
A)They are sometimes essential to production.
B)They can sometimes be decreased without affecting the quality of operations.
C)Both they are sometimes essential to production and they can sometimes be decreased without affecting the quality of operations.
D)Neither that they are sometimes essential to production nor that they can sometimes be decreased without affecting the quality of operations.
Q3) The two categories - valued-added and non-value added - are defined from the organization's management perspective.
A)True
B)False
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) Elton's Electronics is a wholesale distributer for TVs and other electronics and appliances.The selling price of TV Model 83G7 is $799.The following standard cost data per Model 83G7 includes $300 direct material,$30 direct labor and $200 manufacturing overhead 75% variable,25% fixed.Elton has received a special order for 200 Model 83G7s at a price of $450 each.The only additional cost of accepting the special order is a sales commission of $9 per
Q2) The Theory of Constraints was developed by Eli Goldratt to m.maximize the performance of a value chain by focusing on constraints that limit an organization's output.
A)maximize the performance of a value chain by focusing on those processes that do not have constraints.
B)limit or eliminate defective product that constrain production.
C)maximize revenues in terms of output.
Q3) Moving a company's business processes to a foreign country is referred to as A)outsourcing.
B)offsourcing.
C)offshoring.
D)outshoring.
Q4) Paris Manufacturing Company Inc.uses 400
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Chapter 9: Capital Budgeting
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Q1) In looking at the "Present Value of $1 Received in n Periods" the rows represent
A)Different interest rates
B)Number of periods in the future
C)Discount factor
D)None of these answer choices are correct
Q2) Discount rates are used to value which of the following items?
A)Future earnings
B)A partnership's property when a new partner is being admitted
C)Distributions of estate assets
D)All of these answer choices are correct
Q3) Which of the following is an advantage of the accounting rate of return?
A)It is easy to determine the time value of money used in the calculation
B)Accounting records are generally not based on cash flow,so the information for the calculation is readily available.
C)Since depreciation is not included in the calculation,the result is not distorted.
D)None of these answer choices are correct.
Q4) Assume that on January 1,2014 you purchased ten shares of XYZ Corporate stock for $22 each.On September 30,2016,you sell one-half of your stock for $28 each.What is your return on your investment?
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Chapter 10: Decentralizing and Performance Evaluation
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Q1) An investment center manager should be evaluated by
A)Examination of actual costs against budgeted costs.
B)A review of both revenues and expenses,with a focus on operating income.
C)How well assets have been used to generate income.
D)None of these answer choices are correct.
Q2) A profit center manager's performance is measured using methods such as return on investment or residual income.
A)True
B)False
Q3) In a responsibility accounting environment,which of the following managers is considered to have the broadest responsibility?
A)Cost center manager
B)Profit center manager
C)Investment center manager
D)Revenue center manager
Q4) ROI can be improved by
A)Increasing revenue.
B)Decreasing expenses.
C)Decreasing assets.
D)All of these answer choices are correct.
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Q1) A visual display of the key measures related to an organization's operational goals and strategies is referred to as a
A)balanced scorecard.
B)performance dashboard.
C)strategy map.
D)benchmark report.
Q2) Lagging indicators can be used to
A)measure past performance.
B)predict future results.
C)provide evidence that a certain result has been obtained.
D)All of these answer choices are correct.
Q3) Which of the following does benchmarking not focus on?
A)Identifying best practices
B)Studying best practices
C)Analyzing best practices
D)Eliminating non-value-added processes
Q4) Explain the difference between a leading indicator and a lagging indicator and give one example of each relating to your performance in this class.
Page 13
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Chapter 12: Financial Statement Analysis
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Q1) In a trend analysis of cost of goods sold over the last three months,all cost of goods sold accounts are shown as a percentage of the current quarter.
A)True
B)False
Q2) Another term for vertical analysis is
A)Common-size analysis.
B)Liquidity analysis.
C)Horizontal analysis.
D)Leverage analysis.
Q3) The gross margin percentage shows how much of each sales dollar is available to cover operating expenses and provide a profit after the cost of goods sold has been covered.
A)True
B)False
Q4) The quality of assets is assessed through the profitability ratios.
A)True
B)False
Q5) Foreman Outfitters,a retail store of camping supplies,has total assets of $170,000 and total liabilities of $70,000.What is Foreman's debt-to-equity ratio?
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Chapter 13: Statement of Cash Flows
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Q1) When a company sells equipment for cash,which of the following is the correct reporting on the statement of cash flows?
A)Gain or loss in operating section,amount of cash received in operating section
B)Gain or loss in operating section,amount of cash received in investing section
C)Gain or loss in investing section,amount of cash received in investing section.
D)Gain or loss in investing section,amount of cash received in investing section .
Q2) For the past two years,Monroe Corporation's statement of cash flows has shown net cash provided by financing activities.Which of the following choices could explain this result?
A)Collection of accounts receivable balances
B)Sales of factory equipment
C)Receipt of cash dividends from investments in other company's stock
D)Issuance of long-term debt
Q3) Which of the following is a use of cash?
A)Interest received on investment
B)Issuing long-term bonds
C)Dividends paid to stockholders
D)Loss on sale of investment
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Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) What types of costs are incurred in a process costing system?
A)Direct material and direct labor
B)Direct labor and manufacturing overhead
C)Manufacturing overhead and direct material
D)Direct material,direct labor and manufacturing overhead
Q2) At the end of January,Monroe Industries had completed 65,000
A)66,600
B)68,200
C)69,800
D)71,400
Q3) To determine the equivalent
A)multiply the percentage of completion for each cost category by the number of physical units in the ending work in process inventory.
B)divide the percentage of completion for each cost category by the number of physical units in the ending work in process inventory.
C)add the cost of production to beginning work in process inventory and divide this total by the physical units transferred out.
D)multiply the number of physical
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Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) Walker Manufacturing began its operations on January 1 of the current year.Walker produced 10,000
A)$26,000
B)$6,000
C)$8,400
D)$10,000
Q2) When production volume equals sales volume,the amount of fixed overhead expensed is higher using absorption costing than with variable costing.
A)True
B)False
Q3) Which of the following is not a product cost?
A)Direct material
B)Direct labor
C)Selling expenses
D)Manufacturing overhead
Q4) To make predictions about costs and income,you must first classify costs by their behavior.
A)True
B)False
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Chapter 16: Topic Focus Standard Costing Systems
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Q1) A costing system where direct material and direct labor are recorded at actual cost and overhead is applied to products using a predetermined overhead rate is referred to as
A)Normal costing
B)Variable costing
C)Full costing
D)Standard costing
Q2) When using a standard costing system,recording events related to variable overhead requires four separate entries.
A)True
B)False
Q3) When using a standard costing system,when materials are purchased,the transaction is recorded in the inventory account at the standard price and accounts payable is charged for the full amount owed to the supplier.
A)True
B)False
Q4) Wolfe Manufacturing Company's standards are set at one gallon of liquid for each
a.Calculate the direct material price variance.
b.Calculate the direct material quantity variance.
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Chapter 17: Topic Focus Customer Profitability
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Q1) Which of the following is a step managers might take after identifying an unprofitable customer?
A)Identify the reason the customer is unprofitable
B)Work with the supplier to increase costs.
C)Require the customer to reimburse the company for any losses attributed to the customer
D)Eliminate customer entirely.
Q2) It may appear that all unprofitable customers should be dropped.However,before any action is taken,managers should evaluate all the implications of the action for the affected customer,for other customers,and for the company.
Required:
a.Explain three implications for the affected customer.
b.Explain three implications for other customers.
c.Explain three implications for the company.
Q3) The revenue a customer generates should cover which of the following costs?
A)Product
B)Selling
C)Administrative
D)Product,Selling,and Administrative
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