Accounting for Managers
Final Exam
Course Introduction
Accounting for Managers is designed to equip future leaders with a practical understanding of accounting principles and their critical application in managerial decision-making. The course explores the interpretation and analysis of financial statements, cost behaviors, budgeting, and performance measurement, enabling managers to make informed strategic and operational decisions. Emphasis is placed on the use of accounting information in planning, control, and evaluating business activities, ensuring that managers are able to contribute effectively to their organizations financial health and efficiency.
Recommended Textbook
Managerial Accounting 3rd Edition by Charles E. Davis
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17 Chapters
2529 Verified Questions
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Page 2
Chapter 1: Accounting As a Tool for Management
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Sample Questions
Q1) Assume your roommate is a management major and must take this course next semester.You have explained some of the things you have learned thus far,but your roommate states,"I don't know why I would need to know anything about managerial accounting! I am not an accounting major and will NEVER be preparing any managerial accounting reports.As long as I make a profit for the company I will work for,who cares what the accountants' reports say?" How would you respond?
Answer: Managerial accounting helps managers in their decision making activities.Managerial accounting information helps managers do their jobs more efficiently and effectively.Managerial accounting reports are not constrained by GAAP and can provide information in various formats and at whatever detailed level a manager needs.Since internal users have access to all of the underlying data,they can create reports that suit their particular decision making needs.Managerial accounting reports not only provide information to managers from historical information but helps managers make decisions that will affect the company's future by projecting the results of certain decisions.
Q2) Long-term planning is often referred to as strategic planning.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Cost Behavior and Cost Estimation
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Sample Questions
Q1) Three methods used for estimating the fixed and variable portions of a cost include: cost-cover graphs,the high-low method and regression analysis.
A)True
B)False
Answer: True
Q2) To calculate the unit cost of the Neoprene stockingfoot waders he sells, Gary Guinn added up all his costs and divided by the number of waders he sold during the year. He then used this unit cost to estimate total costs for the coming year. Explain why Garys method is not useful in predicting total costs for the coming year.
Answer: Gary did not consider what portion of his total cost is fixed versus variable.Gary should analyze his total cost to estimate the variable cost per unit and total fixed cost and then apply these amounts to his estimated sales for the coming year.
Q3) The relevant range is the normal level of operating activity.
A)True
B)False
Answer: False
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) Assume a sales price per
A)420,000 units
B)$420,000
C)840,000 units
D)$840,000
Answer: D
Q2) Which of the following is not included in the profit equation?
A)Sales revenue
B)Variable costs
C)Cost of goods sold
D)Fixed costs
Answer: C
Q3) At the breakeven point
A)Sales revenue equals zero.
B)Contribution margin equals total variable costs.
C)Sales revenue equals total costs.
D)Operating income equals total costs.
Answer: C
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Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) Companies that use job order costing often have under- or overapplied overhead.Discuss three reasons to apply overhead and explain how overhead is applied.Give two reasons why overhead might be under- or overapplied and discuss the two methods companies use to dispose of over- or underapplied overhead. Ans : N/A,
Q2) For labor to be considered direct,the worker must actually have his or her hands on the product or on the machine as the product is being made. A)True B)False
Q3) Assume you have recently accepted a position as cost accountant for a large manufacturing company.The sales manager approaches you immediately about a particular product the company sells and expresses his belief that the product is overpriced and impossible to sell unless you do something to make it more marketable.You are not aware of any environmental or technology issues with the product that would inhibit its sales.Discuss four things you would do to investigate the concern expressed by the sales manager.Include more than just cost issues in your discussion.
Q4) Predetermined overhead rates and manufacturing overhead application
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Page 6
Chapter 5: Planning and Forecasting
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Sample Questions
Q1) Bottom-up budgeting is also referred to as a participative budgeting.
A)True
B)False
Q2) Williams Company makes and sells laundry duffel bags.Each duffel bag sells for $20 and has a
a.How many units did Williams budget to sell during March?
b.What is Williams' budgeted cash balance at the end of the period before borrowing?
c.How much should Williams budget for borrowing in January? Unit 5-4,
Q3) Development of the operating budget begins with the A)cash budget.
B)sales budget.
C)overhead budget.
D)pro-forma budget.
Q4) 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
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) Casper Concrete manufactures custom concrete countertops for restaurants and individual homeowners.Casper's actual fixed overhead for the year was $86,600.During the year Casper produced 8,500 square feet of countertop and used 4,420 direct labor hours.Casper had budgeted to produce 9,000 square feet of countertop and had budgeted to use 4,500 direct labor hours.Casper's fixed overhead spending variance was $1,200 unfavorable for the year.What was Casper's budgeted fixed overhead for the year if necessary,round your answer to the nearest dollar?
A)$87,800
B)$85,400
C)$88,167
D)$86,967
Q2) Most companies monitor their performance
A)monthly.
B)weekly.
C)daily.
D)All of these answer choices are correct.
Q3) A variance is the difference between actual results and budgeted,or expected results.
A)True
B)False
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Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) In the activity identification stage of implementing an activity-based costing system,defining activities in greater detail will
A)require more monitoring.
B)lessen the change of misclassifying some costs and activities.
C)both require more monitoring and lessen the change of misclassifying some costs and activities.
D)neither require more monitoring nor lessen the change of misclassifying some costs and activities.
Q2) Which of the following would be considered a batch-level activity?
A)Engineering changes made on the assembly line
B)Quality tests
C)Warehouse costs
D)Preparing the annual budget
Q3) Which of the following is formula for calculating the activity rate in an activity-based costing system?
A)Activity cost pool resources divided by activity driver
B)Activity driver divided by activity cost pool resources
C)Activity cost pool resources divided by estimated total cost pool
D)Estimated cost pool divided by activity cost pool resources
Page 9
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) Your friend purchased a non-refundable ticket to a popular Broadway play for Friday night.Yesterday she was invited to spend Friday on the lake with a group of sorority sisters.Her only cost will be for personal items such as lunch.The lake is two hours away from her apartment and the play is another hour in the opposite direction.She knows that if she goes to the lake,she will not get back in time to attend the play.Which of the following is not a relevant cost in making her decision on whether to go to the play or to the lake?
A)The price of the ticket
B)The price of eating out at the lake
C)The price of renting an umbrella at the lake
D)The price of driving to the play
Q2) The segment margin is the contribution margin of a particular segment less any direct fixed costs.
A)True
B)False
Q3) In an outsourcing decision,one important factor is the quality of the outsourced product.
A)True
B)False
Page 10
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Chapter 9: Capital Budgeting
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Sample Questions
Q1) Before you can calculate the present value of a cash flow,you must
A)Identify the amount and timing of each cash flow
B)Determine the appropriate discount rate
C)Both identify the amount and timing of each cash flow and determine the appropriate discount rate
D)Neither identify the amount and timing of each cash flow nor determine the appropriate discount rate
Q2) Capital budgeting decisions involve all of the following except
A)Outflows of cash at one or more times
B)Inflows of cash at one or more times
C)Consideration of depreciation expense
D)A review and approval process
Q3) Identify which of the following items would be classified as capital assets.
a.Pollution prevention technology
b.Direct material
c.Computer generated manufacturing system
d.Office supplies
e.Delivery van Unit 9-1,
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Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) In a decentralized organization,upper managers need a way to evaluate the performance of
Q2) The organizational structure in which decision-making authority for the entire organization rests in the hands of one person or a small group of people in a single location is called
A)Responsibility centered.
B)Centralization.
C)Decentralization.
D)Segmentation .
Q3) In the Dupont Model for calculating ROI,which of the following components appears on both the margin side of the expression and the asset turnover side?
A)Operating income
B)Sales revenue
C)Average operating assets
D)Segment margin
Q4) The goal of the cost center manager is to minimize total costs and to maximize profit.
A)True
B)False
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) A difference in quantitative indicators and qualitative indicators is
A)quantitative indicators are the same regardless of who is doing the measuring whereas qualitative indicators will differ among individual since each one has a unique perspective.
B)qualitative indicators are subjective while quantitative indicators are objective.
C)both quantitative indicators are the same regardless of who is doing the measuring whereas qualitative indicators will differ among individual since each one has a unique perspective and qualitative indicators are subjective while quantitative indicators are objective.
D)neither quantitative indicators are the same regardless of who is doing the measuring whereas qualitative indicators will differ among individual since each one has a unique perspective nor qualitative indicators are subjective while quantitative indicators are objective.
Q2) Another way of evaluating a company's performance is to compare it to other companies.This is called benchmarking.
Required:
Explain benchmarking,including its definition,goal,and the items that benchmarking focuses on.
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) A helpful approach to examine changes in the relative size of account balances within a single statement is referred to as horizontal analysis.
A)True
B)False
Q2) Barber Industries reported net sales of $92,000,net income of $32,000,dividends paid to preferred stockholders of $7,000,dividends paid to common stockholders of $10,000,average number of shares outstanding is 5,000.What is the earnings per share?
A)$18.40
B)$16.40
C)$6.40
D)$5.00
Q3) Earnings per share represents how much of a company's current net income could be distributed for each share of stock held by an investor.
A)True
B)False
Q4) Another form of horizontal analysis is called trend analysis.
A)True
B)False
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14
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) 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
Q2) Which of the following would be considered an investing activity and a source of cash?
A)Purchase of equipment
B)Sale of Dillard's stock held as an investment
C)Issuance of corporate stock
D)Receipt of interest on savings account
Q3) The statement of cash flows is organized into three sections: operating activities,investing activities,and financing activities.
A)True
B)False
Q4) The two approaches to presenting cash flows provided by operating activities in the statement of cash flows are the internal approach and the external approach.
A)True
B)False
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Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) Which of the following is a similarity between job order costing and process costing systems?
A)Both accumulate product costs throughout the production process and assign those costs to individual units of production
B)Both track individual product costs
C)Both accumulate product costs in each production department during the period
D)Both accumulate costs on a job cost sheet
Q2) Both the process costing and job order costing systems accumulate product costs throughout the production process and assign those costs to individual
A)True
B)False
Q3) The inventories used in a process costing system include work-in-process and finished goods,but not raw materials.
A)True
B)False
Q4) When using a process costing system,explain the steps you use in assigning costs to
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Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) Based on the matching principle,all product costs end up in
A)Raw materials Inventory.
B)Work in Process.
C)Finished Goods.
D)Cost of Goods Sold.
Q2) The costing method in which only variable product costs are accumulated in inventory is called
A)absorption costing.
B)normal costing.
C)direct costing.
D)full costing.
Q3) Mixed costs are divided into their direct and indirect components.
A)True
B)False
Q4) The following table shows Jackson Company's inventory balances,in
Q5) Variable costing is acceptable for which of the following purposes?
A)GAAP reporting
B)Internal reporting
C)Reporting to the IRS
D)SEC reporting
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Chapter 16: Topic Focus Standard Costing Systems
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Sample Questions
Q1) Haven Industries purchased 1,000
Q2) 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
Q3) Suggest one reason for each of the following variances.
a.Unfavorable direct material quantity variance
b.Favorable direct labor rate variance
c.Favorable variable overhead spending variance
d.Unfavorable fixed overhead volume variance
Q4) Answer the following questions regarding costing systems.
a.What is the difference between a normal costing system and a standard costing system?
b.What adjustments are required at the end of each period for each?
c.What is an advantage of standard costing?
d.Are inventory and costs of goods sold accounts reported on financial statements at actual cost or standard cost?
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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) The formula for the customer profit margin is
A)Customer net profit divided by customer revenue.
B)Customer revenue divided by customer cost of goods sold.
C)Customer revenue less cost of goods sold less allocated selling expenses.
D)Customer profit margin less allocated selling and administrative expenses.
Q3) If unprofitable customers cannot be turned to profitable ones,the company should never drop them.
A)True
B)False
Q4) Customer net profit divides customer net profit by customer revenues.
A)True
B)False
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