Accounting for Managers Pre-Test Questions
Course Introduction
Accounting for Managers provides an essential overview of financial and managerial accounting concepts tailored for decision-makers in business settings. The course equips students with the skills to interpret financial statements, understand cost behaviors, and use accounting information to plan, control, and evaluate organizational performance. Emphasizing practical application, it explores budgeting, financial analysis, and performance measurement tools that support strategic management decisions, enabling future managers to communicate effectively with accounting professionals and make informed, value-driven choices within their organizations.
Recommended Textbook
Cost Accounting A Managerial Emphasis 7th Canadian Edition by Charles T. Horngren
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22 Chapters
3533 Verified Questions
3533 Flashcards
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Page 2
Chapter 1: The Accountants Vital Role in Decision Making
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Sample Questions
Q1) A budget is defined as
A)the qualitative expression of a plan.
B)an aid in controlling income.
C)the quantitative expression of a plan of action by management.
D)the quantitative expression of a plan and an aid in controlling income.
E)an aid in coordinating and implementing a plan.
Answer: C
Q2) Discuss the potential behavioural implications of performance evaluation.
Answer: As measurements are made on operations and,especially,on individuals and groups,the behaviour of the individuals and groups are affected.People react to the measurements being made.They will focus on those variables or the behaviour being measured and spend less attention on variables and behaviour that are not measured.In addition,if managers attempt to introduce or redesign cost and performance measurement systems,people familiar with the previous system will resist.Management accountants must understand and anticipate the reactions of individuals to information and measurements.The design and introduction of new measurements and systems must be accompanied with an analysis of the likely reactions to the innovations.
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3
Chapter 2: An Introduction to Cost Terms and Purposes
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Sample Questions
Q1) Cost tracing assigns indirect costs to the chosen cost object.
A)True
B)False
Answer: False
Q2) Calculate this year's operating income if the company plans to produce and sell 60,000 units.
A)$150,000
B)$0
C)$<300,000>
D)$<650,000>
E)$300,000
Answer: E
Q3) A cost object is anything for which a separate measurement of costs is desired.
A)True
B)False
Answer: True
Q4) Prime costs consist of direct and indirect manufacturing labour.
A)True
B)False
Answer: False
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Chapter 3: Cost-Volume-Profit Analysis
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156 Flashcards
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Sample Questions
Q1) The relative combination of quantities of products or services that constitute total revenues are called the sales target.
A)True
B)False
Answer: False
Q2) What is the margin of safety assuming 100 procedures are performed?
A)$16,000 or 40 times
B)$20,000 or 50 times
C)$24,000 or 60 times
D)$40,000 or 100 times
E)$50,000 or 110 times
Answer: C
Q3) Operating income is equal to net income plus income taxes.
A)True
B)False
Answer: True
Q4) An increase in the tax rate will increase the break-even point.
A)True
B)False
Answer: False
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Chapter 4: Job Costing
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Sample Questions
Q1) Which method(s)for dealing with under/over allocated overhead provides the most accurate inventory and cost of goods sold account balances when the amount is material?
A)proration approach
B)adjusted allocation-rate approach
C)immediate write-off to cost of goods sold
D)either proration or adjusted allocation-rate approach
E)either the proration approach or the immediate write-off to cost of goods sold
Q2) Proration is the equalization of the overhead allocation rates between finished goods inventory and work-in-process inventory.
A)True
B)False
Q3) What is the budgeted direct cost rate for dental assistant labour?
A)$17.875 per hour
B)$16.125 per hour
C)$13.750 per hour
D)$11.250 per hour
E)$9.125 per hour
Q4) Describe job-costing and process-costing systems.Explain when it would be appropriate to use each.
Page 6
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Chapter 5: Activity-Based Costing and Management
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Sample Questions
Q1) If the cost of an activity increases with each hour of machine time,it is which of the following?
A)market-sustaining cost
B)output unit-level cost
C)batch-level cost
D)product-sustaining (service-sustaining)costs
E)facility-sustaining cost
Q2) Output unit-level cost is identical to batch-level cost in a system that costs based on activities.
A)True
B)False
Q3) Which of the following is a sign that a "smoothing out" costing system exists?
A)Managers rely on data originated by the cost system.
B)The company wins bids they thought had low margins.
C)A batch consumes a relatively high level of input materials and conversion activities and is reported to have a relatively high cost.
D)A batch consumes a relatively low level of input materials and conversion activities and is reported to have a relatively low cost.
E)The company loses bids they thought had low margins.
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Page 7
Chapter 6: Master Budget and Responsibility Accounting
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Sample Questions
Q1) Direct material purchases equal
A)usage plus production needs.
B)production needs plus target ending inventories.
C)beginning inventories plus production needs.
D)usage plus target ending inventories less beginning inventories.
E)the number of units to be produced times the amount of direct material in each unit.
Q2) A rolling budget encourages management to be thinking about the next 12 months.
A)True
B)False
Q3) The master budget summarizes all the financial and nonfinancial plans into a single document.
A)True
B)False
Q4) Management at all levels should understand and support the budget and all aspects of the management control system.
A)True
B)False
Q5) Describe the benefits to an organization of preparing an operating budget.
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Page 8
Chapter 7: Flexible Budgets,variances,and Management
Control: I
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Sample Questions
Q1) What is the All Good Things Ltd.direct labour rate variance?
A)$4,200 U
B)$4,200 F
C)$200 F
D)$4,000 F
E)$4,000 U
Q2) Benchmarking is the continuous process of measuring products,services,and activities against the best possible levels of performance.
A)True
B)False
Q3) A favourable variance can be automatically interpreted as "good news."
A)True
B)False
Q4) The static-budget variance can be subdivided into the flexible-budget variance and the sales-volume variance.
A)True
B)False
Q5) Describe the purpose of variance analysis.
Page 9
Q6) What is benchmarking,and how is it useful to a company?
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Page 10
Chapter 8: Flexible Budgets,variances,and Management
Control: II
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Sample Questions
Q1) When machine-hours are used as a cost allocation base,the item MOST likely to contribute to a favourable production-volume variance is
A)an increase in the selling price of the product.
B)the purchase of a new manufacturing machine costing considerably less than expected.
C)a decline in the cost of energy.
D)strengthened demand for the product.
E)a competitor lowering the price of a similar product.
Q2) What is the variable overhead flexible-budget variance?
A)$1,200 favourable
B)$360 unfavourable
C)$840 favourable
D)$1,200 unfavourable
E)$1,560 unfavourable
Q3) Calculate the rate variance for fixed setup overhead costs.
A)$1,600 unfavourable
B)$400 unfavourable
C)$600 unfavourable
D)$400 favourable
E)$600 favourable
Page 11
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Chapter 9: Income Effects of Denominator Level on Inventory Valuation
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Sample Questions
Q1) How does the capacity level chosen to compute the budgeted fixed overhead cost rate affect the production-volume variance?
Q2) What is contribution margin using variable costing?
A)$96,250
B)$91,000
C)$84,000
D)$78,750
E)$52,500
Q3) What is the per unit manufacturing cost using absorption costing?
A)$23.00
B)$18.00
C)$27.00
D)$12.00
E)$10.00
Q4) What is the absorption costing break-even point in units?
A)917 units
B)1,000 units
C)5,838 units
D)6,000 units
E)4,445 units
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Chapter 10: Analysis of Cost Behaviour
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Sample Questions
Q1) Andrew Pallet Co. ,Inc.manufactures pallets for various manufacturing companies.Each new employee takes 10 hours to make the first pallet and 8 hours to make the second.The manufacturing overhead charge per hour is $80.
Required:
a.What is the learning curve percentage assuming the cumulative average method?
b.What is the time needed to build 8 pallets by a new employee using the cumulative average-time method? Assume the rate of learning factor is -0.1520.
c.What is the time needed to produce the 16th pallet by a new employee using the incremental unit-time method? Assume the rate of learning factor is -0.3219.
Q2) Cross-sectional data pertain to the same entity over successive past periods.
A)True
B)False
Q3) The standard error of the estimated coefficient indicates whether a relationship exists between the predictor variable and the outcome variable that cannot be attributed to chance alone.
A)True
B)False
Q4) Describe the two assumptions upon which managers often estimate cost functions.
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Page 13
Chapter 11: Decision Making and Relevant Information
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Sample Questions
Q1) Which of the following costs are never relevant in the decision-making process?
A)fixed costs
B)historical costs
C)relevant costs
D)variable costs
E)opportunity costs
Q2) A florist produces table settings for weddings.Based on an annual volume of 10,000 units it incurs $100,000 in fixed manufacturing costs.Variable costs per unit are $16 for direct materials,$3 for direct manufacturing labour,and $14 for variable factory overhead.
Another company has offered to supply empty baskets for the settings for $8,with a minimum annual order of 5,000 units.If the florist accepts the offer,it will be able to reduce variable labour and overhead costs by 50 percent.The materials for the empty baskets will cost $4 if the florist assembles them.
Required:
a.Determine if they should make or assemble the empty baskets.
b.Should they make or assemble the empty baskets if they could rent the space that the basket assembly requires for $16,000 per year to another company?
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Page 14
Chapter 12: Pricing Decisions, product Profitability
Decisions, and Cost Management
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Sample Questions
Q1) At a management meeting,you just finished presenting your cost analysis report,showing unit costs last year for 60,000 widgets produced were $435.00.The sales manager then complained that she was going to lose a special overseas sale because the customer had indicated they could only pay $425.00.She knew from sources that no competitor would be bidding below $440,and she complained that if the company had better cost control,there would be more profit for everyone.The production manager also would like to take the extra job,since even with the extra production,the plant would be under-capacity.
Required:What type of information would you need in order to be able to determine if the extra order could be profitably produced if the selling price was held to $425 per unit?
Q2) What is the target cost if the company wants to maintain its same income level,and marketing is correct (rounded to the nearest cent)?
A)$168.75
B)$170.46
C)$185.00
D)$210.00
E)$202.50
Q3) Describe the five steps in developing target pricing and target costs.
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Chapter 13: Strategy,balanced Scorecard,and Profitability Analysis
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161 Flashcards
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Sample Questions
Q1) Required:
Present the following,
a.The change in operating income from cost leadership.
b.The change in operating income due to industry wide effects.
c.The effect of product differentiation on operating income and a summarization of the change in operating income between Year 1 to Year 2.
Q2) Learning and growth perspective identifies the capabilities in which the organization must excel to achieve superior internal processes that create value for customers and shareholders.
A)True
B)False
Q3) What is the Barry Company's cost effect of price-recovery component?
A)$61,000 favourable
B)$60,850 unfavourable
C)$60,100 favourable
D)$60,100 unfavourable
E)$61,000 unfavourable
Q4) What are the four key perspectives in the balanced scorecard?
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Q5) Describe three key components in doing a strategic analysis of operating income.
Chapter 14: Period Cost Allocation
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Sample Questions
Q1) Using the step-down method,what amount of Maintenance Department cost will be allocated to Department A if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)
A)$64,000
B)$85,333
C)$114,667
D)$128,000
Q2) If the incremental method were used,what amount of cost would be allocated to the start-up business?
A)$10,000
B)$50,000
C)$40,000
D)$42,000
Q3) Under the incremental method,the first incremental user usually receives the highest allocation of the common costs.
A)True
B)False
Q4) What is a "common cost"? What are two methods that a manager can use to allocate common costs to two or more users?
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Chapter 15: Cost Allocation: Joint Products and Byproducts
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Sample Questions
Q1) Using estimated net realizable value,what amount of the $72,240 of joint costs would be allocated Xyla and the skim goat ice cream?
A)$41,971 and $30,269
B)$44,471 and $27,769
C)$32,796 and $39,444
D)$36,120 and $36,120
E)$39,444 and $32,796
Q2) What is the reason that accountants do not like to carry inventory at net realizable value?
A)it is the most difficult costing method
B)income is recognized after the sale is complete
C)income is recognized before sales are made
D)it is never acceptable to the taxing authorities
E)it is more difficult to count the inventory when carrying cost is different than purchase cost
Q3) List three reasons why we allocate joint costs to individual products or services.Give an example of when the particular cost allocation reason would come into use.
Q4) How should toxic waste be accounted for?
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Chapter 16: Revenue and Customer Profitability Analysis
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Sample Questions
Q1) The market-share variance is caused solely by the actual market share being different than the budgeted market share.
A)True
B)False
Q2) Analyzing whether to add or drop a customer is an application of relevant costing analysis.
A)True B)False
Q3) Describe and discuss the two methods of allocating the revenues of a bundled package to the individual products in that package.Describe any special problems associated with the method.
Q4) Unfavourable variances reveal not only what occurred but how it occurred.
A)True
B)False
Q5) What actions might be taken with an unprofitable customer?
Q6) What is the total sales-quantity variance in terms of the contribution margin?
A)$220,000 favorable
B)$340,000 favorable
C)$556,000 favorable
D)$896,000 favorable
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Chapter 17: Process Costing
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Sample Questions
Q1) What amount of conversion costs are assigned to the Townsend Company ending Work-in-Process account for April?
A)$143,750.00
B)$145,312.50
C)$180,000.00
D)$250,000.00
E)$116,250.00
Q2) The final result of the process costing procedure is to compute the dollar amount of the credit to a work-in-process account and the corresponding debit to finished goods and/or other work-in-process accounts.
A)True
B)False
Q3) The final step of the accounting for processes with respect to process costing is to
A)compute the amount of debits to work-in-process.
B)compute the amount of credits to work-in-process.
C)compute the equivalent units for the period.
D)account for all units placed in process during the period.
E)account for all units in ending inventory at the end of the period.
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Chapter 18: Spoilage, rework, and Scrap
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Sample Questions
Q1) Which of the following can be used in accounting for spoilage?
A)standard costs
B)FIFO
C)Weighted average
D)FIFO and weighted average but not standard costs
E)FIFO and weighted average and standard costs
Q2) Reworked goods are unacceptable units of production usually not capable of being repaired or converted into a salable product.
A)True
B)False
Q3) When a unit has to be reworked,the rework may be classified in three ways.What are those ways,and how does the accounting for each differ?
Q4) What costs would be associated with normal and abnormal spoilage,respectively,using the FIFO method of process costing?
A)$12,571;$30,108
B)$30,108;$12,571
C)$1,257;$3,010
D)$8,000;$4,000
E)$10,627;$25,453
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Chapter 19: Inventory Cost Management Strategies
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Sample Questions
Q1) When goods and/or materials are purchased in such a manner as to immediately precede demand or use,it is specifically called
A)inventory purchasing.
B)just-in-time purchasing.
C)materials purchasing.
D)stock purchasing.
E)safety purchasing.
Q2) The economic order quantity decision model
A)calculates the amount of inventory that may be purchased with the monetary constraint.
B)determines the minimum amount of inventory to purchase.
C)determines the maximum amount of inventory to keep on hand.
D)determines the optimal amount of inventory to order.
E)calculates the numbers of employees needed.
Q3) The annual relevant total costs are at a minimum where relevant ordering costs and their relevant carrying costs are equal.
A)True
B)False
Q4) What are five features of a just-in-time manufacturing system?
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Chapter 20: Capital Budgeting: Methods of Investment Analysis
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Sample Questions
Q1) What is the internal rate of return of the Neptune Ltd.investment?
A)13.62%
B)12.75%
C)10.00%
D)6.86%
E)18.00%
Q2) Capital cost allowance is the income tax version of financial reporting depreciation.
A)True
B)False
Q3) The terminal disposal price of a replacement machine
A)generally increases cash inflow in the year of disposal.
B)is the total of the salvage values of the old machine and the new machine.
C)is the salvage value of the old machine.
D)is the NPV value of the new machine salvage value.
E)is the NPV of the salvage value of the old machine.
Q4) Capital Cost Allowance (CCA)is a cash flow.
A)True
B)False
Page 23
Q5) Explain why the term tax shield is used in conjunction with amortization.
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Chapter 21: Transfer Pricing and Multinational Management
Control Systems
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Sample Questions
Q1) What is the daily operating advantage (disadvantage)of purchasing the water from the independent producer and using the company's Manitoba shipping department,assuming the shipping department is currently shipping 50,000 containers per day for external customers?
A)$0
B)$45,000
C)$225,000
D)$120,000
E)$165,000
Q2) What is the Refining Division's operating income if 150 litres of oil are sold at $110 /litre and 200 litres are transferred in? Assume the transfer price is based on 175% of variable costs.
A)$16,500
B)$15,600
C)$525
D)$6,825
E)$8,500
Q3) Management control systems reflect only financial data.
A)True
B)False
Page 24
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Chapter 22: Multinational Performance Measurement and Compensation
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Sample Questions
Q1) Team incentives encourage cooperation by
A)forcing people to work together on difficult tasks.
B)changing management style.
C)letting individuals help one another as they strive toward a common goal.
D)rewarding based on team performance.
E)rewarding team members individually.
Q2) The benefits of tying performance measures more closely to a manager's efforts encourage the use of
A)financial measures.
B)nonfinancial measures.
C)nonfinancial and financial measures.
D)performance input measures.
E)moral measures.
Q3) What is the value of the total assets belonging to the Tiller Division?
A)$10,000,000
B)$ 12,000,000
C)$ 14,400,000
D)$ 15,000,000
E)$ 16,000,000
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