Accounting for Managers
Question Bank
Course Introduction
Accounting for Managers provides an essential introduction to the principles and practices of accounting from a managerial perspective. The course explores how managers use financial and management accounting data to plan, control, and make informed decisions in business organizations. Topics include understanding financial statements, budgeting, performance measurement, cost analysis, and financial decision-making processes. Emphasis is placed on interpreting accounting information, linking accounting with strategic goals, and enhancing managerial effectiveness through practical analysis and real-world applications.
Recommended Textbook
Cornerstones of Cost Management 2nd Edition by Don R. Hansen
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Page 2
Chapter 1: Introduction to Cost Management
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Sample Questions
Q1) The monitoring of a plan's implementation is called
A) planning.
B) controlling.
C) decision making.
D) budgeting.
Answer: B
Q2) Companies with a strong __________ can benefit from strong customer and employee loyalty.
Answer: Code of Ethics
Q3) Which of the following is NOT a process associated with an accounting information system?
A) auditing existing data
B) collecting and recording data
C) providing information to users
D) analyzing and managing data
Answer: A
Q4) The __________ information system is primarily concerned with producing outputs for internal users using inputs and processes needed to satisfy management objectives.
Answer: cost management
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Chapter 2: Basic Cost Management Concepts
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Sample Questions
Q1) Which of the following costs are expensed in the period in which they are incurred?
A) Direct materials costs
B) Product costs
C) Factory overhead costs
D) Nonproduction costs
Answer: D
Q2) Direct costs
A) are incurred for the benefit of the business as a whole.
B) would continue even if a particular product were discontinued.
C) are those costs that can be easily and accurately traced to a cost object.
D) can be assigned to products only by a process of allocation.
Answer: C
Q3) Gross margin, also called gross profit, is the difference between sales and costs of finished products.
A)True
B)False
Answer: False
Q4) Expired costs used up in the generation of revenues are called __________ . Answer: expenses
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Chapter 3: Cost Behavior
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Sample Questions
Q1) For each of the following situations, draw a graph that best describes the cost behavior pattern. The vertical axis represents costs, and the horizontal axis represents volume.
a. Direct materials per unit
b. Depreciation expense on a building per urit
c. An employee paid \( \$ 50 \) per hour with a guarenteed salary of \( \$ 1,000 \) per week
d. A consultant paid \( \$ 100 \) per hou with a maximum fee of \( \$ 2,000 \)
e. Salaries of teachers where each teacher can handle a maximum of 15 students
Answer: 11ea8af9_3d80_4e3a_b2e9_d79482ce0cd4_TB2044_00
Q2) Which of the following is NOT a method of determining cost behavior?
A) industrial engineering method
B) account analysis method
C) statistical and quantitative methods
D) confidence interval model
Answer: D
Q3) The method of least squares requires a __________ in order to be utilized.
Answer: regression
Q4) Multiple regression has __________ or __________ independent variables.
Answer: two; more
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Chapter 4: Activity-Based Costing
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Sample Questions
Q1) Which of the following quantities is an example of an activity driver in activity-based costing?
A) number of setups
B) number of orders placed
C) number of machine hours
D) all of the above
Q2) All of the following are non-unit-based activity drivers EXCEPT
A) number of direct labor hours.
B) number of inspections.
C) number of setups.
D) number of material moves.
Q3) If activity-based costing is used, security is an example of a A) unit-level activity.
B) batch-level activity.
C) product-level activity.
D) facility-level activity.
Q4) Activity-based costing uses only unit-level drivers for costing.
A)True
B)False
Q5) A(n) __________ is a grouping of logically related information.
Page 6
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Chapter 5: Product and Service Costing: Job-Order System
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Sample Questions
Q1) The uniqueness of the products or units for cost accounting purposes relates to their common costs.
A)True
B)False
Q2) The cost of direct materials is assigned to a job by the use of a source document known as a
A) job cost sheet.
B) control account.
C) materials requisition form.
D) production order.
Q3) The document which indicates the type and quantity of each material issued to the factory is called the:
A) control account
B) materials requisition form
C) production list
D) work ticket
Q4) The source document known as a time ticket assigns the direct overhead to each particular job.
A)True
B)False
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Chapter 6: Process Costing
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Sample Questions
Q1) Figure 6-10 Julius Corporation's mixing department began January 2014 with 10,000 gallons of product (40 percent completed) in process. During January, Julius started 100,000 gallons of new product, of which 15,000 gallons remained in ending inventory (70 percent completed).
Refer to Figure 6-10. If materials were added when the units are 50 percent complete, how many equivalent units of production for materials would there be for Julius Corporation using the FIFO costing method?
A) 101,500 units
B) 105,500 units
C) 110,000 units
D) 85,000 units
Q2) Activity-based costing might have a role in process costing settings under what conditions?
A) under no conditions
B) when there are products produced with homogeneous processes and little diversity
C) when multiple products are being produced.
D) when only one product is being produced
Q3) In a __________ costing system, production costs are accumulated by process.
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Chapter 7: Allocating Costs of Support Departments and Joint Products
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Sample Questions
Q1) If a support department's costs were budgeted to be $75,000 and actual costs incurred by the support department were $70,000, the total amount of the support department's costs that should be allocated to other departments is
A) $145,000.
B) $75,000.
C) $70,000.
D) $5,000.
Q2) The __________ method of allocating costs, allocates costs from support to producing departments.
Q3) Support departments
A) are responsible for manufacturing the products sold to customers.
B) work directly on the products of the firm.
C) provide services directly to customers.
D) provide essential services to the producing departments.
Q4) Joint products are two or more products produced simultaneously by the same process.
A)True
B)False
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Q5) Departmental __________ is applied to products passing through the department.
Chapter 8: Budgeting for Planning and Control Key
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Q1) A __________ budget is developed around one particular level of activity.
Q2) Refer to Figure 8-3. How many units of steel are expected in the material inventory at the end of the second month?
A) 30 units
B) 45 units
C) 40 units
D) 35 units
Q3) Figure 8-1 Armando Company produces and sells mattresses. It expects to sell 10,000 mattresses in the year 2015 and had 1,000 mattresses in finished goods inventory at the end of 2014. Armando would like to complete operations in the year 2015 with at least 1,250 completed mattresses in inventory. There is no ending work-in-process inventory. The mattresses sell for $300 each.
Refer to Figure 8-1. What would be the total sales for the year 2015?
A) $3,375,000
B) $3,675,000
C) $3,000,000
D) $3,300,000
Q4) The budgeted __________ shows projected assets, liabilities, and shareholders' equity of the end of the budget period.
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Chapter 9: Standard Costing: a Functional-Based Control Approach
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Q1) A variable overhead efficiency variance could be caused by A) using a poor quality material that needs more labor time to meet production standards.
B) not taking a quantity discount.
C) paying more than the standard rate for labor.
D) price increases on the materials.
Q2) The usage variances focus on the difference between A) actual quantity used and standard quantity allowed for actual production. B) actual costs of inputs and standard costs of inputs.
C) actual quantity used and standard quantity allowed for budgeted production.
D) both a and b.
Q3) A mix variance is created whenever the actual mix of inputs is equal to the standard mix.
A)True B)False
Q4) A yield variance occurs when the actual output is the same as the standard output. A)True B)False
Q5) Compare and contrast mix and yield variances.
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Chapter 10: Decentralization: Responsibility Accounting, Performance
Evaluation, and Transfer Pricing
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Sample Questions
Q1) Which of the following responsibility centers would have a manager responsible for revenues, costs, and investments?
A) cost center
B) investment center
C) profit center
D) expense center
Q2) Goal congruence can be defined as
A) an incentive plan arranged so the managers' goals are aligned with the shareholders' goals.
B) managers operating the business in the best interest of the shareholders.
C) tying management rewards to shareholder results.
D) all of these are correct.
Q3) When there is an outside market for an intermediate product that is perfectly competitive, the most equitable method of transfer pricing is
A) market price.
B) production cost pricing.
C) variable cost pricing.
D) cost plus markup pricing.
Q4) Investments are not controlled by managers of a __________ center.
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Chapter 11: Strategic Cost Management
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Sample Questions
Q1) JIT manufacturing uses which of the following philosophies of quality control?
A) just-in-case (JIC)
B) acceptable quality level (AQL)
C) total quality control (TQC)
D) both a and c
Q2) The operational activity of setting up equipment is classified as a
A) unit-level activity.
B) batch-level activity.
C) product-level activity.
D) facility-level activity.
Q3) The strategy which involves choosing among alternative strategies with the goal of selecting a strategy or strategies that provides a company with reasonable assurance of long-term growth and survival is called:
A) Competitive advantage
B) Strategic cost management
C) Strategic decision making
D) Customer value
Q4) Choosing alternative strategies that provide long-term growth involves __________ decision making.
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Chapter 12: Activity-Based Management
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Sample Questions
Q1) Financial-based responsibility accounting focuses on functional organizational units.
A)True
B)False
Q2) The process of improving performance and constantly eliminating waste is known as __________ .
Q3) Mendelsohn company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $4,000 per day. Bach, Inc., a competitor, keeps 10 days of inventory on hand, and the competitor's carrying costs average $2,000 per day. The value-added costs are
A) $-0-.
B) $40,000.
C) $20,000.
D) $80,000.
Q4) Financial measures of performance focus on the dollar effect of activity performance changes.
A)True
B)False
Q5) What is process value analysis?
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Chapter 13: The Balanced Scorecard: Strategic-Based Control
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Q1) Training hours is an example of a(n) __________ measure.
Q2) Stretch targets are
A) aimed at stretching the firm's resources.
B) aimed at static standards.
C) aimed at transforming the organization within three to five years if achieved.
D) aimed at transforming the organization immediately.
Q3) Performance expectations are communicated by setting
A) new initiatives.
B) targets.
C) a strategic vision.
D) activity measures.
Q4) Which of the following statements comparing activity-based performance and strategic-based performance evaluation is NOT true?
A) Strategic-based performance evaluation expands the set of metrics.
B) Only strategic-based performance evaluation leads to cost reductions.
C) Only strategic-based performance standards set stretch targets for all four perspectives.
D) Both systems encourage quality improvements.
Q5) Dissatisfied customers are an example of a __________ measure.
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Chapter 14: Quality and Environmental Cost Management
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Q1) Environmental internal failure costs would be defined as
A) costs of activities performed because contaminants and waste have been produced, but not discharged into the environment.
B) costs of activities carried out to prevent the production of contaminants or waste that could cause damage to the environment.
C) costs of activities executed to determine if processes, products, and other activities within the firm are in compliance with appropriate environmental standards.
D) costs of activities performed after discharge of contaminants into the environment.
Q2) Internal failure costs incurred by failure of products to conform to specifications are discovered after sales take place.
A)True
B)False
Q3) Customers are concerned with product reliability, durability, fitness for use, and conformance to specifications.
A)True
B)False
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Chapter 15: Lean Accounting and Productivity Measurement
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Q1) __________ allocation is the only allocation used regularly in a value stream cost assignment.
Q2) Profit-linked productivity measurement involves the measuring of the amount of profit related to productivity change.
A)True
B)False
Q3) Which of the following is NOT a limitation of a value stream cost assignment?
A) Initially, it may not be possible to allocate all the people needed in a value stream to that stream exclusively.
B) There will always be some individuals whose related costs will remain outside of any particular value stream.
C) A value stream is usually organized around a family of products.
D) Having a value stream for each product is not practical.
Q4) The production rate
A) tells how many units of a product can be produced by the manufacturing cell.
B) calculates how many minutes it takes an operation to process one unit of product.
C) calculates the processing time of the slowest department.
D) calculates the wait and move time of a production.
Page 17
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Chapter 16: Cost-Volume-Profit Analysis
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Q1) The __________ ratio expresses variable costs in terms of sales dollars.
Q2) Units to earn target profit equal total fixed costs plus target profit divided by the contribution margin ratio.
A)True
B)False
Q3) Sensitivity analysis is a what-if technique that examines the impact of changes in assumptions.
A)True
B)False
Q4) Total contribution margin is calculated by subtracting
A) cost of goods sold from total revenues.
B) fixed costs from total revenues.
C) total manufacturing costs from total revenues.
D) total variable costs from total revenues.
Q5) Multiple-product break-even analysis requires a constant sales mix, which is difficult to predict with certainty.
A)True B)False
Q6) In cost-volume-profit analysis income taxes __________ the break even point.
Page 18
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Chapter 17: Activity Resource Usage Model and Tactical
Decision
Making
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Q1) An important qualitative factor to consider regarding a special order is the
A) variable costs associated with the special order.
B) avoidable fixed costs associated with the special order.
C) effect the sale of special-order units will have on existing customers.
D) incremental revenue from the special order.
Q2) A __________ model is a set of procedures that, if followed, will lead to a decision.
Q3) Which of the following costs is NOT relevant to a decision to sell a product at split-off or process the product further and then sell the product?
A) joint costs allocated to the product
B) the selling price of the product at split-off
C) the additional processing costs after split-off
D) the selling price of the product after further processing
Q4) One of Maersk cargo ships hit an iceberg and sank. In deciding whether or not to salvage the ship, its book value is a(n)
A) relevant cost.
B) discretionary cost.
C) opportunity cost.
D) sunk cost.
Page 19
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Chapter 18: Pricing and Profitability Analysis
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Q1) The budgeted contribution margin of two products is $1,000 the actual contribution margin is $500 and the total variable expenses are $750. The contribution margin variance is:
A) $500(F)
B) $500(U)
C) $750(F)
D) $750(U)
Q2) The charging of different prices to different customers for essentially the same product is called:
A) Gouging
B) Penetration pricing
C) Skimming
D) Price discrimination
Q3) The stage where revenues always decrease is the __________ stage.
Q4) The contribution margin volume variance is the difference between the actual and budgeted quantities sold multiplied by the:
A) budgeted sales price
B) actual contribution margin variance
C) budgeted contribution margin variance
D) budgeted average unit contribution margin
Page 20
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Chapter 19: Capital Investment
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Sample Questions
Q1) Clementine Company is considering the purchase of a new machine for $160,000. The machine would generate an annual cash flow before depreciation and taxes of $62,588 for four years. At the end of four years, the machine would have no salvage value. The company's cost of capital is 12 percent. The company uses straight-line depreciation with no mid-year convention and has a 40 percent tax rate. What is the annual net after-tax cash flow per year?
A) $62,588
B) $53,553
C) $37,552
D) $16,000
Q2) The accounting rate of return on original investment is calculated as A) original investment/net income.
B) net income/debt.
C) average income/original investment.
D) assets/debt.
Q3) Accelerated methods of __________ are preferred because of the tax benefits created.
Q4) The __________ rate of return uses income instead of cash flows.
Q5) The time required by a firm to recover its original investment is called the __________ period.
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Chapter 20: Inventory Management: Economic Order
Quantity, Jit, and the Theory of Constraints
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Sample Questions
Q1) In the graphic method of solving a linear programming problem, which of the following is depicted on the graph?
A) coefficient of correlation
B) constraint
C) least-squares line of best fit
D) break-even point
Q2) Comfy Wheels Bus Company produces buses. In order to produce the seats for the buses, special equipment must be set up. The setup cost per frame is $35. The cost of carrying seats in inventory is $6 per seat per year. The company produces 90,000 buses per year. Total carrying costs (rounded to the nearest dollar) associated with the economic order quantity are
A) $3,075.
B) $3,750.
C) $502.
D) $328.
Q3) Which of the following is NOT a common reason for shutdowns?
A) safety stock of inventory
B) defective materials or subassemblies
C) machine failure
D) unavailability of a material of subassembly
Page 22
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