Accounting for Managers Test Bank
Course Introduction
Accounting for Managers introduces the fundamental principles and practices of accounting with a focus on their application in managerial decision-making processes. The course covers essential topics such as financial statement analysis, budgeting, cost analysis, performance measurement, and internal control systems. It emphasizes how accounting information aids in planning, controlling, and evaluating business operations, empowering managers to make informed financial decisions. Through case studies and practical exercises, students develop the skills necessary to interpret accounting data, understand financial implications of business activities, and communicate financial information effectively within an organizational context.
Recommended Textbook
Horngrens Cost Accounting A Managerial Emphasis16th Global Edition by Srikant M. Datar
Available Study Resources on Quizplus 23 Chapters
Source URL: https://quizplus.com/study-set/3725
2
Chapter 1: The Manager and Management Accounting
Available Study Resources on Quizplus for this Chatper
195 Verified Questions
195 Flashcards
Source URL: https://quizplus.com/quiz/74294
Sample Questions
Q1) Management accountants work closely with managers in various departments to formulate strategies by providing information about the sources of competitive advantage.
A)True
B)False
Answer: True
Q2) Financial accounting information focuses on internal reporting.
A)True
B)False
Answer: False
Q3) What is strategy? Briefly describe the two broad types of strategies that companies may choose to pursue.
Answer: Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives.In other words,strategy describes how a company will compete.
Companies follow one of two broad strategies.One is provide a quality product or service at low prices.The other is to compete on their ability to offer a unique product or service that is generally offered at a higher price.
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: An Introduction to Cost Terms and Purposes
Available Study Resources on Quizplus for this Chatper
224 Verified Questions
224 Flashcards
Source URL: https://quizplus.com/quiz/74283
Sample Questions
Q1) Manufacturing sector firms normally hold three types of inventory: direct materials inventory,work-in-process inventory,and finished goods inventory.
A)True
B)False
Answer: True
Q2) Improvements in information-gathering technologies are making it possible to trace more costs as direct.
A)True
B)False
Answer: True
Q3) Assigning indirect costs is easier than assigning direct costs.
A)True
B)False
Answer: False
Q4) Cost drivers casually affect total costs of a cost object over a given time span. A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Cost-Volume-Profit Analysis
Available Study Resources on Quizplus for this Chatper
209 Verified Questions
209 Flashcards
Source URL: https://quizplus.com/quiz/74278
Sample Questions
Q1) Contribution margin = Contribution margin percentage × Revenues (in dollars).
A)True
B)False
Answer: True
Q2) Family Furniture sells a table for $950.Its fixed costs are $2,500,while its variable costs are $500 per table.It currently plans to sell 180 tables this month. What is the budgeted operating income for the month assuming that Family Furniture sells 180 tables?
A)$168,500
B)$81,000
C)$78,500
D)$171,000
Answer: C
Q3) The degree of operating leverage at a specific level of sales helps the managers calculate the effect that potential changes in sales will have on operating income. A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Job Costing
Available Study Resources on Quizplus for this Chatper
203 Verified Questions
203 Flashcards
Source URL: https://quizplus.com/quiz/74277
Sample Questions
Q1) For normal costing,even though the indirect-cost rate is based on actual,indirect costs are allocated to products based on the normal capacity of the cost-allocation base.
A)True
B)False
Q2) An accounting firm completes an audit for a local union and has the following cost information for the year.
Indirect labor $60,000
Office lease $22,000
Depreciation on office equipment $8,000
Marketing expense $20,000
Utilities $15,000
The firm's direct labor costs are budgeted at $500,000 for the year and overhead is allocated based on direct labor costs.The firm used 1 partner and 2 audit associates on the audit.Partners are paid $150 per hour while audit associates earn $50 per hour.The partner spent 6 hours on the engagement while the audit associates spent a total of 40 hours.
\(\text { Required: }\)
What is the cost of the audit?
Q3) Differentiate between a cost pool and a cost-allocation base.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Activity-Based Costing and Activity-Based Management
Available Study Resources on Quizplus for this Chatper
176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/74276
Sample Questions
Q1) ABC systems attempt to trace more costs as indirect costs.
A)True
B)False
Q2) Which of the following statements is true of activity-based costing?
A)In activity-based costing,direct labor-hours is always the best allocation base to allocate all non-manufacturing indirect costs.
B)Activity based costing is more suited to companies with high product diversity than companies with single product line.
C)Activity based costing broadly averages or spreads the cost of resources uniformly to cost objects such as products or services.
D)The main advantage of activity-based costing over peanut-butter costing is the accurate distribution of all direct costs to the products.
Q3) An effective activity-based cost system always ignores facility-sustaining cost drivers.
A)True
B)False
Q4) Explain how a top-selling product may actually result in losses for the company.
Q5) How does ABC costing system help service companies?
Page 7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Master Budget and Responsibility Accounting
Available Study Resources on Quizplus for this Chatper
226 Verified Questions
226 Flashcards
Source URL: https://quizplus.com/quiz/74275
Sample Questions
Q1) Which one of the following budgets would be prepared using activity based budgeting techniques?
A)direct materials purchase budget
B)revenues budget
C)manufacturing overhead cost budget
D)production budget
Q2) The use of activity-based budgeting is growing because of ________.
A)the increased use of activity-based costing
B)the increased use of kaizen costing
C)increases in work-in-process inventory
D)increases in direct materials inventory
Q3) As budgeting is not a cross-functional activity,it tends to be accurate and reliable with regard to forecasts.
A)True
B)False
Q4) Most ethical issues related to budgetary decisions are clear cut because at no point should pressure for performance influence budgetary decisions.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Flexible Budgets,direct-Cost Variances,and Management Control
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/74274
Sample Questions
Q1) An unfavorable variance indicates that ________.
A)the actual costs are less than the budgeted costs
B)the actual revenues exceed the budgeted revenues
C)the actual units sold are less than the budgeted units
D)the budgeted contribution margin is more than the actual amount
Q2) A favorable price variance for direct manufacturing labor might indicate that
A)employees were paid more than planned
B)unexpected increase in direct labor rates
C)underskilled employees are being hired
D)congestion due to scheduling problems
Q3) A favorable efficiency variance for direct manufacturing labor indicates that
A)a lower wage rate than planned was paid for direct labor
B)a higher wage rate than planned was paid for direct labor
C)less direct manufacturing labor-hours were used during production than planned for actual output
D)more direct manufacturing labor-hours were used during production than planned for actual output
Q4) Describe the purpose of variance analysis.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Flexible Budgets, overhead Cost Variances, and Management Control
Available Study Resources on Quizplus for this Chatper
171 Verified Questions
171 Flashcards
Source URL: https://quizplus.com/quiz/74273
Sample Questions
Q1) The accounting for 3-variance analysis is simpler than the 4-variance analysis,but some information is lost because the variable and fixed overhead spending variances are combined into a single total overhead spending variance.
A)True
B)False
Q2) Russo Corporation manufactured 15,000 air conditioners during November.The overhead cost-allocation base is $33.25 per machine-hour.The following variable overhead data pertain to November:
\(\begin{array}{lll}&\text { Actual }&\text { Budgeted } \\
\text { Production } & 15,000 \text { units } & 18,000 \text { units } \\
\text { Machine-hours } & 13,275 \text { hours } & 14,400 \text { hours } \\
\text { Variable overhead cost per machine-hour: } & \$ 33,00 & \$ 33.25
\end{array}\)
What is the flexible-budget amount?
A)$441,394
B)$399,000
C)$396,000
D)$475,200
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Inventory Costing and Capacity Analysis
Available Study Resources on Quizplus for this Chatper
207 Verified Questions
207 Flashcards
Source URL: https://quizplus.com/quiz/74272
Sample Questions
Q1) Which of the following is not one of the reasons why absorption costing might also be used for internal reporting?
A)It is more useful for managerial decision making than variable costing
B)It is cost effective and less confusing for managers to use one common method for both internal and external reporting
C)It can help prevent managers from making decisions that make their performance look good to the detriment of income reported to shareholders
D)For long-term decision making both variable and fixed costs must be considered for inventory related decisions
Q2) When production is less than sales,operating income will be the same regardless of whether variable cost or absorption costing is used.
A)True
B)False
Q3) Practical capacity rather than master-budget volume is a better way to price product and avoid downward demand spiral.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Determining How Costs Behave
Available Study Resources on Quizplus for this Chatper
192 Verified Questions
192 Flashcards
Source URL: https://quizplus.com/quiz/74293
Sample Questions
Q1) The account analysis method estimates cost functions ________.
A)by classifying cost accounts as variable,fixed,or mixed based on qualitative analysis
B)using time-and-motion studies
C)at a high cost,which renders it seldom used
D)in a manner that cannot be usefully combined with any other cost estimation methods
Q2) Which cost estimation method uses time-and-motion studies to reveal that to make a high quality men's suit jacket ,it takes of 3 hours of direct labor effort per jacket and 5 minutes of a salaried manager to perform quality control?
A)the accrual accounting method
B)the high-low method
C)the industrial engineering method
D)the cash accounting method
Q3) The dependent variable is a cost to be predicted and managed,whereas an independent variable or cost driver is the factor used to predict the dependent variable.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Decision Making and Relevant Information
Available Study Resources on Quizplus for this Chatper
218 Verified Questions
218 Flashcards
Source URL: https://quizplus.com/quiz/74292
Sample Questions
Q1) Capacity constraints include ________.
A)increased demand of warranty services for a pharmaceutical product
B)increased need of display space for a retailer
C)decreased demand for a pharmaceutical product
D)increased fuel efficiency of cars
Q2) Performance evaluation focuses on responsibility centers for a specific period,not on projects or individual items of equipment over their useful lives.
A)True
B)False
Q3) Depreciation allocated to a product line is a relevant cost when deciding to discontinue that product.
A)True
B)False
Q4) Which of the following is true of an opportunity cost?
A)It is the income foregone by not using a resource in an alternative way.
B)The higher the opportunity costs,the lower is the relevant cost.
C)It is recorded as an expense in the accounting records.
D)It is an unavoidable cost that cannot be changed no matter what action is taken.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Strategy,balanced Scorecard,and Strategic
Profitability Analysis
Available Study Resources on Quizplus for this Chatper
172 Verified Questions
172 Flashcards
Source URL: https://quizplus.com/quiz/74291
Sample Questions
Q1) Which component of strategy measures the reduction in costs attributable to a reduction in the quantity of inputs used in Year 2 relative to the quantity of inputs that would have been used in Year 1 to produce the Year 2 output?
A)the growth component
B)the price-recovery component
C)the productivity component
D)the cost leadership component
Q2) Feedback on how a company is doing from the perspectives of financial,customer,internal business processes,and learning and growth.
A)Master budget
B)Product differentiation
C)Differential report
D)Balanced scorecard
Q3) Productivity describes the relationship between different quantities of inputs consumed and the quantities of output produced.
A)True
B)False
Q4) What are the four key perspectives in the balanced scorecard?
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Pricing Decisions and Cost Management
Available Study Resources on Quizplus for this Chatper
209 Verified Questions
209 Flashcards
Source URL: https://quizplus.com/quiz/74290
Sample Questions
Q1) A full-cost formula for pricing does requires that the management accountant performs a detailed analysis of cost-behavior patterns to separate product costs into variable and fixed components.
A)True
B)False
Q2) Sales of Granite City Products Inc.have been on a steady decline for the last 12 months.A market research study conducted revealed that the product of Granite City Products Inc.can be sold only for $480 as opposed to the current market price charged of $580 per unit.Granite City Products Inc.has decided to revise its sales price to $480.The annual sales target volume of the product after price revision is 280 units.Granite City Products Inc.wants to earn 30% on its sales amount. What is the target cost per unit?
A)$625.00
B)$336.00
C)$480.00
D)$145.00
Q3) Claudia Geer,controller,discusses the pricing of a new product with the sales manager,James Nolan.What major influences must Claudia and James consider in pricing the new product? Discuss each briefly.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/74289
Sample Questions
Q1) Costs of displays at customer sites is an example of customer batch-level costs.
A)True
B)False
Q2) If a cost pool is homogeneous,the cost allocations using that pool will be the same as they would be if costs of each individual activity in that pool were allocated separately.
A)True
B)False
Q3) The sales-volume variance is the difference between ________.
A)a sales-mix variance and the corresponding sales-quantity variance
B)a flexible-budget amount and the corresponding static-budget amount
C)a market-share variance and the corresponding market-size variance
D)a sales-mix variance and the corresponding market size variance
Q4) Tracking price discounts by customer and by salesperson helps improve customer profitability.
A)True
B)False
Q5) How can a company's revenues and costs differ across customers?
Q7) Should a company allocate its corporate costs to divisions? Page 16
Q6) Briefly describe the four criteria used to guide cost-allocation decisions.
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 15: Allocation of Support-Department Costs, common
Costs, and Revenues
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74288
Sample Questions
Q1) If management wants to choose a method of revenue allocation that best captures the "benefits received" by customers then they would use ________ to allocate revenue to products in a bundle.
A)stand-alone revenue -allocation based on unit costs
B)stand-alone revenue-allocation based on selling prices
C)stand-alone revenue-allocation based on physical units
D)stand-alone revenue-allocation based on unit costs
Q2) Which of the following is an advantage of a dual-rate method?
A)It is the most widely used method in practice.
B)It is less costly to implement.
C)It avoids the expensive analysis for categorizing costs as either fixed or variable.
D)It allocates fixed cost as per the budgeted usage that helps in short and long-run planning.
Q3) The Shapley value method of allocating common costs considers each party as first the primary party and then the incremental party and computes an average allocation.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 16: Cost Allocation: Joint Products and Byproducts
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74287
Sample Questions
Q1) How does the net realizable value method allocate joint costs?
A)allocates joint costs to joint products on the basis of a comparable physical measure at the split-off point
B)allocates joint costs to joint products on the basis of the relative sales value at the split-off point
C)allocates joint costs to joint products in a way that each product has an identical gross-margin percentage
D)allocates joint costs to joint products on the basis of relative NRV
Q2) Which of the following statements is true of main products and byproducts?
A)A byproduct will never become a main product.
B)A main product will never become a byproduct.
C)Product classifications may change over time.
D)Product classifications remains constant over time.
Q3) Which of the following factors would NOT be one of the reasons why the sales value at the split-off would be used to allocate joint costs?
A)the sales value method is a good measure of benefits received
B)it helps determine manager compensation and performance evaluation
C)it is a method that is independent of further processing decisions
D)it provides a common allocation basis
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 17: Process Costing
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/74286
Sample Questions
Q1) The weighted-average cost is the total of all costs entering the Work-in-Process account (whether they are from beginning work-in-process or from work started during the current period)divided by total equivalent units of work done to date.
A)True
B)False
Q2) Which of the following companies is most likely to use process costing?
A)Crimpson Color,a company selling customized garments for niche customers
B)Effel & Associates,a consulting firm providing various audit and related services
C)Dental Bright Inc. ,a company manufacturing and selling toothpaste on a large scale
D)Grimpy Corp. ,a company manufacturing furniture for customers as per their requirements
Q3) Underestimating the degree of completion of ending work in process leads to increase in operating income.
A)True
B)False
Q4) List and describe the five steps in process costing.
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 18: Spoilage, rework, and Scrap
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/74285
Sample Questions
Q1) Spoilage can be considered either normal or abnormal.
A)True
B)False
Q2) Costs in beginning inventory are pooled with costs in the current period when determining the costs of good units under the weighted-average method of process costing.
A)True
B)False
Q3) The costs of normal spoilage are allocated to the units in ending work-in-process inventory,in addition to completed units if the units ________.
A)in ending inventory have not passed the inspection point
B)in ending work-in-process inventory have passed the inspection point
C)in ending work in process inventory are more than 25% complete
D)in ending work-in-process inventory are less than 25% complete
Q4) There is a tradeoff between the speed of production and the normal spoilage rate.
A)True
B)False
Q5) How do job-costing systems account for spoilage?
Q6) What is the distinction between normal and abnormal spoilage?
Page 21
To view all questions and flashcards with answers, click on the resource link above.
Chapter 19: Balanced Scorecard: Quality and Time
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74284
Sample Questions
Q1) The last step of the five-step decision making process is implementing the decision,evaluating performance,and learning.How can a balanced scorecard play a role in helping to assure this final step will be successful?
Q2) Relevant-cost and relevant-revenue analysis uses the allocated costs as the base for calculating the costs of a quality improvement program.
A)True
B)False
Q3) Manufacturing lead time is the sum of waiting time and manufacturing time for an order.
A)True
B)False
Q4) Prevention costs include inspection and product testing.
A)True
B)False
Q5) ISO 9000 developed by the International Organization for Standardization is a set of five international standards for quality management.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 20: Inventory Management, just-In-Time, and Simplified Costing Methods
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74282
Sample Questions
Q1) Which of the following statements is true of just-in-time production systems?
A)In a just-in-time production system,a master production schedule specifies the quantity and timing of each item to be produced.
B)Sales budget triggers each step of the production process in a just in time production system.
C)Defects arising at one workstation affect other workstations in the line quickly because of the tight links between workstations.
D)Production is organized in manufacturing cells in a just in time production system,which are production centers that use a "push-through" approach whereby finished goods are manufactured on the basis of demand forecasts.
Q2) Among different types of costs associated with inventory,the costs of obtaining purchase approvals are ________.
A)purchasing costs
B)ordering costs
C)stockout costs
D)carrying costs
Q3) What are the implications of JIT and backflush costing systems for activity-based costing (ABC)systems?
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 21: Capital Budgeting and Cost Analysis
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/74281
Sample Questions
Q1) The minimum annual acceptable rate of return on an investment is the ________.
A)accrual accounting rate of return
B)hurdle rate
C)internal rate of return
D)net present value
Q2) Accrual accounting rate of return is calculated by dividing an increase in expected average annual after-tax operating income by the net initial or average investment.
A)True
B)False
Q3) While calculating terminal recovery of working capital there are no tax consequences as there is no gain or loss on working capital.
A)True
B)False
Q4) Explain why the term tax shield is used in conjunction with depreciation.
Q5) A commitment to a new capital project will always result in an increase in net working capital.
A)True
B)False
Q6) List the capital budgeting methods used to analyze financial information.
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 22: Management Control Systems, transfer Pricing, and Multinational Considerations
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74280
Sample Questions
Q1) An organization should design its management control system independently of its strategies,so that the system is not affected by change of strategies in future.
A)True
B)False
Q2) The transfer-pricing method that reduces the goal-congruence problems associated with a pure cost-plus-based transfer-pricing method is the ________.
A)dual pricing
B)market pricing
C)single pricing
D)distress pricing
Q3) What is goal congruence?
Q4) Transfer prices do not affect managers whose compensation is directly dependent on an organization's operating income because transfer prices affect only divisional profits and not the organization's profit.
A)True
B)False
Q5) What does Section 482 of the U.S.Internal Revenue Code govern?
Page 25
Q6) What are transfer prices and what are its criteria?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 23: Performance Measurement, compensation, and Multinational Considerations
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/74279
Sample Questions
Q1) Make a list of steps of designing an accounting based performance measure.Give an example of decisions taken under each step.
Q2) The return on investment is usually considered the most popular approach to measure performance because ________.
A)it blends all the ingredients of profitability into a single percentage B)once determined,there is no need to use it with other measures of performance
C)it throws light on the company's working capital
D)it measures the cash balance of the company in the most efficient manner
Q3) To convert the operating income for an overseas branch into US dollars,the historical rate of exchange is used for its conversion into US dollars.
A)True
B)False
Q4) The credit rating agencies require detailed disclosures of the compensation arrangements of top-level executives.
A)True
B)False
Q5) Briefly explain each of the four levels of control.Why does a company need to implement more than a diagnostic control system?
Page 26
To view all questions and flashcards with answers, click on the resource link above.