Accounting for Managers
Textbook Exam Questions
Course Introduction
Accounting for Managers is designed to introduce the fundamental concepts and practices of accounting relevant to managerial decision-making. The course covers the preparation and analysis of financial statements, budgeting, cost analysis, and performance evaluation techniques to equip students with the ability to interpret accounting information and apply it to planning, controlling, and strategic decision processes. Emphasis is placed on understanding how accounting data supports management functions such as resource allocation, financial planning, and organizational control, enabling future managers to make informed, data-driven business decisions.
Recommended Textbook
Horngren's Financial and Managerial Accounting The Managerial Chapters 6th Edition by Tracie
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Chapter 15: Accounting Information Systems
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Sample Questions
Q1) An accounting information system is said to have good flexibility,if it ________.
A)works smoothly with the business's employees and organizational structure
B)safeguards a business's assets and reduces the likelihood of fraud and errors
C)provides information that will improve decision making and reduce uncertainty
D)accommodates changes in the business over time
Q2) A computerized system uses software to process transactions.Thus employees are no longer required to manually journalize and post transactions to the accounts.
A)True
B)False
Q3) After posting entries in a sales journal to the general ledger,the Accounts Receivable balance in the general ledger should equal the sum of the individual customer balances in the accounts receivable subsidiary ledger.
A)True B)False
Q4) Describe the transactions recorded in the purchases journal.
Q5) The cash disbursements journal is also called the check register.
A)True B)False
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Chapter 16: Introduction to Managerial Accounting
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Sample Questions
Q1) The managerial role that involves the day-to-day running of the business is the
A)directing function
B)planning function
C)controlling function
D)strategic planning function
Q2) You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the company's bonds.Which of the IMA standards appears to have been violated?
A)integrity
B)confidentiality
C)competence
D)objectivity
Q3) Define indirect materials and give two examples of indirect materials for a manufacturing company.
Q4) If work-in-process units are incomplete,the costs remain in Work-in-Process Inventory and are reported on the balance sheet.
A)True
B)False
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Chapter 17: Job Order Costing
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Sample Questions
Q1) Which of the following describes the allocation base for allocating manufacturing overhead costs?
A)the primary cost driver of indirect manufacturing costs
B)the estimated base amount of manufacturing overhead costs in a year
C)the percentage used to allocate direct labor to Work-in-Process Inventory
D)the main element that causes direct costs
Q2) In a machine-intensive production environment,the most accurate cost driver of manufacturing overhead costs is usually ________.
A)direct labor costs
B)direct labor hours
C)direct materials used
D)machine hours
Q3) Mumbai Travel Services provided the following information:
Direct labor rate: $40 per hour
Predetermined allocation rate for indirect costs: $30 per direct labor hour
If Mumbai Travel records revenue of $600 for a job requiring 8 hours of direct labor,then Mumbai Travel will make a profit of $40.
A)True
B)False
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Chapter 18: Process Costing
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Sample Questions
Q1) Production costs are transferred from one Work-in-Process Inventory account to the next and eventually to ________.
A)Manufacturing Overhead
B)Sales Revenue
C)Finished Goods Inventory
D)Accounts Payable
Q2) The Refining Department of Crystal Cane Sugar,Inc.had 56,000 tons of sugar to account for in December.Of the 56,000 tons,40,000 tons were completed and transferred to the Boiling Department,and the remaining 16,000 tons were 60% complete.The materials required for production are added at the beginning of the process.Conversion costs are added equally throughout the refining process.The weighted-average method is used.Calculate the total equivalent units of production for conversion costs.
A)9600 units
B)40,000 units
C)49,600 units
D)56,000 units
Q3) The equivalent units of production for transferred in units are always 100%.
A)True
B)False
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Chapter 19: Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems
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Sample Questions
Q1) Tungsten,Inc.manufactures both normal and premium tube lights.The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base.Estimated overhead costs for the year are $102,000.Additional estimated information is given below. \[\begin{array} { | l | r | r | }
\hline & \text { Normal } & \text { Premium } \\
\hline \text { Machine hours } ( \mathrm { MHr } ) & 24,000 & 39,000 \\
\hline \text { Direct materials } & \$ 51,000 & \$ 480,000 \\
\hline
\end{array}\] Calculate the predetermined overhead allocation rate.(Round your answer to the nearest cent.)
A)$4.25 per direct labor hour
B)$1.62 per machine hour
C)$2.62 per machine hour
D)$0.19 per direct labor hour
Q2) Under the just-in-time costing system,underallocated and overallocated conversion costs are treated just like underallocated and overallocated manufacturing overhead.
A)True
B)False
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Chapter 20: Cost-Volume-Profit Analysis
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Sample Questions
Q1) In the graph above,the area between the lines AC and OB to the right of point E represents ________.
A)fixed costs
B)breakeven point
C)operating loss
D)operating income
Q2) Identify each cost below as variable (V),fixed (F),or mixed (M),relative to units sold.Explain the reason for your answer.
\[\begin{array} { | l | r | r | r | }
\hline \text { Units Produced } & 100 & 500 & 1,000 \\
\hline \text { Total electric cost } & \$ 1,500 & \$ 1,650 & \$ 1,700 \\
\hline \text { Supervisor's monthly salary } & \$ 4,500 & \$ 4,500 & \$ 4,500 \\
\hline \text { Assembly line workers' per hour wage rate } & \$ 30 & \$ 30 & \$ 30 \\
\hline \text { Total materials cost } & \$ 800 & \$ 4,000 & \$ 8,000 \\
\hline \text { Depreciation on factory equipment } & \$ 5,000 & \$ 5,000 & \$ 5,000 \\
\hline \text { Total delivery costs } & \$ 1,400 & \$ 1,800 & \$ 2,250 \\
\hline \end{array}\]
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Chapter 21: Variable Costing
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Sample Questions
Q1) Orderly Headquarters,Inc.has two business segments: Commercial and Residential.The following data have been provided for the year ending December 31,20XX.
\(\begin{array}{lll} & \text { Commercial } & \text { Residential } \\
\text { Service Revenue } & \$ 5,900 & \$ 8,500 \\
\text { Variable costs } & 3,500 & 5,400
\end{array}\) The company incurred $1,500 as fixed costs.
Requirements:
a)Prepare the income statement of Orderly Headquarters showing the contribution margin of each segment.
b)Calculate the contribution margin ratio of each segment.Which segment is more profitable and why?
Q2) Which of the following costing methods charges all the manufacturing costs to the products?
A)variable costing
B)direct costing
C)absorption costing
D)contribution costing
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Chapter 22: Master Budgets
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Sample Questions
Q1) Which of the following is useful to combine the data of different segments using different software for the purpose of creating companywide budgets?
A)accounting development manual
B)budget management software
C)financial analysis software
D)budget creation manual
Q2) Budgetary slack occurs when managers intentionally overstate expected revenues or understate expected expenses.
A)True
B)False
Q3) The cost accountant works directly with the corporate president to develop the selling and administrative expense budget.
A)True
B)False
Q4) A static budget is a financial plan for only one level of sales volume.
A)True
B)False
Q5) List the three sections of the cash budget for a merchandising company.
Q6) List the three sections of the cash budget for a manufacturer.
Page 10
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Chapter 23: Flexible Budgets and Standard Cost Systems
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Sample Questions
Q1) A favorable sales volume variance in sales revenue suggests a(n)________.
A)increase in actual sales price per unit as compared to budgeted sales price
B)increase in number of actual units sold when compared to the expected number of units sold
C)increase in actual variable cost per unit as compared to expected variable cost per unit
D)decrease in actual fixed costs
Q2) The purchasing manager was able to bring down the cost of direct materials by purchasing direct materials of a slightly lower grade quality than the company had used previously.The lower grade of direct materials,however,meant a higher defect rate on the assembly line and a higher waste of direct materials during production,which in turn lowered operating income.This situation would lead to a(n)________.
A)favorable direct materials cost variance
B)unfavorable direct labor cost variance
C)favorable direct labor efficiency variance
D)favorable direct materials efficiency variance
Q3) Fixed overhead volume variance is a flexible budget variance.
A)True
B)False
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Chapter 24: Responsibility Accounting and Performance Evaluation
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Sample Questions
Q1) Which of the following is a key performance indicator of the internal business perspective in a balanced scorecard?
A)hours of employee training
B)number of warranty claims received
C)percentage of market share
D)return on investment
Q2) In addition to considering both the division's operating income and its average total assets,residual income incorporates top management's target rate of return.
A)True
B)False
Q3) Goal congruence can be achieved when ________.
A)segment managers' goals align with top management's goals
B)each segment manager makes decisions which best benefits their own division
C)managers don't fully understand the "big picture"
D)top management institutes strategic plans which segment managers have difficulty implementing
Q4) A lag indicator is a performance measure that forecasts future performance.
A)True
B)False
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Chapter 25: Short-Term Business Decisions
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Sample Questions
Q1) Pinewood Furniture manufactures a small table and a large table.The small table sells for $800,has variable costs of $780 per table,and takes 7.50 labor hours to manufacture.The large table sells for $1,600,has variable costs of $900,and takes 10 direct labor hours to manufacture.If the company has no sales limitations on either product,it should make and sell as many of the large tables as possible to maximize operating income.
A)True
B)False
Q2) Celaneo Avionics makes aircraft instrumentation.Its basic navigation radio requires $60 in variable costs and $4000 per month in fixed costs.Celaneo sells 20 radios per month.If the company further processes the radio,to enhance its functionality,it will require an additional $40 per unit of variable costs,plus an increase in fixed costs of $500 per month.The current sales price of the radio is $280.The CEO wishes to improve operating income by $1200 per month by selling the enhanced version of the radio.In order to meet this target,the sales price to be charged for the enhanced product is
A)$320 per unit
B)$405 per unit
C)$125 per unit
D)$380 per unit
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Chapter 26: Capital Investment Decisions
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Sample Questions
Q1) Under conditions of limited resources,when a company is comparing several investments with different amounts of initial cost,the decision should be made on the basis of the ________.
A)highest total cash inflows
B)shortest payback period
C)highest profitability index
D)highest NPV
Q2) The payback method considers cash flows that occur both during and after the payback period.
A)True
B)False
Q3) Capital budgeting methods which incorporate the time value of money include the ________.
A)net present value method
B)accounting rate of return
C)average rate of return
D)payback method
Q4) All else being equal,investments with longer payback periods are preferable. A)True
B)False
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