Accounting Information for Decision Making
Final Exam Questions
Course Introduction
Accounting Information for Decision Making provides students with an understanding of how accounting data are used in the decision-making process within organizations. The course explores the principles and methods of financial and management accounting, emphasizing how managers use accounting information to plan operations, control activities, and make informed strategic and operational decisions. Key topics include financial statement analysis, budgeting, cost-volume-profit analysis, performance measurement, and ethical considerations in accounting. By the end of the course, students will be equipped with analytical tools to interpret accounting information and apply it effectively to solve real-world business problems.
Recommended Textbook
Managerial Accounting 3rd Edition by
Karen W. Braun Wendy M Tietz
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15 Chapters
3368 Verified Questions
3368 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Oral and written communications skills are considered among the most valuable skills a management accountant can possess.
A)True
B)False
Answer: True
Q2) Which of the following positions report to the audit committee of the Board of Directors?
A)The CFO and internal audit department
B)The internal audit department and the independent CPA firm
C)The CFO and the independent CPA firm
D)The treasurer and controller
Answer: B
Q3) Managerial accountants no longer perform routine mechanical accounting tasks in most companies.
A)True
B)False
Answer: True
Q4) Discuss at least four differences between financial accounting and managerial accounting.
Answer: 11ea68e5_ab25_ebe6_935e_d57067bb0ed9_TB2868_00
Page 3
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Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) North Pacific Company used $65,000 of direct materials and incurred $43,000 of direct labor costs during 2011. Indirect labor amounted to $1,700 while indirect materials used totaled $1,800. Other operating costs pertaining to the factory included utilities of $4,300; maintenance of $6,800; supplies of $1,500; depreciation expense of $8,900; and property taxes of $2,400. There was no beginning or ending finished goods inventory, but work in process inventory began the year with a $6,400 balance and ended the year with a $7800 balance.
Required: Prepare a schedule of cost of goods manufactured for South State Company for the year ended December 31.
Answer: 11ea68e5_ab32_e492_935e_f921ccee3774_TB2868_00
Q2) What is the promotion of products and services known as?
A)Customer service
B)Marketing
C)Distribution
D)Design
Answer: B
Q3) How are average cost and marginal cost computed?
Answer: The average cost is the total cost divided by the number of units produced. Marginal cost is the cost of making one more unit.
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Page 4
Chapter 3: Job Costing
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Sample Questions
Q1) The total cost of a job shown on the job cost record is the sum of the direct labor traced to the job and the manufacturing overhead allocated to the job.
A)True
B)False
Answer: False
Q2) Sales revenue is $725,000; allocated manufacturing overhead is $95,000; actual manufacturing overhead is $120,000; and cost of goods sold before adjustment is $380,000. What is the actual gross profit?
A)$320,000
B)$370,000
C)$345,000
D)$225,000
Answer: A
Q3) How is the cost-plus price determined?
A)Cost - markup on cost
B)Cost + markup on cost
C)Cost × markup on cost
D)Cost ÷ markup on cost
Answer: B
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Page 5
Chapter 4: Activity-Based Costing, Lean Operations, and the Costs of Quality
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Sample Questions
Q1) The cost of maintaining quality control testing equipment would be classified as a(n)________ cost.
A)appraisal
B)prevention
C)internal failure
D)external failure
Q2) Which of the following items is not a characteristic of a lean company?
A)Machines are arranged by function.
B)Machine setup times are reduced.
C)Production is in small batches.
D)Employees are trained to operate more than one machine.
Q3) A plantwide overhead rate is calculated by dividing the estimated total manufacturing overhead costs for the year by estimated total amount of the allocation base for the year.
A)True
B)False
Q4) Lean companies typically arrange production activities into self-contained cells.
A)True
B)False
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Chapter 5: Process Costing
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Sample Questions
Q1) Equivalent units express the amount of work done during a period of time in terms of fully completed units of output.
A)True
B)False
Q2) If all direct materials are added at the beginning of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is 100%.
A)True
B)False
Q3) If all direct materials are added at the beginning of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is
A)100%.
B)0%.
C)50%.
D)none of the above.
Q4) Conversion costs are usually incurred evenly throughout productions.
A)True
B)False
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Chapter 6: Cost Behavior
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Sample Questions
Q1) Manufacturing overhead (consisting of costs like factory rent, factory utilities, factory maintenance, and other similar costs)is usually what type of cost?
A)Variable
B)Fixed
C)Step
D)Mixed
Q2) Variable costs are described by which of the following statements?
A)They vary per unit of output.
B)They are fixed in total.
C)They are fixed per unit and vary in total.
D)They decrease per unit as production volume increases.
Q3) Total fixed costs for Purple Figs Company are $52,000. Total costs, both fixed and variable are $160,000 if 80,000 units are produced. The fixed cost per unit at 80,000 units would be
A)$1.35/unit.
B)$0.65/unit.
C)$2.00/unit.
D)$2.65/unit.
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8
Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Contribution margin less fixed costs yields A)sales.
B)operating income.
C)variable costs.
D)none of the above.
Q2) CVP analysis assumes that the only factor that affects costs is a change in sale price.
A)True
B)False
Q3) All else being equal, a company with a low operating leverage will have
A)relatively high fixed costs.
B)relatively high contribution margin ratio.
C)relatively high risk.
D)relatively high variable costs.
Q4) On a CVP graph, total fixed costs are shown as a horizontal line. A)True
B)False
Q5) A hotel would be an example of a company with high operating leverage. A)True
B)False
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Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) The format of the income statement most useful in decision-making is which of the following?
A)Absorption costing format
B)Traditional format
C)Contribution margin format
D)Single-step format
Q2) In making the decision whether to sell a product as is or process the product further, the expected income from selling the product as is may be defined as which of the following?
A)The opportunity cost of processing the product further
B)A sunk cost of processing the product further
C)The opportunity cost of selling the product as is
D)A limiting factor in processing the product further
Q3) All other things being equal, if the incremental costs of outsourcing a product exceed the incremental costs of making a product, it should be outsourced.
A)True
B)False
Q4) Define the term constraints and give an example. What product should be made first when resource constraints exist?
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Chapter 9: The Master Budget
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Sample Questions
Q1) The financial budgets prepared for manufacturers are different than those for merchandising and service companies.
A)True
B)False
Q2) The sales budget must be prepared after every other component of the operating budget.
A)True
B)False
Q3) The sales budget is the cornerstone of the master budget.
A)True
B)False
Q4) Desired ending inventory is 20% of next month's sales. If cost of goods sold is $300,000 and next month's sales is $900,000, which of the following statements is true regarding purchases?
A)Purchases will be more than cost of goods sold.
B)Purchases cannot be predicted from the information given.
C)Purchases will be less than cost of goods sold.
D)Purchases will equal cost of goods sold.
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Chapter 10: Performance Evaluation
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Sample Questions
Q1) Favorable sales volume variance for revenues is caused by which of the following?
A)Actual net income for the subunit is greater than budgeted net income.
B)Actual sales in dollars are greater than the master budget sales in dollars.
C)The flexible budget sales in dollars are greater than the static budget sales in dollars.
D)Actual sales in dollars are less than the static budget sales in dollars.
Q2) The performance report for a ________ would typically include revenues and costs.
A)cost center
B)sales center
C)profit center
D)revenue center
Q3) The production line at Morningstar Farms is most likely treated as a(n)
A)investment center.
B)cost center.
C)profit center.
D)revenue center.
Q4) List and describe reasons why a company might choose to decentralize.
Q5) Discuss potential problems associated with decentralization.
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Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) Ideal standards allow for a normal amount of waste and inefficiency.
A)True
B)False
Q2) On the line in front of each variance, enter the letters of the items needed to compute that variance. You will enter more than one item on each line.
A. Actual labor rate
B. Actual labor hours
C. Standard labor rate
D. Standard labor hours
______ Direct labor rate variance
______ Direct labor efficiency variance
Q3) The actual cost of direct materials is $50.25 per pound. The standard cost per pound is $56.00. During the current period, 6,800 pounds were used in production. The standard quantity for actual units produced is 6.500 pounds. How much is the direct materials price variance?
A)$37,375 favorable
B)$37,375 unfavorable
C)$39,100 favorable
D)$39,100 unfavorable
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Page 13
Chapter 12: Capital Investment Decisions and the Time
Value of Money
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Sample Questions
Q1) Your hard work in college paid off, quite literally, and you received a graduate assistantship for your MBA program. The assistantship pays a stipend of $10,000 at the end of each of the next 2 years. Using an average discount rate of 3%, the future value of your assistantship can be calculated by
A)PV = $10,000 × 3% × 2.
B)PV = $10,000 (PV factor, i = 3%, n = 2).
C)PV = $10,000 (Annuity PV factor, i = 3%, n = 2).
D)PV = $10,000 (Annuity FV factor, i = 3%, n = 2).
Q2) Assuming an interest rate of 6%, the present value of $22,000 to be received 9 years from now would be closest to
A)$16,434.
B)$13,024.
C)$37,162.
D)$35,068.
Q3) The payback method primarily focuses on profitability and not time.
A)True
B)False
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Page 14
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) On the statement of cash flows, which of the following sections would include the purchase of a building paid for with cash?
A)Investing section
B)Operating section
C)Financing section
D)None of the above
Q2) When a company uses the direct method to present the statement of cash flows, depreciation expense must be added to net income to reconcile to net cash provided by operating activities.
A)True
B)False
Q3) List three ways that owners and investors use the statement of cash flows.
Q4) When a company uses the direct method to present the statement of cash flows, cash received from the sale of treasury stock increases the amount of net cash provided by investing activities.
A)True
B)False
Q5) Identify and describe the three sections of the statement of cash flows.
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Horizontal analysis and vertical analysis are used to analyze the performance of a single company.
A)True
B)False
Q2) The common size statement percentages are different from those that appear in horizontal analysis.
A)True
B)False
Q3) In comparing companies of different sizes, which of the following is most helpful?
A)Ratio analysis
B)Using common-sized statements
C)Neither ratio analysis or common-sized statements
D)Both ratio analysis and using common-sized statements
Q4) A common size statement reports only percentages.
A)True
B)False
Q5) The times-interest-earned ratio is a measure of ability to cover debt.
A)True
B)False
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Chapter 15: Sustainability
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Sample Questions
Q1) Sustainability is an expense item only. An organization choosing sustainability will see reduced profits.
A)True
B)False
Q2) For maximum effectiveness sustainable strategies are often implemented at which stage of an organization's value chain?
A)Design
B)Production
C)Distribution
D)Research
Q3) When Doubletree Hotel in Oregon created a "green" floor, it saw decreased housekeeping costs, laundry costs, and personal consumables costs. This situation is an example of which type of reason to implement sustainable initiatives?
A)Stakeholder influence
B)Competitive strategy
C)Cost reduction
D)None of the above
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