Accounting Information for Decision Making Practice Questions

Course Introduction

This course provides an in-depth examination of how accounting information is used by managers to support decision making within organizations. Students will learn key concepts of financial and managerial accounting, focusing on the interpretation and analysis of financial statements, cost behavior, budgeting, and performance evaluation. The course emphasizes the use of relevant accounting data to make strategic business decisions, ensuring that students are equipped to analyze the financial implications of various operational choices. Through case studies and practical exercises, students will develop their ability to communicate financial insights effectively and contribute to organizational success.

Recommended Textbook Managerial Accounting 2nd Edition by

Karen W. Braun

14 Chapters 2698 Verified Questions

2698 Flashcards

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Page 2

Chapter 1: Introduction to Managerial Accounting

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Sample Questions

Q1) CPA firms cannot provide consulting services for their current audit clients.

A)True

B)False

Answer: True

Q2) Management accounting requires independent audits of the firm's books.

A)True

B)False Answer: False

Q3) The philosophy of providing superior goods and services is:

A)ERP.

B)JIT.

C)Supply-chain management.

D)TQM.

Answer: D

Q4) Which is NOT a result of Sarbanes-Oxley?

A)Audit committees must be independent.

B)The COO assumes financial statement responsibility.

C)There are new requirements for CPA firms.

D)There are stiffer consequences for white-collar crimes.

Answer: B

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Chapter 2: Building Blocks of Managerial Accounting

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Sample Questions

Q1) A company is deciding whether to purchase production equipment which can produce units more quickly than the current equipment.Which of the following costs would be relevant to its decision?

A)The cost of the new equipment

B)The salary of the factory manager

C)The cost of raw materials

D)The original purchase price of the current machinery

Answer: A

Q2) Which of the following is calculated before operating income can be determined for a manufacturer?

A)Cost of goods available for sale

B)Cost of goods manufactured

C)Cost of goods sold

D)All of the above

Answer: D

Q3) All companies have the same types of inventories.

A)True

B)False

Answer: False

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Page 4

Chapter 3: Job Costing

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Sample Questions

Q1) Computing the predetermined manufacturing overhead rate is done:

A)before the period starts.

B)during the period.

C)at the end of the period.

D)at any time.

Answer: A

Q2) What is the company's predetermined manufacturing overhead rate?

A)$13.50 per direct labor hour

B)$12.02 per direct labor hour

C)$12.79 per direct labor hour

D)$12.69 per direct labor hour

Answer: A

Q3) Management can use the job cost information to control costs on future jobs.

A)True

B)False

Answer: True

Q4) The main driver of indirect costs for service firms is usually labor hours.

A)True

B)False

Answer: True

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Chapter 4: Activity-Based Costing, lean Production, and the Costs of Quality

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Sample Questions

Q1) What was the total cost of Job 542 if Bond Industries used the departmental overhead rates to allocate manufacturing overhead?

A)$1,375

B)$1,425

C)$1,500

D)$1,600

Q2) The estimated total manufacturing overhead costs that will be incurred in each department in the coming year are often referred to as activity cost pools.

A)True

B)False

Q3) Waste activities is another name for value-added activities.

A)True

B)False

Q4) Unit-level activities and costs are incurred once for every batch.

A)True

B)False

Q5) Inspection is considered a value-added activity

A)True

B)False

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Chapter 5: Process Costing

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Sample Questions

Q1) What are the total equivalent units for conversion costs?

A)124,270

B)138,700

C)124,035

D)128,710

Q2) When units are moved from one processing department to the next,the cost associated with those units must also be moved from one WIP account to the next.These costs are called:

A)transported costs.

B)transmitted costs.

C)conveyed costs.

D)transferred costs.

Q3) On a production cost report,current costs added during the period would appear:

A)as part of unit output for the period.

B)after any beginning WIP inventory cost.

C)after any ending WIP inventory cost

D)as part of beginning WIP inventory cost.

Q4) Conversion costs are the sum of direct labor and manufacturing overhead.

A)True

B)False

Page 7

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Chapter 6: Cost Behavior

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Sample Questions

Q1) Using variable costing,what is the contribution margin for last month?

A)$ 54,000

B)$ 58,800

C)$120,000

D)$181,200

Q2) Renting a car and paying $15 per day plus $.03 per mile driven is an example of what type of cost?

A)Conversion cost

B)Fixed cost

C)Mixed cost

D)Variable cost

Q3) The contribution margin income statement presents _________ above the contribution margin line.

A)only variable expenses relating to selling and administrative activities

B)only fixed expenses relating to selling and administrative activities

C)all variable expenses

D)all fixed expenses

Q4) A scatter plot will not help managers identify potential outliers.

A)True

B)False

Page 8

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Chapter 7: Cost-Volume-Profit Analysis

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Sample Questions

Q1) Royal Corporation management has budgeted the following amounts for its next fiscal year: \[\begin{array} { | l | r | }

\hline \text { Total fixed expenses } & \$ 580,000 \\

\hline \text { Sale price per unit } & \$ 60 \\

\hline \text { Variable expenses per unit } & \$ 40 \\

\hline

\end{array}\] If Royal Corporation spends an additional $11,500 on advertising,sales volume should increase by 2,300 units.What effect will this have on operating income?

A)Increase of $46,000

B)Increase of $34,500

C)Decrease of $46,000

D)Decrease of $34,500

Q2) Given breakeven sales in units of 28,000 and a unit contribution margin of $4,how many units must be sold to reach a target operating income of $4,000?

A)29,000

B)1,000

C)16,000

D)27,000

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Chapter 8: Short Term Business Decisions

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Sample Questions

Q1) Which of the following is the factor that restricts production or sale of a product?

A)Constraint

B)Demanding factor

C)Sunk factor

D)Relevant factor

Q2) To maximize profits,what product and how many units should the company produce in a month?

A)152 cat trees and 30 cat condos

B)1,800 cat trees

C)1,800 cat trees and 900 cat condos

D)900 cat condos

Q3) Companies often try to gain more control over pricing by attempting to differentiate their products.

A)True

B)False

Q4) When making a pricing decision,it is necessary to separate costs into fixed and variable.

A)True

B)False

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Chapter 9: The Master Budget and Responsibility Accounting

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Sample Questions

Q1) Timothy Company manufactures blenders.The following selected data relates to Timothy Company's budgeted sales and inventory levels of the blenders for the upcoming quarter.How many blenders should Timothy Company produce in November? Show your calculations.

Q2) Stiller Company expects cash sales for July of $15,000,and a 20% monthly increase during August and September.Credit sales of $10,000 in July should be followed by 25% increases during August and September.What are budgeted cash sales and budgeted credit sales for September respectively?

A)$18,000 and $12,500

B)$21,600 and $15,625

C)$23,438 and $14,400

D)$18,750 and $12,000

Q3) Strategic planning involves setting short-term goals that extend a year into the future.

A)True

B)False

Q4) The sales budget must be prepared before any other component of the operating budget.

A)True B)False

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Chapter 10: Flexible Budgets and Standard Costs

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Sample Questions

Q1) If the employees who build the product go on strike and temporary workers who are slower and not as skilled are hired,which variance is directly impacted?

A)Materials price variance

B)Materials efficiency variance

C)Labor price variance

D)Labor efficiency variance

Q2) A flexible budget variance is the difference between:

A)actual results and amounts in the static budget.

B)amounts in the flexible budget and the actual results.

C)amounts in the flexible budget and the static budget.

D)the budgeted amounts for each level of sales in the flexible budget.

Q3) What is the flexible budget variance for operating income?

A)$58,700 favorable

B)$76,400 unfavorable

C)$76,400 favorable

D)$58,700 unfavorable

Q4) In a flexible budget,total fixed costs change as production volume changes.

A)True

B)False

Q5) Identify five benefits of standard costs.

Page 12

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Chapter 11: Performance Evaluation and the Balanced Scorecard

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Sample Questions

Q1) Which of the following goals of a performance evaluation system is accomplished when subunit performance targets are aligned with company strategy?

A)Benchmarking

B)Communicating expectations

C)Promoting goal congruence

D)Providing feedback

Q2) What is The Plastic Lumber Company's Outdoor Furniture Division return on investment?

A)9.52%

B)20.00%

C)40.00%

D)2000.00%

Q3) What is the Beverage Division's Economic Value Added (EVA)?

A)$688,800

B)$504,000

C)$411,600

D)$92,400

Q4) Financial performance measures are lead indicators.

A)True

B)False

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Chapter 12: Capital Investment Decisions and the Time

Value of Money

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Sample Questions

Q1) What is the name given to choosing among different alternative investments due to limited resources?

A)Capital rationing

B)Capital investing

C)Resource rationing

D)Resource allocation

Q2) The cost associated with renovating a warehouse to be used as a restaurant would be considered to be a capital asset.

A)True

B)False

Q3) All of the following are advantages of post-audits of capital investments EXCEPT that they:

A)indicate whether project should continue or should be abandoned.

B)help managers better make better estimates for future projects.

C)help managers to decide which project should be selected.

D)encourage managers to submit realistic net cash inflows with their project proposals.

Q4) Self-scan check-out machines are an example of capital assets.

A)True

B)False

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Chapter 13: Statement of Cash Flows

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Sample Questions

Q1) Which of the following sections from the statement of cash flows includes activities that affect net income on the income statement?

A)Financing section

B)Operating section

C)Investing section

D)None of the above

Q2) What will appear in the operating activities section related to inventory?

A)The decrease of $19,000 will be subtracted from net income.

B)The decrease of $19,000 will be subtracted from cost of goods sold.

C)The decrease of $19,000 will be added to cost of goods sold.

D)The decrease of $19,000 will be added to net income.

Q3) A company's income statement reports depreciation expenses of $25,000.How will the depreciation expense be reported on the statement of cash flows if the company uses the direct method to prepare the statement?

A)Depreciation would not be reported on the statement of cash flows.

B)Depreciation expense would be an addition under financing activities.

C)Depreciation expense would be a deduction under operating activities.

D)Depreciation expense would be an addition under investing activities.

Q4) Calculate the cash paid for merchandise for the year.

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Chapter 14: Financial Statement Analysis

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Sample Questions

Q1) What is the percentage change in cost of goods sold?

A)25.00%

B)35.00%

C)-20.00%

D)125.00%

Q2) What is the company's current ratio for the current year?

A)0.30

B)0.50

C)0.76

D)1.32

Q3) The formula used in vertical analysis of the balance sheet is: (each income statement item/net sales)= vertical %.

A)True

B)False

Q4) What is the times-interest-earned ratio for the current year?

A)4.64 times

B)1.44 times

C)3.64 times

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