Accounting Information Systems
Exam Solutions
Course Introduction
Accounting Information Systems explores the integration of accounting methodologies and information technology within organizations. This course covers the design, implementation, and management of systems that collect, process, and report accounting data. Students learn about system controls, security measures, and the regulatory environment affecting financial information. Through the study of real-world examples, software applications, and theoretical frameworks, the course emphasizes the importance of accurate, timely, and relevant data in supporting decision-making processes, internal controls, and compliance. The role of emerging technologies, such as cloud computing and data analytics, in advancing accounting systems is also examined.
Recommended Textbook
Managerial accounting 10th Canadian Edition by Ray Garrison
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Page 2
Chapter 1: Managerial Accounting and the Business Environment
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Q1) Which one of the following is NOT an activity in the planning and control cycle?
A) Comparing actual to planned performance.
B) Raw materials are released to production far in advance of being needed to ensure no interruptions in work flows due to shortages of raw materials.
C) Formulating long and short-term plans.
D) Measuring performance.
Answer: B
Q2) Managerial accounting places less emphasis on precision and more emphasis on timeliness of data than financial accounting does.
A)True
B)False
Answer: True
Q3) A customer value proposition is essentially a reason for customers to choose a company's products over its competitors' products.
A)True
B)False
Answer: True
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Chapter 2: Cost Terms, Concepts, and Classifications
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Q1) Which of the following would NOT be treated as a product cost for external financial reporting purposes?
A) Depreciation on a factory building.
B) Salaries of factory workers.
C) Indirect labour in the factory.
D) Advertising expenses.
Answer: D
Q2) Variable costs are costs whose per unit costs vary as the activity level rises and falls.
A)True
B)False
Answer: False
Q3) Manufacturing overhead combined with direct materials is known as conversion cost.
A)True
B)False
Answer: False
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Chapter 3: Cost Behaviour: Analysis and Use
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Q1) If 110,000 machine hours of activity are projected for next period,what would be total expected overhead cost?
A) $242,500.
B) $256,000.
C) $263,500.
D) $306,625.
Answer: C
Q2) A cost formula may not be valid outside the relevant range of activity.
A)True
B)False
Answer: True
Q3) Which costs will change with a decrease in activity within the relevant range?
A) Total fixed costs and total variable costs.
B) Unit fixed cost and total variable costs.
C) Unit variable cost and unit fixed cost.
D) Unit fixed cost and total fixed costs.
Answer: B
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Chapter 4: Cost-Volume-Profit Relationships
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Q1) Carver Company produces a product that sells for $30.Variable manufacturing costs are $15 per unit.Fixed manufacturing costs are $5 per unit based on the current level of activity,and fixed selling and administrative costs are $4 per unit.A selling commission of 10% of the selling price is paid on each unit sold.What is the contribution margin per unit?
A) $3.
B) $15.
C) $8.
D) $12.
Q2) The break-even point in sales for Rice Company is $360,000,and the company's contribution margin ratio is 20%.Its income tax rate is 40%.If Rice Company desires an after-tax operating profit of $84,000,what would total sales have to be?
A) $1,050,360.
B) $1,060,000.
C) $780,000.
D) Cannot be determined without additional information.Sales = (360,000 * .20 + 140,000)/.20 = $1,060,000
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Chapter 5: Systems Design: Job-Order Costing
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Q1) (Appendix 5A)Basing predetermined overhead rate on capacity will almost certainly result in overapplied overhead.
A)True
B)False
Q2) What is the cost of goods manufactured?
A) $50,000.
B) $55,000.
C) $56,000.
D) $61,000.
Q3) Which entry records the purchase of raw materials?
A) 8.
B) 4.
C) 6.
D) 1.
Q4) The most common accounting treatment of underapplied manufacturing overhead is to transfer it to the Manufacturing Overhead control account.
A)True
B)False
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Chapter 6: Systems Design: Process Costing
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Q1) The Richmond Company uses the weighted-average method in its process costing system.The company has only a single processing department.The company's ending work-in-process inventory on August 31 consisted of 18,000 units.The units in the ending work-in-process inventory were 100% complete with respect to materials and 60% complete with respect to labour and overhead.If the cost per equivalent unit for August was $2.75 for materials and $4.25 for labour and overhead,what was the total cost assigned to the ending work-in-process inventory?
A) $126,000.
B) $75,600.
C) $80,100.
D) $95,400.
Q2) (Appendix 6A)Using the FIFO method,what are the equivalent units of production for material for the month?
A) 50,000 units.
B) 58,000 units.
C) 54,000 units.
D) 60,000 units.
Q3) $4 per EU x 5,000 × 80% = $16,000
b)
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Chapter 7: Activity-Based Costing: a Tool to Aid Decision Making
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Q1) What is a transaction driver?
A) An event that causes a transaction to begin.
B) A measure of the amount of time required to perform an activity.
C) An event that causes a transaction to end.
D) A simple count of the number of times an activity occurs.
Q2) What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?
A) $0.90.
B) $1.05.
C) $1.10.
D) $1.20.
Q3) How much cost,in total,would be allocated in the first-stage allocation to the Order Size activity cost pool?
A) $123,000.
B) $222,000.
C) $307,500.
D) $492,000.
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Chapter 8: Variable Costing: a Tool for Management
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Q1) What was the unit product cost for the month under absorption costing?
A) $74.
B) $81.
C) $83.
D) $90.
Q2) What is the unit product cost for the month under absorption costing?
A) $60.
B) $66.
C) $87.
D) $93.
Q3) Under variable costing,which of the following costs are treated as period costs?
A) Only fixed manufacturing costs.
B) Both variable and fixed manufacturing costs.
C) All fixed costs.
D) Only fixed selling and administrative costs.
Q4) What was the operating income (loss)for the month under absorption costing?
A) ($17,000).
B) $6,000.
C) $10,600.
D) $16,600.
Page 10
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Chapter 9: Budgeting
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Q1) At an activity level of 180,000 direct labour hours,what amount would the flexible budget estimate for indirect labour cost?
A) $108,000.
B) $144,000.
C) $162,000.
D) $180,000.
Q2) In a budgeted income statement for the month of February,what would be the net income?
A) $0.
B) $1,800.
C) $4,200.
D) $9,000.
Q3) Which of the following best describes the direct materials purchase budget?
A) It is the beginning point in the budget process.
B) It must provide for the desired ending inventory as well as for production.
C) It is accompanied by a schedule of cash collections.
D) It is completed after the cash budget.
Q4) Budgets are used for planning rather than for control of operations.
A)True
B)False
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Chapter 10: Standard Costs and Overhead Analysis
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Q1) Which department is usually held responsible for an unfavourable materials quantity variance?
A) Marketing.
B) Purchasing.
C) Engineering.
D) Production.
Q2) Which of the following is the most probable reason a company would experience an unfavourable labour rate variance and a favourable labour efficiency variance?
A) The mix of workers assigned to the particular job was heavily weighted towards the use of higher paid,experienced individuals.
B) The mix of workers assigned to the particular job was heavily weighted towards the use of new,relatively low-paid,unskilled workers.
C) Because of the production schedule,workers from other production areas were assigned to assist this particular process.
D) Defective materials caused more labour to be used in order to produce a standard unit.
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Chapter 11: Reporting for Control
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Q1) (Appendix 11A)Which of the following would be classified as a prevention cost on a quality cost report?
A) Cost of field servicing and handling complaints.
B) Warranty repairs and replacements.
C) Systems development.
D) Rework labour and overheaD.
Q2) (Appendix 11A)Suppose there is ample capacity so that transfers of the posts to the Lamp Division do not cut into sales to outside customers.What is the lowest transfer price that would not reduce the operating income of the Post Division?
A) $0.90.
B) $1.35.
C) $1.41.
D) $1.75.
Q3) What was Division A's residual income?
A) $20,000.
B) $30,000.
C) $35,000.
D) $45,000.
Q4) Describe the balanced scorecard concept and explain the reasoning behind it.
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Chapter 12: Relevant Costs for Decision Making
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Q1) Assume that Tolar decides to upgrade the calculators.At what selling price per unit would the company be as well off as if it just sold the calculators in their present condition?
A) $8.
B) $30.
C) $53.
D) $67.
Q2) What is the net monetary advantage of processing Product Y beyond the split-off point?
A) $3,500.
B) $7,900.
C) $25,500.
D) $29,900.
Q3) Joint production costs are relevant costs in decisions about what to do with a product from the split-off point onward in the production process.
A)True
B)False
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Chapter 13: Capital Budgeting Decisions
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Q1) (Appendix 13B)Kane Company is in the process of purchasing a new machine for its production line.It is near the end of the year,and the machine is being offered at a special discount if purchased before the end of the year.Kane has determined that the capital cost allowance (CCA)deduction on the new machine for the year of purchase would be $13,000.The tax rate is 30%.If Kane purchases the machine and reports a positive net income for the year,what would be the tax savings from the CCA tax shield related to this machine for the year of purchase?
A) $0.
B) $3,900.
C) $9,100.
D) $13,000.
Q2) (Appendix 13A)The net present value on this investment is closest to which of the following? (Do not round your intermediate calculations. )
A) $76,750.
B) $80,000.
C) $91,565.
D) $400,000.
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Chapter 14: Financial Statement Analysis Online
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Q1) Oratz Company's earnings per common share for Year 2 was closest to which of the following? Do not round intermediate calculations.
A) $1.74.
B) $19.61.
C) $20.25.
D) $28.93.
Q2) If the assets in which funds are invested have a rate of return lower than the fixed rate of return paid to the supplier of the funds,then financial leverage is positive.
A)True
B)False
Q3) March Company's average sale period (turnover in days)for Year 2 was closest to which of the following? Round your intermediate calculations to 2 decimal places.
A) 34.0 days.
B) 35.1 days.
C) 48.9 days.
D) 50.5 days.
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