Advanced Management Accounting Exam
Questions
Course Introduction
Advanced Management Accounting delves into sophisticated techniques and concepts used to inform strategic decision-making in complex organizational environments. The course covers topics such as activity-based costing, balanced scorecard approaches, strategic cost management, variance analysis, and performance measurement systems. Emphasizing the integration of financial data with operational strategies, students learn to analyze costs, manage resources effectively, and support long-term planning. Real-world case studies and contemporary issues are explored to develop advanced analytical skills, critical thinking, and the ability to provide actionable insights to managers in dynamic business contexts.
Recommended Textbook
Horngrens Cost Accounting A Managerial Emphasis 3rd Australian Edition by Charles Horngren
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Chapter 1: Management Accounting in Context
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Sample Questions
Q1) Responsibilities of a Chief Financial Officer (CFO )include all of the following EXCEPT:
A)chairing the board of directors.
B)supervising the preparation of tax returns.
C)managing short-term and long-term financing.
D)providing financial reports to shareholders.
Answer: A
Q2) The first step in the five-step decision-making process is 'gather relevant information'.
A)True
B)False
Answer: False
Q3) Most professional accounting organisations around the world do NOT issue statements about professional ethics.
A)True
B)False
Answer: False
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Chapter 2: Different Costs for Different Purposes
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Sample Questions
Q1) By summing unit costs throughout the ________,managers calculate the unit cost of the different products or services they deliver and determine the profitability of each product or service.
A)organisation
B)business environment
C)value chain
D)organisation structure
Answer: C
Q2) Under both variable costing and absorption costing,all variable manufacturing costs are inventoriable costs and all non-manufacturing costs in the value chain (e.g.R&D,marketing),whether variable or fixed,are period costs and are recorded as expenses when incurred.
A)True
B)False
Answer: True
Q3) Period costs are all costs in the income statement other than cost of goods sold. A)True
B)False
Answer: True
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Chapter 3: Determining How Costs Behave
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Sample Questions
Q1) The longer the time horizon,the more likely that a cost will have a fixed cost behaviour.
A)True
B)False
Answer: False
Q2) A linear cost function can only represent fixed cost behaviour.
A)True
B)False
Answer: False
Q3) A cost function with a lower constant than a year ago could indicate all of the following EXCEPT:
A)a new operations manager is being effective.
B)the sales commission percentage has decreased.
C)insurance premiums have decreased.
D)last year's cost function was inaccurate.
Answer: B
Q4) Economic plausibility is an important criterion for choosing a cost driver.
A)True
B)False
Answer: True
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Chapter 4: Costvolumeprofit Analysis
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Sample Questions
Q1) If the sales mix shifts to one unit of Product Q and two units of Product P,then the break-even point will:
A)stay the same.
B)decrease.
C)increase.
D)be indeterminable.
Q2) If sales increase by $40 000,operating profit will increase by:
A)$10 000.
B)$20 000.
C)$30 000.
D)None of these answers are correct.
Q3) Cost-volume-profit analysis assumes all of the following EXCEPT:
A)total fixed costs remain the same over the relevant range.
B)total variable costs remain the same over the relevant range.
C)units manufactured equal units sold.
D)all costs are variable or fixed.
Q4) There is no unique break-even point when there are multiple cost drivers.
A)True
B)False
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Chapter 5: Estimating the Cost of Producing Services
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Sample Questions
Q1) An operation-costing system is a hybrid costing system applied to batches of similar,but not identical,products.
A)True
B)False
Q2) When management accountants use ______________ systems,they separate costs into cost categories according to when they are introduced into the process.
A)job-costing
B)process-costing
C)hybrid
D)accounting
Q3) When a job continues across accounting periods,where do costs remain until the job has been completed?
A)Finished goods
B)Raw materials
C)Work in process
D)Overhead
Q4) The actual cost-driver rate measures the budgeted capacity utilisation.
A)True
B)False
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Chapter 7: Target Costing, Managing Activities and Managing Capacity
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Sample Questions
Q1) When managers measure capacity on the assumption that the entity is capable of producing at 100% efficiency all the time,that is,24 hours a day,seven days a week,this represents theoretical capacity.
A)True
B)False
Q2) It is most difficult to estimate ________ because of the need to predict demand for the next few years.
A)normal capacity utilisation
B)practical capacity
C)budgeted capacity utilisation
D)theoretical capacity
Q3) When calculating activity cost rates,management should use:
A)normal capacity utilisation.
B)budgeted capacity utilisation.
C)practical capacity.
D)None of the above.
Q4) Capacity costs arise in non-production parts of the value chain.
A)True
B)False
9
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Chapter 8:
Activity-Based Management and Activity-Based Costing
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Sample Questions
Q1) What are the four parts of the cost hierarchy? Briefly explain each part and contrast this cost hierarchy to the fixed-variable dichotomy.
Q2) A PRIMARY reason for assigning selling and distribution costs to products for analytical purposes is:
A)that all indirect costs must be assigned.
B)that different processes,products and customers require different quantities of selling and distribution activities.
C)that controllers are required to assign all costs when valuing inventories.
D)to justify a varied product mix.
Q3) Although managers are able to achieve a great deal through ABM without resorting to sophisticated costing systems,there is a point at which they might need more fine-grained information to progress further,information that ABC is capable of providing.
A)True
B)False
Page 10
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Chapter 9: Pricing and Customer Profitability
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Sample Questions
Q1) Determining a target price can be difficult in markets where products are differentiated from one another.
A)True
B)False
Q2) What advice would you give a company to avoid the appearance of predatory pricing?
Q3) Which of the following factors should NOT be considered when pricing a special order?
A)The incremental cost of one unit of product
B)Revenues that will be lost on existing sales if prices are lowered
C)Stable pricing to earn the desired long-run return
D)The likely bids of competitors
Q4) Companies that only record the invoice price can usually track the magnitude of price discounting.
A)True
B)False
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Chapter 10: Decision Making and Relevant Information
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Sample Questions
Q1) Would you recommend the 50-cent price increase?
A)Yes,because contribution margin per unit increases.
B)No,because the selling price increases.
C)No,because demand decreased.
D)Yes,because operating profits increase.
Q2) What is the full cost of the product per unit?
A)$255
B)$170
C)$110
D)$85
Q3) TOC considers a short-run time period and assumes that operating costs are fixed costs.
A)True
B)False
Q4) If there are 600 machine-hours available per week,how many rockers of each model should Jim Darwin produce to maximise profits?
A)100 units of Deluxe and 49 units of Super Deluxe
B)85 units of Deluxe and 60 units of Super Deluxe
C)100 units of Deluxe and 70 units of Super Deluxe
D)72 units of Deluxe and 70 units of Super Deluxe
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Chapter 11: Budgeting, Management Control and Responsibility Accounting
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Sample Questions
Q1) What is budgeted cost of goods sold for 2019?
A)$345 600
B)$432 000
C)$480 000
D)$311 040
Q2) At the end of January,budgeted accounts receivable is:
A)$20 000.
B)$30 000.
C)$60 000.
D)None of these answers are correct.
Q3) ________ uses a 'what-if' technique that examines how results will change if the originally predicted data changes.
A)A sales forecast
B)The cash flow statement
C)A sensitivity analysis
D)A pro forma financial statement
Q4) Even in the face of changing conditions,attaining the original budget is critical.
A)True
B)False
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Chapter 12: Flexible Budgets, Direct Cost Variances and Management Control
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Sample Questions
Q1) If actual costs are much higher than budgeted,the variances indicate that _________ action is needed.
A)immediate
B)management
C)long-term
D)corrective
Q2) For ____________ items,a favourable variance occurs when actual revenues exceed budgeted revenues.
A)cost
B)estimated
C)budgeted
D)revenue
Q3) When budgets are not achieved,the variances may signal that the company should consider a change in:
A)strategy.
B)pricing.
C)costing. D)staff.
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Chapter 13: Flexible Budgets, Overhead Cost Variances and Management Control
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Sample Questions
Q1) What is the fixed overhead production-volume variance?
A)$3000 unfavourable
B)$1000 unfavourable
C)$2000 favourable
D)$8000 favourable
Q2) Detailed 4-variance analyses are most common in large,complex businesses.
A)True
B)False
Q3) Day-to-day,ongoing operating decisions mainly determine the level of ___________________ costs incurred in that period.
A)fixed overhead
B)variable overhead
C)direct labour
D)direct materials
Q4) Managers can reduce ______________ costs by,say,selling equipment or laying off employees.
A)variable overhead
B)production
C)fixed overhead
D)head office
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Chapter 14: Allocation of Support-Department Costs,
Common Costs and Revenues
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Sample Questions
Q1) Using the stand-alone method with selling price as the weight for revenue allocation,what amount of revenue will be allocated to Reading Fun in the first package (Reading Fun & Math Fun)?
A)$38.50
B)$44.91
C)$55
D)$40
Q2) The single-rate method makes no distinction between __________ costs.
A)past and present
B)direct and indirect
C)fixed and variable
D)labour and overhead
Q3) Companies commit to infrastructure costs (e.g.the fixed costs of a support department)on the basis of a ________ planning period.
A)short-term
B)projected
C)long-term
D)situational
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Chapter 15: Strategy Formation, Strategic Control and the Balanced Scorecard
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Sample Questions
Q1) Engineered costs may be variable or fixed in the short-run.
A)True
B)False
Q2) What is the revenue effect of the growth component?
A)$220 000 F
B)$400 000 F
C)$420 000 F
D)$200 000 F
Q3) Measures of the balanced scorecard's learning-and-growth perspective include all of the following EXCEPT:
A)employee education and skill level.
B)time taken to replace defective products.
C)employee-satisfaction ratings.
D)percentage of processes with advanced controls.
Q4) Limiting the number of measures focuses managers' attention on those that most affect strategy implementation.
A)True
B)False
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Chapter 16: Quality, Time and the Balanced Scorecard
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Sample Questions
Q1) Two important drivers of time are limited capacity and bottlenecks.
A)True
B)False
Q2) A company that doesn't invest in quality improvement while competitors are doing so is likely to suffer a decline in its market share,revenues and profits,even to the extent of losses.
A)True B)False
Q3) Quality of design measures how closely the characteristics of products or services meet the needs and wants of customers.
A)True
B)False
Q4) How much do external failure costs change if all changes are as anticipated with the new prevention procedures? Assume all units produced are sold and there are no ending inventories.
A)$137 700 decrease
B)$243 000 decrease
C)$137 700 increase
D)None of these answers are correct.
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Chapter 17: Inventory Management, Just-In-Time and Simplified Costing Methods
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Sample Questions
Q1) Which type of companies would benefit from backflush costing? Companies
______:
Variant question
A)that require audit trails.
B)whose inventories vary from period to period.
C)which have fast manufacturing lead times.
D)Both A and B are correct.
Q2) The simplest version of the economic order quantity (EOQ)model incorporates only ordering costs,carrying costs and purchasing costs into the calculation.
A)True
B)False
Q3) What are the costs that result from the theft of inventory known as in the managing of inventory?
Variant question
A)Costs of quality
B)Stockout costs
C)External failure costs
D)Shrinkage costs
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Chapter 18: Capital Budgeting and Cost Analysis
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Sample Questions
Q1) A post-investment audit of capital budgeting projects provides management with feedback about the performance of a project so management can compare actual results to the costs and benefits expected at the time the project was selected.
A)True
B)False
Q2) The Alpha Beta Corporation sells a capital asset with an original cost of $85 000 and accumulated depreciation of $54 500 for $25 000.Alpha Beta's tax rate is 40%.Calculate the after-tax cash inflow from the disposal of the capital asset.
A)($2200)
B)$31 500
C)$27 200
D)$2200
Q3) Cash received from the disposal of old equipment is not relevant to a decision to buy replacement equipment.
A)True
B)False
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Chapter 19: Management Control Systems, Transfer Pricing and
Multinational Considerations
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Sample Questions
Q1) Penrith Chocolate Company makes internal transfers at 180% of full cost.The Dairy Milk Division purchases 3000 litres of milk per day,on average,from a local supplier who delivers the milk for $3 per litre via an external shipper.To reduce costs,the company located an independent supplier in Tasmania who is willing to sell 3000 litres at $2 each,delivered to Penrith Chocolate Company's Shipping Division in Penrith.The company's Shipping Division has excess capacity and can ship the 3000 litres at a variable cost of $0.25 per litre.What is the total cost to Penrith Chocolate Company if the milk is purchased from the local supplier?
A)$9000
B)$6000
C)$12 000
D)$9750
Q2) Actual costs are the only costs used in cost-based transfer prices.
A)True
B)False
Q3) The desire to attain a selected goal combined with the resulting drive or pursuit toward that goal is referred to as 'motivation'.
A)True
B)False
Page 21
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Chapter 20: Performance Measurement, Compensation
and Multinational Considerations
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Sample Questions
Q1) What is the Tiller Division's investment turnover?
A)0.50
B)0.833
C)1.5
D)1.2
Q2) During the past 12 months,the Platypus Corporation had a net profit of $50 000.What is the amount of the investment if the return on investment is 20%?
A)$100 000
B)$200 000
C)$250 000
D)$500 000
Q3) During the past 12 months,the Wombat Corporation had a net profit of $39 200.What is the return on investment if the amount of the investment is $280 000?
A)10%
B)12%
C)14%
D)16%
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Chapter 21: Measuring and Reporting Sustainability
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Sample Questions
Q1) With crisis comes opportunity.
A)True
B)False
Q2) In which sector has the Global Reporting Initiative not issued sector supplement guidelines?
A)Non-government organisations
B)Small business
C)Financial services
D)None of the above;i.e.it has issued them in all of these sectors.
Q3) The most universal reporting framework for sustainability is the International Standards for Environmental Management.
A)True
B)False
Q4) All of these statements are correct except:
A)many businesses profess a commitment to sustainable business practices.
B)eco-justice is an important concept of sustainability.
C)there is pressure from society for businesses to address social and environmental concerns.
D)all businesses currently accept that sustainability is their primary goal.
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