Advanced Management Accounting
Midterm Exam
Course Introduction
Advanced Management Accounting delves into the strategic application of management accounting techniques to support decision-making, planning, and control in complex organizational environments. The course explores sophisticated costing methods, performance measurement systems, budgeting techniques, and variance analysis, as well as contemporary topics such as activity-based costing, balanced scorecards, and strategic cost management. Emphasis is placed on the use of management accounting information for long-term strategic decisions, value creation, risk assessment, and sustainability initiatives. Case studies and real-world scenarios are integrated to develop students analytical and problem-solving skills necessary for effective leadership in dynamic business contexts.
Recommended Textbook
Management Accounting 2nd Edition by Leslie G. Eldenburg
Available Study Resources on Quizplus
20 Chapters
1520 Verified Questions
1520 Flashcards
Source URL: https://quizplus.com/study-set/3533
Page 2
Chapter 1: The Role of Accounting Information in Management Decision Making
Available Study Resources on Quizplus for this Chatper
81 Verified Questions
81 Flashcards
Source URL: https://quizplus.com/quiz/70182
Sample Questions
Q1) Which of the following often prevents managers from adequately exploring information before making a decision?
A) The existence of many uncertainties
B) The need to distinguish between relevant and irrelevant information
C) The managers' biases
D) The organisation's values
Answer: C
Q2) Accounting information is the only thing managers need to make financial decisions.
A)True
B)False
Answer: False
Q3) Higher quality reports are more I Relevant
II Understandable
III Available
A) I and II only
B) I and III only
C) II and III only
D) I, II, and III
Answer: D
Page 3
To view all questions and flashcards with answers, click on the resource link above.
Chapter 2: Cost Concepts, Behaviour and Estimation
Available Study Resources on Quizplus for this Chatper
88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/70181
Sample Questions
Q1) Simple regression analysis output produces a variety of statistics. Which of the following statistics best summarises how well the cost driver explains the behavior of the cost?
A) T-statistics for alpha and beta coefficients
B) T-statistic and p-value for the alpha coefficient
C) P-values for alpha and beta coefficients
D) Adjusted R-square
Answer: D
Q2) Assuming that a cost is mixed and linear, and that past cost behavior is expected to continue into the future, which of the following is mostly likely the best technique for estimating future costs?
A) Engineered estimate of cost
B) Two-point method
C) Scatter plot
D) Regression analysis
Answer: D
Q3) Estimates of future costs can be used in budgeting.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: A Costing Framework and Cost Allocation
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/70180
Sample Questions
Q1) The cost driver that is a volume based cost driver is:
A) labour hours
B) number of set-ups
C) number of employees
D) all are volume based cost drivers
Answer: A
Q2) Support department cost allocation is necessary for the preparation of externally issued financial statements.
A)True
B)False Answer: False
Q3) As the number of cost pool increases the accuracy of the cost information decreases.
A)True
B)False Answer: False
Q4) Indirect costs are traced and direct costs are allocated.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Cost-Volume-Profit Cvp Analysis
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/70179
Sample Questions
Q1) When the assumption of linearity is applied to revenue in CVP analyses
A) Fixed cost per unit increases as revenue decreases
B) Variable cost per unit is linear with respect to total revenue
C) The sales mix and all of the prices remain constant
D) The sales mix remains constant, but prices decrease as volumes increase
Q2) Which of the following is the amount by which sales could drop before profits reach the breakeven point?
A) Operating leverage
B) Total contribution margin
C) Margin of safety
D) Incremental sales
Q3) If all other factors remain unchanged, a 10% decrease in both the selling price and variable costs for a product will
A) Lower the breakeven point in dollars
B) Raise the breakeven point in dollars
C) Have no effect on the breakeven point in dollars
D) Cannot be determined
Q4) CVP analysis can be used in companies that sell multiple products.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Job Costing Systems
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/70178
Sample Questions
Q1) Estimated production overhead in the printing department is $150,000 and actual overhead is $154,000 and estimated machine hours in the printing department are 3,000 hours and actual machine hours are 3,300 hours. Job 175 used 6 printing machine hours.
Using normal costing what is the printing department overhead charged to job 175?
A) $308
B) $278
C) $273
D) $300
Q2) Overapplied overhead occurs when actual costs are more than the amount of overhead allocated.
A)True
B)False
Q3) In a job costing system the cost object is a job.
A)True
B)False
Q4) Under a job costing system the opportunity costs of spoilage are generally not measured.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Process Costing Systems
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/70177
Sample Questions
Q1) Salmon Manufacturing Ltd uses a process costing system. Direct materials are added at the beginning of the process. During January, Department Q had a beginning inventory of 2,000 units, 25% complete for conversion costs. During the month 14,000 units were started and there were 1,000 units in ending inventory, 60% complete for conversion costs. Using weighted average process costing, the equivalent units for direct material for the month were
A) 13,600
B) 14,000
C) 16,000
D) 15,600
Q2) In a process costing system, direct materials are added during every production process.
A)True
B)False
Q3) When an organisation uses a long-term procurement contract, direct labor costs are normally stable over long periods of time.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Absorption, Variable and Throughput Costing
Available Study Resources on Quizplus for this Chatper
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/70176
Sample Questions
Q1) Throughput costing income statements cannot be used to evaluate management performance.
A)True
B)False
Q2) When units produced are equal to units sold, operating profit under absorption costing will equal operating profit under variable costing.
A)True
B)False
Q3) Throughput costing is a modified form of absorption costing that treats direct labor and variable overhead as period expenses.
A)True
B)False
Q4) Variable costing data can often be used for making non-routine operating decisions.
A)True B)False
Q5) Budgeted capacity is always greater than normal capacity.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Activity Analysis: Costing and Management
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/70175
Sample Questions
Q1) The costs of designing and implementing an ABC system include employee time and training.
A)True
B)False
Q2) Each cost pool in an ABC system has at least one cost driver.
A)True
B)False
Q3) MNK is a large public company that employs numerous accounts receivable clerks. Their jobs involve processing invoices and keeping the accounting records updated. Which of the following is the most likely cost driver for the accounts receivable activity cost pool?
A) Number of journal entries
B) Number of product lines produced by MNK
C) Number of invoices
D) Average dollar amount for each credit sale
Q4) ABC systems are typically associated with
A) Higher quality and improved cycle time
B) Manufacturing firms, but not service firms
C) Service firms, but not manufacturing firms
D) Higher profitability for all firms that implement them
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Relevant Costs for Decision Making
Available Study Resources on Quizplus for this Chatper
122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/70174
Sample Questions
Q1) When resources are constrained, managers are most likely to use which of the following methods to develop decision making information
A) Simple or multiple regression
B) Analysis at the account level
C) Linear programming
D) High-low method
Q2) In an outsourcing decision, fixed costs are
A) Never relevant
B) Relevant if they are greater than associated opportunity costs
C) Relevant if the company is operating outside the relevant range
D) Relevant if they can be avoided through outsourcing
Q3) Average costs are appropriate to use when deciding whether to keep a product or product line.
A)True
B)False
Q4) Managers should accept a special order if its price is greater than the sum of
A) all variable costs and all fixed costs
B) all variable costs and all opportunity costs
C) all fixed costs and all opportunity costs
D) variable costs, relevant fixed costs and opportunity costs
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Standard Costs, Flexible Budgets and Variance Analysis
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/70173
Sample Questions
Q1) Mason Ltd uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include: The direct materials efficiency variance is
A) $60,000 Favorable
B) $60,000 Unfavorable
C) $65,000 Favorable
D) $65,000 Unfavorable
Q2) The production volume variance provides information about
A) Capacity utilisation
B) Variable overhead costs which vary with volume
C) Fixed overhead costs which vary with volume
D) Sales levels
Q3) The budget that reflects the level of activity management expects to attain is the A) Flexible budget
B) Standard budget
C) Master budget
D) Expected budget
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Operational Budgets
Available Study Resources on Quizplus for this Chatper
87 Verified Questions
87 Flashcards
Source URL: https://quizplus.com/quiz/70172
Sample Questions
Q1) One objective of budgeting is motivating managers to
A) Eliminate all variances.
B) Use resources efficiently.
C) Lessen the need for communication.
D) Establish prices for external sales of goods and services.
Q2) Intentionally understating revenues and / or overstating costs during a budgeting process is called
A) Budgetary slack
B) Zero-based budgeting
C) Fraudulent financial reporting
D) Participative budgeting
Q3) Which of the following items is least likely to be included in a cash budget?
A) Accounts receivable collections
B) Depreciation
C) Short-term borrowing
D) Long-term debt repayments
Q4) Master budgets are often summarised in a company's short-term operating plans.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Strategy and Control
Available Study Resources on Quizplus for this Chatper
35 Verified Questions
35 Flashcards
Source URL: https://quizplus.com/quiz/70171
Sample Questions
Q1) Strategic management accounting is essentially theoretical in nature.
A)True
B)False
Q2) Management control systems have one main role; to facilitate decisions by providing relevant and timely information to support decision making.
A)True
B)False
Q3) A future direction which enables the focusing of an organisation's resources and decision making around a common theme, is a definition of:
A) planning
B) budgeting
C) control
D) strategy
Q4) Good internal control systems should aim to eliminate risk.
A)True
B)False
Q5) Overproduction is a non-value added activity.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Planning and Budgeting for Strategic Success
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/70170
Sample Questions
Q1) Which of the following are compatible with kaizen budgeting?
A) Flexible budgeting
B) Activity-based budgeting
C) Neither a nor b are compatible with kaizen budgeting
D) Both a and b are compatible with kaizen budgeting
Q2) Beyond Budgeting proponents argue that the key to instilling accountability originates from the belief that employees enjoy contributing to the organisation.
A)True
B)False
Q3) The primary disadvantage of zero-based budgeting is
A) Its tendency to motivate managers to create budgetary slack
B) It encourages managers to spend all their budgeted money each year to avoid future cutbacks
C) It ignores the input of managers
D) The time it takes to develop a zero-based budget
Q4) Achieving the budget mostly means also achieving the organisation's goals.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: Capital Budgeting and Strategic Investment
Decisions
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/70169
Sample Questions
Q1) You are currently entering university and you want to buy your uncle's Mercedes when you graduate. He has promised to sell it to you for $18,000. How much will you have to deposit now, in an account earning 8%, to have enough money buy the car in 4 years?
A) $6,122
B) $4,500
C) $13,230
D) $3,060
Q2) Elkins Ltd is considering an investment in equipment for a new product line with a cost of $48,625, a terminal value of $6,283, and a useful life of 5 years. The project will provide an annual contribution margin of $12,500. The required rate of return is 12%.
Ignore income taxes. This project is
A) Unacceptable, because it earns a rate below 12%.
B) Acceptable, because it has a positive NPV.
C) Unacceptable, because it has a 0 NPV.
D) Acceptable, because it earns exactly 12%.
Q3) Income taxes have a major effect on capital budgeting decisions.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: The Strategic Management of Costs and Revenues
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/70168
Sample Questions
Q1) Which of the following is a formal method for incorporating demand into prices?
A) Cost-based pricing
B) Market-based pricing
C) Price elasticity of demand
D) Price elasticity of supply
Q2) Life cycle costing focuses on costs incurred in production, but not on those incurred when an operation is closed down and requires costly cleanup activities.
A)True
B)False
Q3) Peak load pricing refers to the illegal practice of charging different prices at different times to reduce capacity constraints.
A)True
B)False
Q4) Not-for-profit organisations price products in the same manner as for-profit organisations.
A)True
B)False
Q5) Give a complete but concise explanation of the target costing cycle. Correct
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Strategic Management Control: a Lean Perspective
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/70167
Sample Questions
Q1) The theory of constraints (TOC) is concerned with constraints on the supply side, not those on the demand side.
A)True
B)False
Q2) The major disadvantage of the just-in-time system is:
A) the number of small deliveries that must occur
B) the number of inspections that must occur
C) unforeseen, external events disrupting the delivery schedule
D) all of the above are major disadvantages
Q3) The originator of the total quality management (TQM) approach was an American, W. Edwards Deming.
A)True
B)False
Q4) The theory of constraints (TOC) involves imposing strict controls and standards on all aspects of the value chain in order to improve efficiency.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Responsibility Accounting, Performance
Evaluation and Transfer Pricing
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/70166
Sample Questions
Q1) If a product has an external market and divisions are treated as profit centres, cost-based transfer prices can often lead to suboptimal decisions.
A)True
B)False
Q2) Economic value added can be measured so that it reduces most of the problems that arise under residual income.
A)True
B)False
Q3) A transfer pricing policy based on market price
A) Maximises total organisational profit.
B) Is best because the market price is always objective and easily obtainable.
C) May result in suboptimal decision making for the company as a whole.
D) Is the only alternative accepted by the Australian Taxation Office.
Q4) Among the responsibility centres listed, which type of responsibility centre is most likely to use growth in sales as a performance measure?
A) Cost
B) Profit
C) Revenue
D) Investment
19
To view all questions and flashcards with answers, click on the resource link above.
Chapter 18: The Balanced Scorecard and Strategy Maps
Available Study Resources on Quizplus for this Chatper
83 Verified Questions
83 Flashcards
Source URL: https://quizplus.com/quiz/70165
Sample Questions
Q1) Weaknesses of the balanced scorecard include all of the following except
A) Expensive and time-consuming implementation
B) Inability to clarify vision and strategies
C) Lack of employee support
D) Doubt about links among the perspectives
Q2) The steps for implementing a balanced scorecard
A) Are different in for-profit and not-for-profit organisations.
B) Should be customised for individual organisations.
C) Should not vary if the implementation is to be effective.
D) Begin with developing measures in each perspective.
Q3) Once balanced scorecard measures have been chosen, they should not be changed for at least five years.
A)True
B)False
Q4) Managers have traditionally relied on which of the following measures to evaluate performance?
A) Qualitative factors
B) Financial measures
C) Non-financial measures
D) Core competencies
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Rewards, Incentives and Risk Management
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/70164
Sample Questions
Q1) To protect shareholders from excessive compensation practices, executive compensation packages are best set by
A) The managing director
B) A committee of primarily outside members of the board of directors
C) A committee of top management employees
D) The complete board of directors
Q2) According to agency theory, under what circumstances could companies eliminate agency costs?
A) If their shares are not traded on the stock exchange
B) If bonuses are based on financial performance
C) If they publish audited financial statements
D) Organisations cannot eliminate agency costs
Q3) A current theme in rewarding senior staff is which of the following?
A) relative performance evaluation
B) pay-for-performance
C) the place of government regulation
D) all of the above are current themes in rewarding senior staff
Q4) An organisation's chief executive officer can be both a principal and an agent.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Sustainability Management Accounting
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/70163
Sample Questions
Q1) Indexes like the Global Reporting Index are not important for management accountants but are only used by financial accountants for external financial reporting.
A)True
B)False
Q2) Which of these is a behavioural issue as opposed to a technical issue when implementing sustainability change processes within an organisation?
A) Arriving at suitable objectives in line with sustainability strategies
B) Identifying suitable social and environmental measures for performance evaluation
C) Creating ownership of projects by participants
D) All are behavioural issues
Q3) Employees will always make ethical decisions if they act in the best interests of their shareholders.
A)True B)False
Q4) Life cycle analysis ends with the sale of the product.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 22