Advanced Managerial Accounting Exam Questions
Course Introduction
Advanced Managerial Accounting delves into the complex concepts and analytical techniques used by managers for informed decision-making in modern organizations. The course examines topics such as strategic cost management, budgeting and variance analysis, performance measurement, capital budgeting, and the integration of accounting information into strategic planning. Students will explore advanced costing methods, including activity-based costing and process costing, and study their applications in various industries. Emphasis is placed on ethical considerations, real-world case analyses, and the role of managerial accounting in achieving organizational objectives and driving value creation.
Recommended Textbook Cornerstones of Managerial Accounting 5th Edition by Maryanne
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16 Chapters
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M. Mowen
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) The managerial accounting system produces information for __________ users.
Answer: internal
Q2) Financial accounting
A) is concerned with the information about the firm as a whole.
B) has to adhere to GAAP policies.
C) focuses on external users.
D) all of these are correct
Answer: D
Q3) The _____________________ is the set of activities required to design, develop, produce, market and deliver products and services as well as provide support services to customers.
Answer: value chain
Q4) Financial accounting is governed by GAAP.
A)True
B)False
Answer: True
Q5) ________________________ involves choosing actions that are right, proper, and just.
Answer: Ethical behavior
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Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) You are the accounting manager at Falcon Inc. You just hired a new staff accountant to assist you in breaking out costs into their appropriate classifications. The staff accountant asks you why cost classification is important. How would you respond?
Answer: Cost classification is important for a variety of reasons. Probably the two most important are decision making and proper presentation on the financial statements. For example, by determining if a cost is fixed or variable it can help a company determine if each cost has a direct relationship to the level of output. If the company feels that their costs are becoming too high, then this type of classification can give them important information. Maybe the cost of the direct materials has increased significantly and they may need to look for a new supplier. Or when reviewing their fixed costs, they determine that the rent for their factory is causing the rise in costs and they should consider moving locations. The break out of product cost and period cost in also vital to a company. A company wants to know how much they are spending to actually produce the product (direct materials, direct labor, overhead) so that they can make such decisions as to the appropriate price to charge a customer. The allocation of product and period costs is also essential to properly generate the income statement, which is also used by external users to make decisions.
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Page 4
Chapter 3: Cost Behavior
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Sample Questions
Q1) The cost of raw materials used is usually a fixed cost.
A)True
B)False
Answer: False
Q2) An advantage of the high-low method is that it is ___________.
Answer: objective quick overview ease of use
Q3) has a discontinuous cost function
A)variable
B)fixed
C)mixed
D)step
Answer: D
Q4) must be purchased in chunks
A)committed fixed cost
B)discretionary fixed cost
C)mixed cost
D)step cost
Answer: D
Page 5
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Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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Sample Questions
Q1) Rachel Company sells office chairs at $350 each, incurs variable cost per unit of $100, and has a total fixed expense of $30,000. How many units must be sold to achieve a target operating income of $55,000?
A) 200
B) 340
C) 180
D) 450
E) 275
Q2) _____________________ is the use of fixed costs to extract higher percentage changes in profits as sales activity changes.
Q3) Music Now plans to sell 6,000 MP3 players at $60 each in the coming year. Variable cost per unit is $12 and total fixed cost is $24,000.
Required:
A.) Calculate the variable cost ratio.
B.) Calculate the contribution margin ratio.
C.) Calculate the break-even point in sales dollars.
D.) If Music Now has a target profit of $90,000, how many MP3 players will they have to sell?
Q4) __________ is the relative combination of products being sold by a firm.
Page 6
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Chapter 5: Job-Order Costing
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Sample Questions
Q1) The ____________________ of allocation recognizes all interactions among support departments.
Q2) If actual overhead is greater than applied overhead, the variance is called underapplied overhead.
A)True
B)False
Q3) The _____________________ is subsidiary to the work-in-process account and is the primary document for accumulating all costs related to a particular job.
Q4) The three manufacturing cost elements are direct materials, direct labor, and overhead.
A)True
B)False
Q5) the costs of job are transferred from the work-in-process account to finished goods account
A)completion of job
B)end of each accounting period
C)materials are moved from storage into production
D)product is sold
E)end of year
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Chapter 6: Process Costing
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Sample Questions
Q1) Equivalent units of output are the complete units that could have been produced given the total amount of manufacturing effort expended during the period.
A)True
B)False
Q2) Nonuniform manufacturing inputs affect
A) the calculation of equivalent units, unit cost, and valuation of ending work in process.
B) only the calculation of equivalent units, and valuation of ending work in process.
C) only the valuation of ending work in process.
D) only the manufacturing outputs.
Q3) Under the FIFO method, for the beginning work-in-process units, the total associated manufacturing costs are the sum of the prior-period costs plus the costs incurred in the current period to finish the units.
A)True
B)False
Q4) ___________________ requires that units pass through one process before they can be worked on in the next process.
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Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) Field trials and quality engineering are examples of ____.
A) prevention costs
B) appraisal costs
C) failure costs
D) quality costs
E) value costs
Q2) Tracing ________________ costs to suppliers can enable managers to choose the true low-cost supplier.
Q3) Activities necessary to remain in business
A)cycle time
B)direct tracing
C)activity sharing
D)driver tracing
E)value-added activities
F)activity selection
Q4) Control activities are performed by an organization or its customers in response to poor quality.
A)True
B)False
Q5) Reinspection and design changes are examples of _____________________ costs.
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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Sample Questions
Q1) Generally accepted accounting principles require ______________ for external reporting.
Q2) Inventory values calculated using variable costing as opposed to absorption costing will generally be
A) equal.
B) less.
C) greater.
D) twice as much.
Q3) Generally Accepted Accounting Principles (GAAP) require the use of which accounting method for external reporting?
A) absorption costing.
B) variable costing.
C) transfer price costing.
D) responsibility costing.
E) all of these are acceptable for GAAP.
Q4) Refer to Figure 8-11. What is the income for Tyler Company?
A) $101,000
B) $120,500
C) $99,000
D) $102,500
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Chapter 9: Profit Planning
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Sample Questions
Q1) forces managers to plan
A)advantage
B)disadvantage
Q2) There are as many direct materials purchases budgets as there are products.
A)True
B)False
Q3) Which of the following is not an advantage of participative budgeting?
A) It fosters a sense of creativity in managers.
B) It encourages the introduction of budgetary slack.
C) It encourages greater goal congruence.
D) It encourages a higher level of performance.
E) It fosters a sense of managerial responsibility.
Q4) Individual behavior that is in basic conflict with the goals of the organization is called goal congruence.
A)True
B)False
Q5) production budget
A)Operating Budget
B)Financial Budget
Q6) The cash budget and budgeted balance sheet are part of the ________________.
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) Refer to Figure 10-6. Calculate the labor efficiency variance.
A) $1,008,000 F
B) $900,000 U
C) $1,008,000 U
D) $900,000 F
Q2) Which of the following is not true concerning control limits?
A) Control limits are the top and bottom measures of the allowable range.
B) The upper control limit is the standard plus the allowable deviation.
C) The lower control limit is the standard minus the allowable deviation.
D) In current practice, control limits are set objectively using standard formulas.
E) Variances that fall outside the control limits are investigated.
Q3) An unfavorable price variance occurs whenever the actual prices are greater than the standard prices.
A)True
B)False
Q4) The __________________ provides the products data needed to calculate the standard unit cost.
Q5) The ____________________ is the difference between the actual cost of the input and its planned cost.
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) Activity flexible budgeting provides a more accurate prediction of costs than a traditional flexible budgeting approach because
A) costs often vary with more than one driver.
B) nonunit level drivers are often not highly correlated with direct labor hours.
C) direct labor hours are often not measured correctly.
D) costs often vary with more than one driver and nonunit level drivers are often not highly correlated with direct labor hours.
E) costs often vary with more than one driver and direct labor hours are not correct.
Q2) Building an activity-based budget requires
A) the activities within an organization to be identified.
B) the demand for each activity's output to be estimated.
C) the cost of resources required to produce this activity output to be assessed.
D) All of these.
E) None of these.
Q3) Activity-based budgeting begins with the _____________ and _______________ budgets.
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) The number of units of output that can be produced in a given period of time is called
A) cycle time.
B) unit process time.
C) responsiveness.
D) cell conversion time.
E) velocity.
Q2) Return on investment (ROI) can be calculated by multiplying margin times turnover.
A)True
B)False
Q3) Which of the following is a reason for decentralization?
A) Ease of gathering and using local information.
B) Focusing of central management.
C) Training and motivating segment managers.
D) Exposing segments to market forces.
E) All of these.
Q4) What are the advantages and disadvantages of return on investment (ROI)?
Q5) Typically, investment centers are evaluated on the basis of
Page 14
Q6) _________________ is found by dividing sales by average operating assets.
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) Refer to Figure 13-9. What is the contribution margin per hour of machine time for Test C?
A) $48
B) $35
C) $13
D) $16
E) $24
Q2) Refer to Figure 13-5. Now suppose that Santorino Company can sell only 5,500 units of each model. How many units of Model K-3 should be produced?
A) 5,500
B) 312
C) 1,250
D) 2,750
E) 5,000
Q3) The difference between the summed costs of two alternatives in a decision is known as the __________________.
Q4) Irrelevant costs are costs that are the same for more than one alternative. A)True
B)False
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) The internal rate of return is the least widely used of the capital investment techniques.
A)True
B)False
Q2) Cooper Industries is considering a project that would require an initial investment of $101,000. The project would result in cost savings of $62,000 in year 1 and $70,000 in year two. The internal rate of return is
A) between 16% and 17%.
B) between 18% and 20%.
C) under 15%.
D) none of these.
Q3) The _______________________ is defined as the interest rate that sets the present value of a project's cash inflows equal to the present value of the project's cost.
Q4) Suppose that the actual cost of capital is 10%, but the firm chooses a discount rate of 18%. Managers of that company will be more likely to choose relatively short term investments.
A)True
B)False
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Chapter 15: Statement of Cash Flows
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Sample Questions
Q1) How is it possible for a company to suffer a net loss for a given year, yet produce a positive net cash flow from operating activities?
Q2) Highly liquid investments such as Treasury bills, money market funds, and commercial paper are examples of ___________________.
Q3) Some individuals prefer to show operating cash flows as the difference between ___________ and ____________.
Q4) Activities that increase cash are sources of cash and are referred to as ___________.
Q5) The decision whether to use the direct or indirect method on the statement of cash flows is relevant with respect to
A) operating activities only.
B) investing activities only.
C) financial activities only.
D) All activities.
Q6) If an asset is sold at a gain, why is the gain deducted from net income when computing the net cash flows from operating activities under the indirect method?
Q7) Income statements are prepared on a (n) ______________.
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Chapter 16: Financial Statement Analysis
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Sample Questions
Q1) Dartmouth Company has a quick ratio of 2.5 to 1. It has current liabilities of $40,000 and noncurrent assets of $70,000. If Dartmouth's current ratio is 3.1 to 1, its inventory and prepaid expenses must be
A) $12,400.
B) $24,000.
C) $30,000.
D) $40,000.
Q2) Trend analysis is analysis
A) of percentage changes over several years.
B) in which all items are presented as a percentage of one selected item on a financial statement.
C) in which a statistic is calculated for the relationship between tow items on a single financial statement or for two items on different financial statements.
D) of all ratios that increased or decreased over past accounting periods.
Q3) Dividend payout ratio
A)Liquidity Ratio
B)Leverage Ratio
C)Profitability Ratio
Q4) ______________ and ____________ are the two major sources of capital.
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