Advanced Managerial Accounting Exam Review
Course Introduction
Advanced Managerial Accounting delves into the strategic use of accounting information for managerial decision-making in complex organizational settings. This course covers advanced topics such as cost allocation methods, activity-based costing, budgeting, performance measurement systems, and variance analysis. Students will explore how to analyze financial and non-financial data to support planning, controlling, and operational decisions. Emphasis is placed on integrating accounting techniques with broader business strategies to improve efficiency, manage risk, and drive organizational value in a dynamic business environment.
Recommended Textbook
Managerial Accounting Decision Making and Motivating Performance 1st Edition by Srikant M.
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Datar
Chapter 1: The Manager and Management Accounting
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) Which of the following is an example of an accountant that does not adhere to special ethical obligation?
A)Ensure tough ethical standards at the organization.
B)Criminal penalties to managers that do not follow ethical standards.
C)Criminal penalties to employees that do not follow ethical standards.
D)Failure to provide a process for employees to report violations of illegal acts.
E)Ensures that the CFO certifies that the financial statements fairly represent the results of operations.
Answer: D
Q2) Organization charts:
A)do not show reporting relationships.
B)show informal reporting relationships.
C)are never understood,and they are never written.
D)show formal reporting relationships.
E)are understood,but never written.
Answer: D
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3
Chapter 2: An Introduction to Cost Terms and Purposes
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Sample Questions
Q1) In general,a manager is more confident about the accuracy of direct costs of cost objects.
A)True
B)False
Answer: True
Q2) Accounting systems report:
A)only the total cost amounts.
B)only the average-cost per unit amounts.
C)both total-cost amounts and average-cost per unit amounts.
D)only average costs.
E)no cost amount data.
Answer: C
Q3) Budgeting is not an important tool that managers use in planning and control. A)True
B)False
Answer: False
Q4) All costs of a product that are considered as assets in the balance sheet when they are incurred and that become cost of goods sold only when the product is sold are: Answer: inventoriable costs.
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Chapter 3: Cost-Volume-Profit Analysis
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126 Verified Questions
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Sample Questions
Q1) A more comprehensive approach to recognizing uncertainty is to compute expected values using probability distributions.
A)True
B)False
Answer: True
Q2) When the outcomes are measured in monetary terms,expected value is often called:
A)unknown fund values.
B)unexpected probabilities.
C)expected monetary fund.
D)expected monetary value.
E)expected probability statement.
Answer: D
Q3) Managers and management accountants distinguish fixed from variable costs and then evaluate how the level of fixed costs and variable costs they choose will affect the risk-return tradeoff.
A)True
B)False
Answer: True
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Chapter 4: Job Costing
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Sample Questions
Q1) The service department is also professionally known as the:
A)support department.
B)internal department.
C)operating department.
D)international department.
E)manufacturing department.
Q2) The assignment of indirect costs is:
A)cost allocation.
B)cost tracing.
C)cost assignment.
D)job-costing system.
E)cost allocation base.
Q3) Which of the following is not a benefit of the normal-costing system?
A)Managers take corrective actions sooner.
B)Manufacturing costs of jobs are reported later.
C)Manufacturing costs of jobs are reported earlier.
D)Job pricing data is available soon after jobs are completed.
E)Sales managers evaluate profitability and efficiency of jobs faster.
Q4) Is the use of budgeted rates for direct costs different to the methods employed when using budgeted rates for indirect costs in normal costing?
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Chapter 5: Process Costing and Cost Allocation
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Sample Questions
Q1) Karen is a managerial accountant at a manufacturing company.She uses manufacturing process costing to assign costs to products and services.Write a short summary and explain how the manufacturing process is different compared to a job-costing system.
Q2) In T-account entries,costs can be added throughout the fiscal year in the Conversion Costs ________ account;and,the Conversion Control ________ account.
A)costing;control
B)control;process
C)allocated;process
D)control;allocated
E)process;control
Q3) The process-costing method that assumes the earliest equivalent units in work in process are completed first is:
A)unit of output method.
B)physical unit method.
C)work in process method.
D)last in,first out (LIFO).
E)first in,first out (FIFO).
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Chapter 6: Activity-Based Costing and
Activity-Based Management
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Sample Questions
Q1) The Chesapeake Organization reported $400,000 of indirect-cost pool in design activity.The manager reported a cost-allocation base of 110 parts per square feet.
Required:
Compute the amount of design activity per part-square foot.
A)$3,000.22
B)$3,025.25
C)$3,636.36
D)$399,890
E)$400,110
Q2) Simple peanut-butter costing broadly averages or spreads the cost of resources uniformly to cost objects.
A)True
B)False
Q3) Machine operations costs that are related to the activity of running the automated molding machines are output unit-level costs.
A)True
B)False
Q4) What are the strategic consequences of product undercosting and overcosting?
Q5) Why do managers refine costing systems?
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Chapter 7: Pricing Decisions, customer Profitability, and Cost Management
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Sample Questions
Q1) What are the key steps in value engineering?
Q2) The Walter Foundation invested $3,500,000 in a plant to remanufacture refrigerators.The target operating income from the plant is $250,000 annually.The company plans actual sales of 800 refrigerators at $1,100.00 each.
Required:
Compute the target rate of return on the investment at the Walter Foundation.
A)6.14 %
B)7.14 %
C)8.14 %
D)9.14 %
E)10.14 %
Q3) "Price discrimination is permissible if differences in prices can be justified by differences in costs" is a key feature of:
A)price-discrimination laws.
B)peak-load pricing.
C)price discrimination.
D)customer life-cycle costs.
E)life-cycle budgeting.
Q4) How can costs impact the supply and demand of products?
Page 9
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Chapter 8: Determining How Costs Behave
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Sample Questions
Q1) In a/an ________,the graph of total costs is not a straight line within the relevant range.
A)cost object
B)learning curve
C)experience curve
D)step cost function
E)nonlinear cost function
Q2) The regression equation,y = $744.67 + $7.72X,could represent indirect manufacturing labor costs based on the number of direct manufacturing labor hours.
A)True
B)False
Q3) Why is the cost hierarchy important to managerial accountants?
Q4) Direct material costs are not always linear variable costs as a result of quantity discounts on direct material purchases.
A)True
B)False
Q5) What is the difference between time-series data and cross-sectional data?
Q6) Why are learning curves important to managers?
Q7) What is the impact of price breaks on direct material costs?
Page 10
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Chapter 9: Decision Making and Relevant Information
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Sample Questions
Q1) Reorganization eliminates all manual handling of materials.
A)True
B)False
Q2) Producing the same goods or providing the same services within an organization is called ________.
A)outsourcing
B)insourcing
C)incremental cost
D)full cost of product
E)business function costs
Q3) The ________ of a linear program expresses the objective,or goal to be maximized or minimized.
A)error
B)trial
C)simplex
D)optimal solution
E)objective function
Q4) Optimization techniques,such as linear programming,solve more complex problems.
A)True
B)False
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Chapter 10: Quality, inventory Management, and Time
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111 Flashcards
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Sample Questions
Q1) ________ is inventory held at all times regardless of the quantity of inventory ordered using the EOQ model.
A)Appraisal
B)Prevention
C)Bottleneck
D)Safety stock
E)Reorder point
Q2) The ratio of the number of employees that indicate high satisfaction ratings to the number of employees surveyed is ________.
A)employee satisfaction
B)employee experience
C)employee training
D)employee turnover
E)employee empowerment
Q3) How do managers use enterprise resource planning to collect data? What are the benefits of this system?
Q4) What do managers do when they are uncertain about demand,lead time,or the quantity that suppliers can provide?
Q5) What is the most direct financial measure of quality?
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Chapter 11: Capital Investments
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Sample Questions
Q1) Bridgett's Beauty Spa needs to purchase a new extra deluxe machine to implement spa services.The initial investment on this new ultra jacuzzi is $85,000.The machine is expected to generate $65,000 in uniform cash flow each year and it has a five-year expected useful life.
Required
Compute the payback period.
A)1 year
B)1.31 years
C)1.51 years
D)1.61 years
E)1.71 years
Q2) Managers prefer projects with ________ payback periods.
A)equal
B)shorter
C)longer
D)infinite
E)solvent
Q3) The payback method ignores cash flows after the payback period.
A)True
B)False
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Chapter 12: Master Budget and Responsibility Accounting
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Sample Questions
Q1) What is the concept of the bottom-up perspective of budgeting?
Q2) The manager is accountable for revenues and costs in:
A)cost centers.
B)profit centers.
C)revenue centers.
D)responsibility centers.
E)organizational centers.
Q3) Which of the following is not true about variances?
A)Variances alert managers to events not easily or immediately evident.
B)Variances permit managers can take corrective actions or exploit available opportunities.
C)Variances prompt managers to probe how well the company has performed in implementing its strategies.
D)Variances sometimes signal managers that their strategies are ineffective.
E)Variances never provide a signal to managers that their strategies are ineffective.
Q4) How do variances help managers implement and evaluate strategies?
Q5) What is a bill of materials? Why do managers use it?
Q6) Describe the advantages of budgets.
Q7) What is the purpose of using financial planning models in sensitivity analysis?
Page 14
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Chapter 13: Flexible Budgets, cost Variances, and Management Control
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Sample Questions
Q1) A flexible budget allows management to highlight the differences between actual costs and ________;and,management uses budgeted costs;and,________ for the actual output level.
A)actual quantities;budgeted quantities
B)expected costs;actual quantities
C)expected quantities;expected costs
D)cost variances;output variances
E)fixed overhead;overhead variances
Q2) To make sure that managers interpret variances correctly and make appropriate decisions based on them,managers need to recognize that ________.
A)variances are active indicators
B)variances are easily miscalculated
C)variances can have multiple causes
D)variances are not accurate indicators
E)decisions should not be made based on variances
Q3) Why is constructing and using a flexible budget beneficial to management?
Q4) In what type of situation would management want to subdivide a flexible-budget variance into the efficiency variance and the spending variance?
Q5) How does variance analysis relate to the five-step decision-making process?
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Chapter 14: Strategy, Balanced Scorecard, and Strategic Profitability Analysis
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Sample Questions
Q1) What is reengineering?
Q2) Not only does the balanced scorecard focus on achieving financial objectives,it also highlights ________.
A)individual recognition
B)personal responsibility
C)nonfinancial objectives
D)progressive hiring practices
E)successful marketing measures
Q3) Why does the absence of a cause-and-effect relationship make identifying unused capacity for discretionary costs difficult?
Q4) Which of the following is true about cost leadership?
A)Lower cost relative to competitors.
B)Offers different products or services.
C)Differentiation through innovative products.
D)Differentiation through careful development and promotion of brands.
E)Organizational managers can increase brand loyalty and charge higher prices.
Q5) Why are more companies in the manufacturing,merchandising,and service sectors giving greater weight to nonfinancial measures when employees are promoted?
Q6) How can a manager evaluate the success of their strategy?
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Chapter 15: Transfer Pricing
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Sample Questions
Q1) Profit centers can be coupled with a highly centralized organization,and cost centers can be coupled with a highly decentralized organization,
A)True
B)False
Q2) ________ is the desire to attain a selected goal combined with resulting pursuit of that goal.
A)Esteem
B)Ability
C)Motivation
D)Determination
E)Achievements
Q3) In reference to negotiated pricing,cost and price information is often the starting point in the negotiation process.
A)True
B)False
Q4) The managerial accountant at International Solutions sells crude oil and it was reported that the company operates in the United States and Mexico.What are some of the tax issues could conflict with other objectives top management hopes to achieve via transfer pricing?
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Chapter 16: Performance Measurement and Compensation
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Sample Questions
Q1) Which of the following is not an issue of an organization operating in different countries?
A)Inflation.
B)Foreign currency.
C)Cost of materials and labor.
D)Availability of materials and skilled labor.
E)Inflation has no impact on performance evaluation.
Q2) Evaluating performance on the basis of improvements in EVA makes the initial method of calculating EVA more important.
A)True
B)False
Q3) Companies that adopt EVA<sup>©</sup> define investment as total assets employed plus current liabilities.
A)True
B)False
Q4) Companies never put the most skillful division managers in charge of the division producing the poorest economic return in an attempt to improve it.
A)True
B)False
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