Advanced Managerial Accounting Exam Practice Tests
Course Introduction
Advanced Managerial Accounting delves into the strategic application of accounting information for managerial decision-making. The course covers topics such as cost analysis, budgeting, performance evaluation, and strategic cost management, emphasizing the use of financial and non-financial data to drive organizational improvement. Students will explore advanced techniques in activity-based costing, responsibility accounting, and capital budgeting, with a focus on supporting long-term business objectives. Real-world case studies and analytical tools are integrated to enhance problem-solving skills and prepare students for complex managerial challenges in dynamic business environments.
Recommended Textbook
Managerial Accounting 4th Edition by John Wild
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16 Chapters
2594 Verified Questions
2594 Flashcards
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Page 2
Chapter 1: Managerial Accounting Concepts and Principles
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196 Verified Questions
196 Flashcards
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Sample Questions
Q1) Prime costs consist of direct labor and factory overhead.
A)True
B)False
Answer: False
Q2) Raw materials that physically become part of the product and can be traced to specific units or batches of product are called:
A)Raw materials sold
B)Chargeable materials
C)Goods in process
D)Indirect materials
E)Direct materials
Answer: E
Q3) M-Bot, Incorporated produces automatic car starters.The company used $700,000 of raw materials in their most recent accounting year.They started the year with $25,000 of raw materials and ended with $40,000.
(a)Compute the company's raw materials inventory turnover.
(b)Compute the company's days' sales in raw materials inventory.
Answer: 11ed5a8d_eeb5_6ffc_a655_71d0d6a33531_TB6311_11
11ed5a8d_e5c4_c58b_a655_9b99ced51a7d_TB6311_11
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Page 3
Chapter 2: Job Order Costing and Analysis
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.
A)True
B)False
Answer: False
Q2) Austin Company uses a job order cost accounting system.The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour)and that factory overhead would be $1,500,000 for the current period.At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs.Using direct labor hours as a base, what was the predetermined overhead allocation rate?
A)$6.00 per direct labor hour.
B)$7.50 per direct labor hour.
C)$6.67 per direct labor hour.
D)$8.33 per direct labor hour.
E)$7.08 per direct labor hour.
Answer: B
Q3) A ______________________ is a separate record maintained for each job.
Answer: job cost sheet
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Page 4
Chapter 3: Process Costing and Analysis
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185 Verified Questions
185 Flashcards
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Sample Questions
Q1) Describe the flow of labor in a process cost accounting system, including accounts used.
Answer: Each pay period, as workers earn their wages, Factory Payroll is debited and Cash is credited to record the amount paid to workers.As direct labor is used in each production department, Goods in Process of that department are debited and Factory Payroll is credited to assign the labor to the department.Indirect labor is recorded to the factory overhead with a debit to Factory Overhead and a credit to Factory Payroll.The Factory Overhead is subsequently allocated to the Goods in Process account for each production department.
Q2) Job order manufacturing and process manufacturing are two major costing systems used in manufacturing.Briefly contrast the characteristics of these two systems. Answer:
11ea83b1_f3f7_1e96_b139_89d5bb0d5b53_TB6311_00_TB6311_00_TB6311_00_TB6311_00
Q3) Process cost accounting systems are commonly used by companies that manufacture standardized products by passing them through a series of manufacturing steps.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Activity-Based Costing and Analysis
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171 Verified Questions
171 Flashcards
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Sample Questions
Q1) Heritage Industries uses departmental overhead rates and is planning on a $3 per direct labor hour overhead rate for the molding department.Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table.
A)$487,500
B)$195,000
C)$292,500
D)$243,750
E)$692,500
Q2) Refer to the data above.How much overhead cost will be assigned to each unit of product using activity-based costing (ABC)?
A)Dog food: $4.62; cat food: $4.62.
B)Dog food: $2.64; cat food: $2.64.
C)Dog food: $8.60; cat food: $0.33.
D)Dog food: $0.26; cat food: $8.60.
E)Dog food: $0.12; cat food: $3.85.
Q3) The ________________________ overhead rate method uses multiple volume-based measures to allocate overhead costs to products.
Q4) What are the major advantages of using a plantwide overhead rate?
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Chapter 5: Cost Behavior and Cost-Volume-Profit Analysis
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) Narrows Co.is considering the production and sale of a new product line with the following sales and cost data: unit sales price $125; unit variable costs $75; and total fixed costs of $140,000.Calculate the break-even point: a.In units.
b.In dollar sales.
Q2) A product is sold for $45 and has variable costs of $33 per unit.The total fixed costs for the firm are $180,600.If the firm desires to earn a pretax income of $77,400, how many units must be sold?
Q3) Using the high-low method, calculate the variable cost component of these overhead costs (round to the nearest two decimal places).
A)$14.90/hr.
B)$10.00/hr.
C)$11.25/hr.
D)$ 7.65/hr.
E)$ 6.56/hr.
Q4) Macleod Company's product has a contribution margin per unit of $62.50 and a contribution margin ratio of 25%.What is the per unit selling price of the product?
Q5) Briefly describe a CVP chart, including its major components.
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Chapter 6: Variable Costing and Performance Reporting
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) Contribution margin ratio is the percent of each sales dollar used to cover variable costs.
A)True
B)False
Q2) A company normally sells a product for $20 per unit.Variable per unit costs for this product are: $2 direct materials, $4 direct labor, and $1.50 variable overhead.The company is currently operating at 70% of capacity producing 14,000 units per year.Total fixed costs are $42,000 per year.The company should not accept a special order for 2,000 units which would be sold for $10 per unit because there would be an incremental loss on the order.
A)True
B)False
Q3) Fixed costs change in the short run depending upon management's decision to accept or reject special orders.
A)True
B)False
Q4) What is the formula to compute break-even volume in units?
Q5) Product costs consist of direct labor, direct materials, and _________________.
Q6) What costs are treated as product costs under the variable costing method?
Page 8
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Chapter 7: Master Budgets and Performance Planning
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160 Flashcards
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Sample Questions
Q1) A manufacturing budget should include a list of equipment to be scrapped and additional equipment to be purchased if the proposed production budget is carried out.
A)True
B)False
Q2) Which of the following budgets is not an operating budget?
A)Sales budget.
B)Cash budget.
C)General and administrative expense budget.
D)Selling expenses budget.
E)Merchandise purchases.
Q3) Preparing a master budget is usually the responsibility of:
A)The company CEO.
B)The marketing department.
C)A budget committee.
D)The chief financial officer.
E)Lower level management.
Q4) A capital expenditures budget is prepared before the operating budgets.
A)True
B)False
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Chapter 8: Flexible Budgets and Standard Costing
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177 Verified Questions
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Sample Questions
Q1) Selected information from Michaels Company's flexible budget follows: \(\begin{array}{c}
\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad\text { Operating Levels }\\
\hline \begin{array}{lrrr}
& \underline {80 \% }& \underline {90 \% }& \underline {100 \%}\\
\text { Budgeted production in units } & 4,800 & 5,400 & 6,000 \\
\text { Budgeted labor (standard hours) } & 9,600 & 10,800 & 12,000 \\
\text { Budgeted overhead: } & & & \\
\text { Variable overhead } & \$ 86,400 & \$ 97,200 & \$ 108,000 \\
\text { Fixed overhead } & 63,600 & 63,600 & 63,600 \end{array}
\end{array}\) Michaels Company applies overhead to production at a rate of $31.25 per unit based on a normal operating level of 80% of capacity.For the current period, Michaels Company produced 5,400 units and incurred $62,000 of fixed overhead costs and $96,000 of variable overhead costs.The company used 11,000 labor hours to produce the 5,400 units.Calculate the variable overhead spending and efficiency variances and the fixed overhead spending and volume variances.Indicate whether each variance is favorable or unfavorable.
Q2) A fixed budget is also called a _____________ budget.
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Page 10
Chapter 9: Performance Measurement and Responsibility Accounting
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) A profit center:
A)Incurs costs but does not directly generate revenues.
B)Incurs costs and directly generates revenues.
C)Has a manager who is evaluated solely on efficiency in controlling costs.
D)Incurs only indirect costs and directly generates revenues.
E)Incurs only indirect costs and generates revenues.
Q2) Cost center
A)A department or unit that incurs costs without directly generating revenues.
B)A center in which a manager is responsible for using the center's assets to generate income for the center.
C)Costs that are incurred for the joint benefit of more than one department and cannot be readily traced to only one department.
D)Costs readily traced to a specific department because they are incurred for the sole benefit of that department.
E)Costs incurred to produce two or more products at the same time.
F)Costs that a manager can strongly influence or control.
G)A department that incurs costs and generates revenues.
H)Assigns managers the responsibility for costs and expenses under their control.
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Chapter 10: Relevant Costing for Managerial Decisions
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Sample Questions
Q1) Teeco Systems Inc.has a limited amount of direct material available for products 1A1 and 2B2.Each unit of 1A1 has a contribution margin of $12 and each unit of 2B2 has a contribution margin of $30.A unit of 2B2 uses three times as much direct material as a unit of 1A1.What is Teeco's most profitable sales mix, assuming there is unlimited demand for either product?
A)Make all 2B2.
B)Make all 1A1.
C)Make equal number of units of 1A1 and 2B2.
D)Make three times as many 1A1 as 2B2.
E)Make three times as many 2B2 as 1A1.
Q2) A sunk cost will change with a future course of action.
A)True
B)False
Q3) The cost of equipment purchased by a company last year would be an avoidable cost.
A)True
B)False
Q4) An out-of-pocket cost requires a current and/or future outlay of cash.
A)True B)False
Page 12
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Chapter 11: Capital Budgeting and Investment Analysis
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146 Flashcards
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Sample Questions
Q1) The time value of money concept works on the principle that a dollar today is worth more than a dollar tomorrow.
A)True
B)False
Q2) A major limitation of the internal rate of return method is:
A)Failure to measure time value of money.
B)Failure to measure results as a percent.
C)Failure to consider the payback period.
D)Failure to reflect varying risk levels over project life.
E)Failure to compare dissimilar projects.
Q3) How does the calculation of break-even time (BET)differ from the calculation of payback period (PBP)?
Q4) The time expected to pass before the net cash flows from an investment would return its initial cost is called the:
A)Amortization period.
B)Payback period.
C)Interest period.
D)Budgeting period.
E)Discounted cash flow period.
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Chapter 12: Reporting and Analyzing Cash Flows
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Sample Questions
Q1) Describe the format of the statement of cash flows, including the reporting of significant noncash investing and financing activities.
Q2) Which one of the following is representative of typical cash flows from operating activities?
A)Proceeds from collecting the principal amount of loans.
B)Repayment of principal on loans.
C)Proceeds from the issuance of bonds and notes payable.
D)Payments by a merchandiser to acquire equity securities of other companies.
E)Receipts of cash sales.
Q3) To be classified as a cash equivalent, an investment must be readily convertible to an unknown amount of cash because the market value may be affected by interest rate changes.
A)True
B)False
Q4) The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.
A)True
B)False
Q5) Explain how to determine cash flows from investing and financing activities.
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Chapter 13: Analyzing Financial Statements
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Sample Questions
Q1) The gross margin ratio, return on total assets and basic earnings per share are all _____________ ratios.
Q2) A company has long-term notes payable of $175,625, taxes of $9,500, ending merchandise inventory of $450,290, interest expense of $14,050, net sales of $720,000 a gross profit ratio of 35%, a times interest earned ratio of 4.23, and total assets of $1,300,417.What is the company's earnings before interest and taxes?
A)$252,000
B)$65,814
C)$269,710
D)106,696
E)$59,432
Q3) In which comparative financial statements is each amount expressed as a percentage of a base amount?
A)Asset comparative statements.
B)Percentage comparative statements.
C)Common-size comparative statements.
D)Sales comparative statements.
E)General-purpose financial statements.
Q4) Explain the form and content of a complete income statement.
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Chapter 14: Time Value of Money
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Sample Questions
Q1) The present value factor for determining the present value of a single sum to be received three years from today at 10% interest compounded semiannually is 0.7462.
A)True
B)False
Q2) The future value of an ordinary annuity is the accumulated value of each annuity payment with interest one period after the date of the final payment.
A)True
B)False
Q3) Daley Co.lends $524,210 to Davis Corporation.The terms of the loan require that Davis repay the loan with six semiannual period-end payments of $100,000 each.What semiannual interest rate is Davis paying on the loan?
Q4) _____________ is a borrower's payment to the owner of an asset for its use.
Q5) An annuity is a series of equal payments occurring at equal intervals.
A)True
B)False
Q6) A company is setting aside $21,354 today and wishes to have $30,000 at the end of three years for a down payment on a piece of property.What interest rate must the company earn?
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Chapter 15: Basic Accounting for Transactions
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Sample Questions
Q1) Rocky Industries received its telephone bill in the amount of $300 and immediately paid it.Rocky's journal entry to record this transaction will include a
A)Debit to Telephone Expense for $300.
B)Credit to Accounts Payable for $300.
C)Debit to Cash for $300.
D)Credit to Telephone Expense for $300.
E)Debit to Accounts Payable for $300.
Q2) A revenue account normally has a debit balance.
A)True
B)False
Q3) Accounting records are also referred to as the books.
A)True
B)False
Q4) Double-entry accounting requires that the impact of each transaction be recorded in at least two accounts.
A)True
B)False
Q5) A ___________________________ gives a complete record of each transaction in one place and shows debits and credits for each transaction.
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Chapter 16: Accounting for Partnerships
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Sample Questions
Q1) ___________________________ implies that each partner in a partnership can be called on to pay a partnership's debts.
Q2) A capital deficiency exists when all partners have a credit balance in their capital accounts.
A)True
B)False
Q3) Rice, Hepburn and DiMarco formed a partnership with Rice contributing $60,000, Hepburn contributing $50,000, and DiMarco contributing $40,000.Their partnership agreement called for the income (loss)division to be based on the ratio of capital investments.If the partnership had income of $75,000 for its first year of operation, what amount of income (rounded to the nearest dollar)would be credited to DiMarco's capital account?
A)$20,000
B)$25,000
C)$30,000
D)$40,000
E)$75,000
Q4) During the closing process, each partner's withdrawals account is closed to
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