Advanced Managerial Accounting Final Exam Questions
Course Introduction
Advanced Managerial Accounting delves into the strategic use of accounting information for planning, decision-making, and control in organizations. The course explores advanced topics such as cost allocation, activity-based costing, performance measurement, budgeting, variance analysis, and the integration of financial and non-financial data for managerial purposes. Students will learn how to evaluate and implement management accounting systems, analyze complex business scenarios, and support organizational objectives through informed financial decisions. Emphasis is placed on case studies and real-world applications, preparing students to address contemporary challenges faced by managers in diverse industries.
Recommended Textbook
Fundamental Managerial Accounting Concepts 9th Edition by Thomas P Edmonds
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14 Chapters
2127 Verified Questions
2127 Flashcards
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Chapter 1: Management Accounting and Corporate Governance
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146 Flashcards
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Sample Questions
Q1) Which of the following costs would be classified as a direct cost for a company that produces motorcycles?
A) Rent of manufacturing facility that produces motorcycles.
B) Seats used in the motorcycles.
C) Wages of motorcycle assembly workers.
D) Both seats used in the motorcycles and wages of motorcycle assembly workers are correct.
Answer: D
Q2) Who are the primary users of financial accounting information? Who are the primary users of managerial accounting information?
Answer: Financial accounting information is used primarily by investors,creditors,and others who are outside a business.Managerial accounting information focuses on information users who are inside the business,including its managers and other employees.
Q3) For what activities do an organization's managers need accounting information?
Answer: Managers of an organization use accounting and other information to plan,direct,and control business operations.
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Page 3
Chapter 2: Cost Behavior, operating Leverage, and Profitability Analysis
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Hard Nails and Bright Nails are competing nail salons.Both companies have the same number of customers.Both charge the same price for a manicure.The only difference is that Hard Nails pays its manicurists on a salary basis (i.e.,a fixed cost structure)while Bright Nails pays its manicurists on the basis of the number of customers they serve (i.e.,a variable cost structure).Both companies currently make the same amount of net income.If sales of both salons increase by an equal amount,Hard Nails:
A) will earn a higher profit than Bright Nails.
B) will earn a lower profit than Bright Nails.
C) will earn the same amount of profit as Bright Nails.
D) The answer cannot be determined from the information provided.
Answer: A
Q2) The variable cost per unit increases in direct proportion to the activity base.
A)True
B)False
Answer: False
Q3) How does variable cost per unit behave when volume decreases?
Answer: Variable cost per unit is constant when volume decreases.
Q4) How does total fixed cost behave when volume increases?
Answer: Total fixed cost is constant (does not change)when volume increases.
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Chapter 3: Analysis of Cost, volume, and Pricing to Increase Profitability
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149 Flashcards
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Sample Questions
Q1) At the break-even point:
A) Sales would be equal to total costs.
B) Contribution margin would be equal to total fixed costs.
C) Sales would be equal to fixed costs.
D) Both sales would be equal to total costs and contribution margin would be equal to total fixed costs are correct.
Answer: D
Q2) Adams Company sells a product whose contribution margin is $10 and selling price is $25.If the company's break-even point is 100 units,its total fixed costs must be $500.
A)True
B)False
Answer: False
Q3) Sensitivity analysis is performed in order to determine optimal sales mix. A)True
B)False
Answer: False
Q4) What does the margin of safety measure?
Answer: The margin of safety measures the amount of cushion between budgeted sales and the break-even point.
5
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Chapter 4: Cost Accumulation,tracing,and Allocation
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158 Flashcards
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Sample Questions
Q1) Haskins Company employs material handling employees who move materials between production divisions at a labor cost of $360,000 a year.It is estimated that these employees move 600,000 pounds of material per year.If 60,000 pounds are moved in March,how much of the material handling cost should be assigned to products made in March? (Do not round intermediate calculations.)
A) $36,000
B) $24,000
C) $50,000
D) $38,000
Q2) The method of allocating service department costs that allocates the costs to both service departments and operating departments is the:
A) direct method.
B) indirect method.
C) weighted-average method.
D) step method.
Q3) The accuracy of managerial accounting information usually is more important than timeliness.
A)True
B)False
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Page 6
Chapter 5: Cost Management in an Automated Business
Environment: ABC, ABM, and TQM
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) Which of the following is the most appropriate cost driver for maintaining parts inventory?
A) Number of parts for a product
B) Direct labor hours
C) Sales dollars
D) Number of setups
Q2) A product-level activity center would likely include all of the following costs except:
A) engineering development costs.
B) legal fees to obtain and protect patents.
C) packaging design costs.
D) materials handling costs.
Q3) All of the following are prevention costs except:
A) training costs.
B) inspection costs.
C) regularly scheduled maintenance.
D) engineering and design costs.
Q4) Voluntary costs refer to internal and external failure costs.
A)True
B)False
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Chapter 6: Relevant Information for Special Decisions
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Sample Questions
Q1) Asset replacement decisions involve:
A) Choices between continuing to use existing materials or replacing them with less expensive materials.
B) Choices between closing down or continuing to operate a segment of a business.
C) Choices between continuing to operate existing equipment or replacing it with new equipment.
D) None of these answers are correct.
Q2) Ethan paid $3 for a bottle of ThirstAid.Later,while on a hiking trip,he was offered $8 for the ThirstAid.Select the correct statement from the following:
A) The $8 offer is not relevant if Ethan refuses to sell the ThirstAid.
B) If Ethan drinks the ThirstAid, no opportunity cost is associated with his decision.
C) The $3 original purchase price is irrelevant to his decision to sell the ThirstAid.
D) All of these answers are correct.
Q3) Only variable costs are relevant for decision making.
A)True
B)False
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Chapter 7: Planning for Profit and Cost Control
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150 Flashcards
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Sample Questions
Q1) Interest expense is not included in the selling and administrative budget because a company cannot estimate interest expense until it prepares the cash budget and makes borrowing projections.
A)True
B)False
Q2) The cash budget is based on which budget?
A) Sales budget
B) Inventory purchases budget
C) Selling and administrative expense budget
D) All of the answers are correct.
Q3) Which of the following items is not needed to prepare a sales budget by product line?
A) Expected purchase price of each product.
B) Expected unit sales of each product.
C) Expected selling price of each product.
D) All of the answers are correct.
Q4) Would you recommend that a business employ a participative approach to budgeting? Why or why not?
Q5) Why is cash management important to a business?
Q6) How do short-term plans differ from long-term plans?
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Chapter 8: Performance Evaluation
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156 Flashcards
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Sample Questions
Q1) What is the result when the actual rate paid for labor is less than the standard rate?
A) A favorable labor price variance
B) An unfavorable labor price variance
C) A favorable labor usage variance
D) An unfavorable labor usage variance
Q2) Indicate whether each of the following statements is true or false. Standards for direct materials and direct labor should be set by a company's accounting department.______ Standards for direct materials and direct labor should be reevaluated frequently in order to remain relevant and useful.______ Historical information is of little use in establishing standards.______ A standard represents what should be,not what is or was.______ Managers should consider behavioral implications when developing standards.______
Q3) Management by exception means that only unfavorable cost variances are investigated.
A)True
B)False
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Chapter 9: Responsibility Accounting
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Sample Questions
Q1) The concept that says managers should be evaluated on the basis of revenues and/or expenses they can control is known as the:
A) Management by exception concept.
B) Controllability concept.
C) Responsibility concept.
D) None of these answers are correct.
Q2) Which of the following statements regarding responsibility accounting is not correct?
A) It calls for the preparation of reports containing detailed information regarding the performance of a responsibility center.
B) It is most effective in a decentralized business structure where many managers exert control over various segments of a company's operations.
C) It calls for the preparation of responsibility reports listing the budgeted and actual revenue and/or expense items over which the manager has control.
D) It requires top management to prepare a budget for the entire company and communicate that plan to lower levels of management.
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11
Chapter 10: Planning for Capital Investments
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155 Flashcards
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Sample Questions
Q1) What is the reinvestment assumption,and how does the assumption affect capital investment analyses?
Q2) Mary needs to have $20,000 one year from today.The formula to compute the amount of money that must be invested today is future value ÷ (1 interest rate).
A)True
B)False
Q3) The future value of $1 table should be used to discount lump sum cash flows expected to occur in the future.
A)True
B)False
Q4) Which of the following is the approximate internal rate of return for an investment that costs $33,550 and provides a $5,000 annuity for 10 years? (PV of $1 and PVA of $1)(Use appropriate factor(s)from the tables provided.)
A) 5%
B) 6%
C) 8%
D) 10%
Q5) Describe what is meant by the time value of money.
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Chapter 11: Product Costing in Service and Manufacturing
Entities
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Generally accepted accounting principles require that a company use variable costing for financial reporting.
A)True
B)False
Q2) Describe how firms use service and product cost information.
Q3) Which of the following correctly computes cost of goods manufactured?
A) Beginning work in process + Direct materials used + Direct labor + Overhead Ending work in process.
B) Beginning work in process + Cost of goods sold Ending finished goods
C) Beginning work in process + Direct materials used + Direct labor + Overhead
D) None of these answers are correct.
Q4) Information about all three manufacturing inventory accounts is required to prepare the cost of goods manufactured and sold schedule.
A)True
B)False
Q5) In calculating product costs,actual direct materials and actual direct labor are charged to the Work in Process account; however,an estimated amount of overhead is charged to the account.Why is overhead accounted for differently than the other costs of production?
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Chapter 12: Job-Order, process, and Hybrid Costing Systems
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Sample Questions
Q1) Process costing is used for products produced in mass quantities through a continuous process that provides similar inputs to each unit produced.
A)True
B)False
Q2) O'Hare Company is a manufacturing firm that uses a job-order costing system to determine the costs of its products.During the current accounting period,O'Hare paid $700 for equipment rental and other indirect costs.The recognition of this event would:
A) Decrease total assets.
B) Increase total assets.
C) Reduce net income.
D) Have no impact on total assets.
Q3) A company that uses a process costing system would calculate the cost per equivalent unit and then use that amount to allocate costs between the goods transferred out and the beginning work in process inventory.
A)True
B)False
Q4) Why is the concept of equivalent units important for process costing?
Q5) What source documents would be used in preparing a job cost sheet?
Page 14
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Chapter 13: Financial Statement Analysis
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Sample Questions
Q1) Accrual accounting requires the use of many estimates,including:
A) Uncollectible accounts expense.
B) Warranty costs.
C) Assets' useful lives.
D) All of these answers are correct.
Q2) Solvency ratios are used to assess a company's:
A) Long-term debt-paying ability.
B) Profitability.
C) Short-term debt-paying ability.
D) Efficiency in use of its assets.
Q3) Grove Corporation had sales of $3,000,000,cost of goods sold of $2,250,000,and average inventory of $500,000.What was Grove's inventory turnover ratio for the period?
A) 1.6 times
B) 6 times
C) 4.5 times
D) 23 times
Q4) Working capital is current assets minus current liabilities.
A)True
B)False
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Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) Pierce Corporation reported a $3,600 balance in accounts receivable on January 1,Year 2.During the year,sales on account in the amount of $24,800 were made.If the ending balance of accounts receivable is $3,700,what is the amount of cash received from customers?
A) $21,200
B) $21,500
C) $28,400
D) $24,700
Q2) Under the indirect method,depreciation expense would be subtracted from net income when determining the net cash flow from operating activities.
A)True
B)False
Q3) What kinds of cash flows are reported as financing activities on the statement of cash flows?
Q4) The indirect method of preparing the statement of cash flows is recommended by the Financial Accounting Standards Board.
A)True
B)False
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