Advanced Managerial Accounting Solved Exam Questions
Course Introduction
Advanced Managerial Accounting explores the strategic application of accounting information in managerial decision-making, planning, and control. This course delves into advanced topics such as cost allocation, activity-based costing, performance measurement, budgeting, variance analysis, and strategic cost management. Students will analyze real-world case studies and apply quantitative and qualitative methods to optimize resource allocation, enhance organizational efficiency, and support long-term profitability. Emphasis is placed on the integration of financial and non-financial data to solve complex business challenges and drive effective management strategies.
Recommended Textbook
Managerial Accounting 9th Canadian Edition by Ray Garrison
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14 Chapters
1982 Verified Questions
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Page 2
Chapter 1: Managerial Accounting and the Business Environment
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Sample Questions
Q1) Which of the following is NOT one of the five steps in the framework used to guide Six Sigma improvement efforts?
A) Analyze.
B) Control.
C) Digitize.
D) Measure.
Answer: C
Q2) The answers to many of the questions raised by prospective providers of funds can be found in the business plan.
A)True
B)False
Answer: True
Q3) Managerial accounting places less emphasis on precision and more emphasis on timeliness of data than financial accounting does.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Cost Terms, Concepts, and Classifications
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Sample Questions
Q1) Which of the following would not be treated as a product cost for external financial reporting purposes?
A) Depreciation on a factory building.
B) Salaries of factory workers.
C) Indirect labour in the factory.
D) Advertising expenses.
Answer: D
Q2) If raw materials costing $35,000 were purchased during January,what were the total manufacturing costs for the month?
A) $145,000.
B) $144,000.
C) $151,000.
D) $146,000.
Answer: D
Q3) In a manufacturing company,goods available for sale equals the sum of the cost of goods manufactured and the beginning finished goods inventory.
A)True
B)False
Answer: True
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Chapter 3: Systems Design: Job-Order Costing
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Sample Questions
Q1) Harrell Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs.At the beginning of the year,the company estimated its total manufacturing overhead cost at $400,000 and its direct labour hours at 100,000 hours.The actual overhead cost incurred during the year was $350,000 and the actual direct labour hours incurred on jobs during the year was 90,000 hours.What would be the manufacturing overhead for the year?
A) $10,000 under applied.
B) $10,000 over applied.
C) $50,000 under applied.
D) $50,000 over applied.
Answer: B
Q2) (Appendix 3A)What is the predetermined overhead rate based on capacity to the nearest whole cent?
A) $5.35
B) $6.69
C) $5.50
D) $5.40
Answer: D
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Chapter 4: Systems Design: Process Costing
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Sample Questions
Q1) (Appendix 4B)What would be the amount of Maintenance Department cost allocated to the Generation Department?
A) $123,750.
B) $132,000.
C) $140,000.
D) $150,685.
Q2) (Appendix 4B)Which of the following statements about reciprocal service department costs is correct?
A) They are allocated to producing departments under the direct method but not allocated to producing departments at all under the step-down method.
B) They are allocated to producing departments under the step-down method but not allocated to producing departments at all under the direct method.
C) They are not allocated to producing departments under either the direct or the step-down methods.
D) They are allocated to producing departments under both the direct and step-down methods.
Q3) $4 per EU x 5,000 x 80% = $16,000 b)
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Chapter 5: Activity-Based Costing: A Tool to Aid Decision Making
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Sample Questions
Q1) Activity-based costing uses a number of activity cost pools,each of which is allocated to products on the basis of direct labour hours.
A)True
B)False
Q2) What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?
A) $1.35.
B) $1.73.
C) $1.79.
D) $2.10.
Q3) What would be the total overhead cost per customer according to the activity-based costing system,rounded to the nearest whole dollar? In other words,what would be the overall activity rate for the Customer Support activity cost pool?
A) $10,800.
B) $12,600.
C) $13,650.
D) $14,400.
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Chapter 6: Cost Behaviour: Analysis and Use
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Sample Questions
Q1) What is the contribution margin of Evans Retail Stores,Inc.,for the first quarter?
A) $140,000.
B) $190,000.
C) $210,000.
D) $300,000.
Q2) The contribution approach to the income statement classifies costs by behaviour rather than by function.
A)True
B)False
Q3) The concept of the relevant range does not apply to fixed costs.
A)True
B)False
Q4) Within the relevant range of activity,how will variable cost per unit behave?
A) It will increase in proportion with the level of activity.
B) It will remain constant.
C) It will vary inversely with the level of activity.
D) Its behaviour cannot be determined without additional information.
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8
Chapter 7: Cost-Volume-Profit Relationships
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Sample Questions
Q1) What is the break-even point in sales dollars?
A) $240,000.
B) $560,000.
C) $728,000.
D) $408,000.
Q2) If the company's fixed costs decrease by 20% next year,all other factors remaining the same,by how much will the break-even level change compared to that of the current year,rounded to the nearest whole unit?
A) 200-unit increase.
B) 440-unit decrease.
C) 200-unit decrease.
D) No change in the break-even point.
Q3) What is the variable expense per unit?
A) $31.20.
B) $24.00.
C) $36.00.
D) $28.80.
Q4) At the break-even point: Sales - Variable expenses = Fixed expenses.
A)True
B)False
9
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Chapter 8: Variable Costing: A Tool for Management
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Sample Questions
Q1) What is the unit product cost for the month under absorption costing?
A) $60.
B) $66.
C) $87.
D) $93.
Q2) What was the total period cost for the month under the absorption costing approach?
A) $61,200.
B) $88,400.
C) $93,600.
D) $182,000
Q3) Which of the following costs/expenses is included in product costs under both absorption costing and variable costing?
A) Supervisory salaries.
B) Equipment depreciation.
C) Variable manufacturing costs.
D) Variable selling expenses.
Q4) Sales volume is the only driver of operating income under absorption costing. A)True B)False
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Chapter 9: Budgeting
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Sample Questions
Q1) In companies that have "no lay-off" policies,the total direct labour cost for a budget period is computed by taking the total direct labour hours needed to make the budgeted output of completed units and multiplying them by the direct labour wage rate.
A)True B)False
Q2) What is the desired ending inventory for March?
A) 380 units.
B) 460 units.
C) 540 units.
D) 720 units.
Q3) What is the variance for laundry costs in the flexible budget performance report for the month?
A) $5,080 F
B) $5,080 U
C) $5,800 U
D) $5,800 F
Q4) The effect of responsibility accounting is to personalize the accounting system. A)True B)False
Page 11
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Chapter 10: Standard Costs and Overhead Analysis
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Sample Questions
Q1) What was the materials quantity variance?
A) $760 favourable.
B) $760 unfavourable.
C) $800 unfavourable.
D) $4,000 unfavourable.
Q2) The overhead spending variance contains price but not quantity elements.
A)True
B)False
Q3) What was the denominator level of activity in direct labour hours (DLHs)used by Claus in setting the predetermined overhead rate for January?
A) 8,750 DLHs.
B) 9,250 DLHs.
C) 9,500 DLHs.
D) 10,500 DLHs.
Q4) What was the materials quantity variance for the month?
A) $6,550 unfavourable.
B) $6,600 unfavourable.
C) $15,982 unfavourable.
D) $16,104 unfavourable.
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Chapter 11: Reporting for Control
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Sample Questions
Q1) (Appendix 11A)What was the market share variance for last year?
A) $16,537.50 unfavourable.
B) $18,375.00 favourable.
C) $18,375.00 unfavourable.
D) $21,875.00 favourable.
Q2) What were the sales for Year 2?
A) $1,200,000.
B) $3,000,000.
C) $3,200,000.
D) $3,333,333.
Q3) (Appendix 11B)Which one of the following is NOT an example of an order-filling marketing activity?
A) Warehousing of customers' orders.
B) Advertising.
C) Order entry.
D) Collection of accounts receivable.
Q4) Only those costs that would disappear over time if a segment were eliminated should be considered traceable costs of the segment.
A)True
B)False
Page 13
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Chapter 12: Relevant Costs for Decision Making
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Sample Questions
Q1) (Appendix 12A) Turnhilm, Inc. is considering adding a small electric mower to its product line. Management believes that in order to be competitive, the mower cannot be priced above $139. The company requires a minimum return of 25% on its investments. Launching the new product would require an investment of $8,000,000. Sales are expected to be 40,000 units of the mower per year.
Required:
a) Compute the target cost of a mower.
b) Suppose the target cost calculated in part (b) above is not attainable using the company's current manufacturing facilities. Specifically, the average cost of producing the 40,000 units is $100 per unit. Besides abandoning the idea, what specific options are available to Turnhilm?
c) Suppose, using the company's current manufacturing facilities the average cost of producing the 40,000 units is only $80. What other specific options are available to Turnhilm?
Q2) Opportunity costs are recorded in the accounts of an organization.
A)True
B)False
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Page 14
Chapter 13: Capital Budgeting Decisions
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Sample Questions
Q1) White Company's required rate of return on capital budgeting projects is 12%.The company is considering an investment opportunity that would yield a cash flow of $10,000 in five years.What is the most that the company should be willing to invest in this project? (Ignore income taxes in this problem.)
A) $2,774.
B) $5,670.
C) $17,637.
D) $36,050.
Q2) Horn Corporation is considering investing in a four-year project.Cash inflows from the project are expected to be as follows: Year 1,$2,000; Year 2,$2,200; Year 3,$2,400; Year 4,$2,600.If using a discount rate of 8%,the project has a positive net present value of $500,what was the amount of the original investment? (Ignore income taxes in this problem.)
A) $1,411.
B) $2,411.
C) $7,054.
D) $8,054.
Q3) Monson Company is considering three investment opportunities with cash flows as described below: (Ignore income taxes in this problem.)
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Page 15
Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) March Company's accounts receivable turnover for Year 2 was closest to which of the following?
A) 7.2 times.
B) 7.5 times.
C) 10.4 times.
D) 10.7 times.
Q2) Lisa Inc.'s inventory turnover for Year 2 was closest to which of the following?
A) 3.7 times.
B) 4.0 times.
C) 4.4 times.
D) 5.0 times.
Q3) Larned Company's dividend yield ratio on December 31,Year 2 was closest to which of the following?
A) 5.5%.
B) 8.3%.
C) 8.7%.
D) 9.1%.
Q4) Financial statements for Qiang Company appear below:
Q5) Financial statements for Quade Company appear below:
Q6) Financial statements for Rarig Company appear below:
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