Business Administration
Question Bank
Course Introduction
Business Administration is an interdisciplinary field that encompasses the principles and practices involved in managing organizations effectively. This course introduces students to key concepts such as organizational behavior, strategic planning, financial management, marketing, operations, and human resources. Through case studies and practical applications, students learn to analyze business problems, develop solutions, and make informed decisions that drive organizational success. Emphasis is placed on ethical leadership, effective communication, and adapting to the dynamic global business environment. By mastering foundational business skills, students are prepared for diverse career opportunities in both the public and private sectors.
Recommended Textbook
Cost Accounting A Managerial Emphasis 6th Canadian Edition by Charles T. Horngren
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2
Chapter 1: The Accountants Vital Role in Decision Making
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Sample Questions
Q1) TQM is a method for improving quality.
A)True
B)False
Answer: True
Q2) What areas of responsibility does a chief financial officer have in a typical organization?
Answer: The responsibilities vary among organizations, but generally include the following areas: controllership, treasury, risk management, taxation, investor relations, and internal audit.
Q3) What is the professional designation for management accountants?
A) Chartered Accountant
B) Certified Management Accountant
C) Certified General Accountant
D) Certified Financial Executive
E) Chartered Management Accountant
Answer: B
Q4) Key success factors are geared to improving customer satisfaction.
A)True
B)False Answer: True
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Chapter 2: An Introduction to Cost Terms and Purposes
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Sample Questions
Q1) When producing for a government contract, all costs allowed by the producer will be paid by the government.
A)True
B)False
Answer: False
Q2) Which of the following statements about the key features of cost accounting and cost management is true?
A) When making decisions about what products to produce, managers need to know how revenue and costs vary with changes in output levels.
B) Managers need to understand that period costs remain the same from one period to the next.
C) The costing system allocates direct costs and traces indirect costs to products.
D) When making decisions, managers must understand that all revenue and costs are relevant.
E) Cost accounting is used for managerial decision making, not for financial statements.
Answer: A
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4
Chapter 3: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Events, as distinguished from actions, would include
A) personnel policy options.
B) decisions on time schedules.
C) decisions on direct material vendors.
D) a financial recession.
E) price changes of the company's products.
Answer: D
Q2) What is the break-even point in tickets sold of option one?
A) 85 tickets
B) 80 tickets
C) 76 tickets
D) 60 tickets
E) 24 tickets
Answer: C
Q3) Operating margin is the same as operating revenues in CVP analysis.
A)True
B)False
Answer: False
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Chapter 4: Job Costing
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Sample Questions
Q1) Sara employs 25 professional cleaners. Budgeted costs total $900,000 of which $525,000 are direct costs. Actual indirect costs were $396,900. Budgeted professional labour hours are 500,000 and actual hours were 525,000. What is the budgeted direct cost assignment rate?
A) $1.80 per hour
B) $1.7857 per hour
C) $0.75 per hour
D) $1.05 per hour
E) $1.00 per hour
Q2) The difference between the actual costing and normal costing methods is that actual costing uses a budgeted indirect cost rate while normal costing uses an actual indirect cost rate.
A)True
B)False
Q3) Normal costing refers to
A) the average cost.
B) costs within the relevant range.
C) costs that behave like other similar costs.
D) costs included in normal pools.
E) allocating indirect costs at standard rates.
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Chapter 5: Activity-Based Costing and Management
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Sample Questions
Q1) Compute the billing to each major client for the month.
A) School Board, $134,440.00; City Gov't, $7,050.50
B) School Board, $8,090.00; City Gov't, $134,440.00
C) School Board, $134,440.00; City Gov't, $4,323.50
D) School Board, $7,050.50; City Gov't, $7,685.00
E) School Board, $8,090.00; City Gov't, $7,050.50
Q2) When using activity-based costing in a manufacturing setting, its distinctive feature is the focus on
A) activities as the fundamental cost objects.
B) minimizing the number of journal entries related to the manufacturing process.
C) minimizing manufacturing costs.
D) materials handling.
E) materials sorting.
Q3) The costs of hiring building security would be which of the following?
A) output unit-level costs
B) batch-level costs
C) general-level costs
D) product-sustaining costs
E) facility-sustaining costs
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Page 7
Chapter 6: Master Budget and Responsibility Accounting
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Sample Questions
Q1) Beginning with the cash budget, each budget supporting the master budget follows step by step in logical fashion.
A)True
B)False
Q2) What will be Fair Score Company's budgeted total cost of direct materials used in 2012?
A) $3,400,000
B) $3,800,000
C) $3,600,000
D) $3,200,000
E) $3,155,000
Q3) What are the 2012 budgeted costs for direct manufacturing labour?
A) $62,000
B) $60,000
C) $61,000
D) $59,000
E) $63,000
Q4) Budgeted financial statements are also referred to as pro forma statements. A)True
B)False
Page 8
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Chapter 7: Flexible Budgets, Variances, and Management
Control: I
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Sample Questions
Q1) What is the static-budget variance of operating income?
A) $3,800 favourable
B) $1,200 unfavourable
C) $6,200 favourable
D) $6,200 unfavourable
E) $1,200 favourable
Q2) Describe the purpose of variance analysis.
Q3) Price variances can be calculated for batch-level costs as well as for output unit-level costs.
A)True
B)False
Q4) In a manufacturing area of an organization; poor product design, problems with the quality of materials, and scheduling conflicts could result in
A) a favourable materials efficiency variance.
B) a favourable labour efficiency variance.
C) a favourable materials effectiveness variance.
D) an unfavourable materials effectiveness variance.
E) an unfavourable materials efficiency variance.
Q5) What is benchmarking, and how is it useful to a company?
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Chapter 8: Flexible Budgets, Variances, and Management
Control: II
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Sample Questions
Q1) Capacity cost is
A) only an inventoriable cost.
B) only a period cost.
C) never amortized.
D) a variable manufacturing overhead cost.
E) a fixed manufacturing overhead cost.
Q2) The variable overhead efficiency variance is computed in a different way than the efficiency variance for direct-cost items.
A)True
B)False
Q3) Delivering value to the customer requires executing activities important to the value proposition. Many of the activities cannot be evaluated by financial measures of performance. List five non-financial measures of performance applicable to the hospitality industry.
Q4) Financial measures of performance include
A) operating income.
B) market share.
C) on-time delivery performance.
D) customer acquisition rate.
E) order time to completion.
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Chapter 9: Income Effects of Denominator Level on Inventory Valuation
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Sample Questions
Q1) A possible criticism of ________ costing is that fixed manufacturing overhead is treated as a/an ________.
A) variable; asset
B) absorption; period cost
C) absorption; asset
D) variable; liability
E) absorption; variable cost in the long run
Q2) Normandeau Corporation manufactures and sells laptop computers and uses standard costing. For the month of September there was no beginning inventory, there were 1,500 units produced and 1,250 units sold. The manufacturing variable cost per unit is $770 and the operating cost per unit was $625. The fixed manufacturing cost is $450,000 and the fixed operating cost is $75,000. The selling price per unit is $1,850.
Required:
Prepare the income statement for Normandeau Corporation for September under variable costing.
Q3) Variable costing does not include variable indirect manufacturing costs as inventorial costs.
A)True
B)False
Page 11
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Chapter 10: Quantitative Analyses of Cost Functions
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Sample Questions
Q1) Write a linear cost function equation for each of the following conditions. Use y for estimated costs and X for activity of the cost driver. a. Direct manufacturing labour is $10 per hour.
B) Direct materials cost $9.20 per cubic metre.
C) Utilities have a minimum charge of $1,000, plus a charge of $0.05 per kilowatt-hour.
D) Machine operating costs include $200,000 of machine amortization per year, plus $75 of utility costs for each day the machinery is in operation.
Q2) A nonlinear cost function
A) has two constants and a single slope.
B) does not effectively describe the behaviour of costs all of the time.
C) never describes the behaviour of costs in relation to the cost driver.
D) always describes the behaviour of costs in relation to the cost drivers.
E) means the relevant range cannot be determined for that cost.
Q3) Discuss the potential use of nonlinear curves in cost functions and cost analysis. Give some examples.
Q4) What are the estimated total costs if Miller's expects to sell 6,500 units next year?
Q5) What were total fixed costs for 2012?
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Page 12
Chapter 11: Decision Making and Relevant Information
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Sample Questions
Q1) Quantitative factors are always expressed in financial terms.
A)True
B)False
Q2) What should Jim do? What are his savings in the first year?
A) Buy the Honda Civic; $15,080
B) Fix the Geo Prizm; $2,820
C) Buy the Honda Civic; $180
D) Fix the Geo Prizm; $5,280
E) Buy the Honda Civic; $80
Q3) A customer can be considered to be a cost object, in the decision to add or drop a particular customer.
A)True
B)False
Q4) When making decisions, it is best to use
A) average costs.
B) fixed costs that would be incurred.
C) unit cost, rather than total cost.
D) variable costs that would be incurred.
E) relevant costs.
Q5) Explain what revenues and costs are relevant when choosing among alternatives.
Page 13
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Chapter 12: Pricing Decisions, Product Profitability Decisions, and Cost Management
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Sample Questions
Q1) Explain the differences between short-run pricing decisions and long-run pricing decisions.
Q2) For setting long-term prices a company should use full product costs. Full product costs for pricing purposes
A) include direct costs only.
B) include all manufacturing costs only.
C) does not include fixed overhead.
D) equals manufacturing and selling costs.
E) include all direct costs plus an appropriate allocation of the indirect costs of all business functions.
Q3) Relevant costs for pricing decisions include manufacturing costs, but not costs from other value-chain functions.
A)True
B)False
Q4) Price discrimination is the practice of charging some customers a higher price than is charged to other customers.
A)True
B)False
Q5) What is the primary reason a firm would adopt target costing?
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Chapter 13: Strategy, Balanced Scorecard, and Profitability Analysis
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Sample Questions
Q1) What are the four key perspectives in the balanced scorecard?
Q2) Companies that have been successful at cost leadership will show large favorable price-recovery and growth components when analyzing profitability.
A)True
B)False
Q3) Required:
a. What is the net effect on operating income as a result of the productivity component?
Q4) What is the primary purpose of the balanced scorecard?
Q5) The productivity component of operating income focuses exclusively on revenues.
A)True
B)False
Q6) Productivity measures the relationship between actual inputs used (both quantities and costs) and standard outputs produced.
A)True
B)False
Q7) Describe three key balanced scorecard components in doing a strategic analysis of operating income.
Q8) Identify and explain Porter's Five Forces model.
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Chapter 14: Period Cost Allocation
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Sample Questions
Q1) How much of the cost of the Personnel Department is allocated to Department B using the direct method?
A) $8,000
B) $15,000
C) $13,333
D) $12,632
E) $48,000
Q2) If the government wants to contract a very large scale project with significant uncertainty about what the final cost will be, often a cost-plus contract is awarded to attract qualified contractors who may otherwise not be willing to accept the risks inherent in a guaranteed bid price.
A)True
B)False
Q3) A support department adds value directly to a product or service, which is observable by the customer.
A)True
B)False
Q4) A company might choose to allocate corporate costs to various divisions within the company for what four purposes? Give an example of each.
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Chapter 15: Cost Allocation: Joint Products and Byproducts
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Sample Questions
Q1) An advantage of the sales value at split off method is
A) the fact that it can be supported subjectively.
B) the fact that only a few assumptions are required beyond the split off point.
C) the fact that there may not be a ready market at the split off point.
D) it always yields the same results as the gross margin percentage method.
E) the cost allocation base is well understood.
Q2) All of the following changes may indicate a change in product classification of a manufacturing process which has a split off point EXCEPT
A) scrap items increase in sales value.
B) a main product becomes a joint product.
C) a main product becomes technologically obsolete.
D) a byproduct loses its market due to a new invention.
E) a byproduct increases in market value.
Q3) What are the pencil casings' sales value at the split-off point?
A) $300
B) $1,480
C) $3,000
D) $3,750
E) $4,500
Q4) What are a joint cost and a splitoff point?
Page 17
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Chapter 16: Revenue and Customer Profitability Analysis
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Sample Questions
Q1) Using the stand-alone method with selling price as the weight for revenue allocation, what amount of revenue will be allocated to Math Fun in the package that contains all three products?
A) $48.25
B) $60.00
C) $45.60
D) $50.67
E) $33.60
Q2) Revenue shedding refers to the strategy of providing price discounts on a long-term basis to specific customers.
A)True
B)False
Q3) Which of the following is not a sales related variance?
A) sales volume variance
B) sales quantity variance
C) market size variance
D) direct materials yield variance
E) market share variance
Q4) List at least three different levels of costs in a customer-cost hierarchy and an example of each.
18
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Chapter 17: Process Costing
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Sample Questions
Q1) What is the total amount debited to the work-in-process account during the month of June?
A) $450,000
B) $2,000,000
C) $2,270,000
D) $2,450,000
E) $3,250,000
Q2) Examples of industries that would use process costing include the pharmaceutical and semiconductor industry.
A)True
B)False
Q3) What are the equivalent units for direct materials and conversion costs, respectively?
A) 1,200.5 units; 1,160.64 units
B) 1,050 units; 1,012.5 units
C) 1,050 units; 887.5 units
D) 962 units; 990 units
E) 990 units and 962 units
Q4) What is meant by the term "prime cost pool"?
Q5) Describe three objectives of a costing system.
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Chapter 18: Spoilage, Rework, and Scrap
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Sample Questions
Q1) Normal spoilage totalled
A) 1,600 units.
B) 2,000 units.
C) 2,700 units.
D) 1,920 units.
E) 1,700 units.
Q2) Units of production that can be reprocessed and then be sold as finished goods are best known as
A) reworked units.
B) scrap.
C) normal spoilage.
D) work-in-process.
E) abnormal spoilage.
Q3) When scrap is insignificant in value,
A) it is recorded when discovered.
B) it may not be recognized until the point of sale.
C) it is recognized at the point of production.
D) it is recorded at its fair market value.
E) it is not necessary to recognize it in the accounting records.
Q4) What are the objectives in accounting for spoilage?
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Chapter 19: Cost Management: Quality, Time, and the Theory of Constraints
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Sample Questions
Q1) The number of defects shipped to customers as a percentage of total units shipped is a type of nonfinancial quality measure.
A)True
B)False
Q2) When new products are introduced, learning-curve effects can have a major influence on production scheduling.
A)True
B)False
Q3) Costs incurred in detecting which of the individual units do not conform to specifications are called
A) correction costs.
B) external failure costs.
C) internal failure costs.
D) prevention costs.
E) appraisal costs.
Q4) Manufacturing lead time is a combination of order receipt time and order manufacturing time.
A)True
B)False
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Chapter 20: Inventory Cost Management Strategies
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Sample Questions
Q1) The possibility of a conflict between the order quantity that an EOQ model recommends and the order quantity that the purchasing manager regards as optimal is increased with
A) inventory costs which are computed with the FIFO method.
B) lower priced inventory items.
C) the absence of opportunity costs not being recorded in conventional accounting systems.
D) the absence of quality costs not being recorded in conventional accounting systems. E) lower priced costs of goods sold.
Q2) Bottle It has one particular product that has an annual demand of 1,000 units. Total manufacturing costs per unit total $40 and set-up costs per batch are $15. Direct material ordering costs for the product total $10 per order. Currently the carrying costs per unit are 25 percent of manufacturing costs. Required:
Determine the economic manufacturing (order) quantity.
Q3) What is a supply chain, and what are the benefits of a supply chain analysis? Provide an example of these benefits.
Q4) The costs associated with storage are an example of which cost category?
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Page 22
Chapter 21: Capital Budgeting: Methods of Investment Analysis
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Sample Questions
Q1) Explain capital budgeting, and then briefly discuss each of the six processes of the capital budgeting decision process model?
Q2) The time value of money refers to the concept that
A) saving money has value for the business.
B) both time and money are valuable resources to any organization.
C) money invested today will grow.
D) the value of a monetary unit today is worth less than the same unit in the future.
E) the value of a monetary unit today is worth more than the same unit in the future.
Q3) When all future cash inflows and outflows are discounted to the present using the required rate of return, the method used is
A) capital budgeting.
B) discounted cash flow.
C) net present value.
D) required rate of return.
E) payback method.
Q4) What are the four alternative methods for evaluating capital budgeting projects? What is an advantage and disadvantage of each method?
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Chapter 22: Capital Budgeting: a Closer Look
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Q1) Johnson's Mini Mart is considering the purchase of a new electronic bar code scanner that will keep detailed records of every sale transaction. The scanner is likely to have little effect on operating revenues and expenses. Its acquisition is primarily for increasing management information about sales. The scanner costs $4,600 and would be included in Class 10 for tax purposes. Johnson's accountant has stated that due to the fast write-off of Class 10 assets (30% CCA rate), its real cost is less than $4,600. Due to technological obsolescence, it would have zero salvage value.
Required:
a. Since the bar code scanner cannot produce a profit or even show short run savings, should it even be evaluated as a capital budgeting expenditure? Explain.
b. Explain whether or not the real cost is less than $4,600.
c. If the company has a 40 percent tax rate and a 10% discount rate, compute the real cost of the bar code scanner. Assume there would be other assets in the class.
Q2) The certainty equivalent is calculate as the expected value based on the probability distribution of a project's cash flows.
A)True
B)False
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Chapter 23: Transfer Pricing and Multinational Management Control Systems
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Q1) It is possible to increase the overall after-tax profit of a multinational corporation by adjusting transfer prices.
A)True
B)False
Q2) Under what conditions would transferring products or services at market prices lead to optimal decisions within the organization?
A) when the immediate market is a monopoly
B) when there is minimal interdependence between subunit divisions
C) when there is excess capacity
D) when the immediate market is not a monopoly, and there is minimal interdependence between subunit divisions
E) when the immediate market is only somewhat competitive and there is excess capacity
Q3) Explain what transfer prices are, and what are the four criteria used to evaluate them?
Q4) An important advantage of decentralized operations is that it improves corporate control.
A)True B)False
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Chapter 24: Multinational Performance Measurement and Compensation
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Q1) Measurement of one group's performance against the best possible level of performance exhibited by another group, either inside or outside the organization, is known as
A) teamwork analysis.
B) performance-variation analysis.
C) comparative analysis.
D) benchmarking.
E) competition analysis.
Q2) Return on investment highlights the benefits that managers can obtain by reducing their investments in current or fixed assets.
A)True
B)False
Q3) What are the respective residual incomes for the Toronto and Vancouver divisions?
A) $975,000; $1,125,000
B) $1,025,000; $1,125,000
C) $1,025,000; $2,375,000
D) $2,375,000; $1,025,000
E) $1,075,000; $1,125,000
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