Course Introduction
Business Decision Making
Exam Materials
Business Decision Making is a comprehensive course that explores the frameworks, tools, and analytical techniques required for effective decision-making in a business context. Students learn to identify problems, evaluate alternatives, and implement solutions across a range of functional areas including marketing, finance, operations, and strategy. Through real-world cases, simulations, and quantitative analysis, the course develops critical thinking, data-driven analysis, and communication skills necessary to make sound and ethical business decisions in a complex and dynamic environment.
Recommended Textbook Managerial Accounting 12th Edition by Carl S. Warren
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14 Chapters
2382 Verified Questions
2382 Flashcards
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Page 2
Chapter 2: Job Order Costing
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176 Flashcards
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Sample Questions
Q1) Define and discuss the two main types of cost accounting systems for manufacturing operations. What are their similarities and differences?
Answer: The two main cost accounting systems are job order cost and process cost. A job order cost system provides product costs for each quantity of product that is manufactured. Each quantity of product that is produced is called a job. This type of system is used by companies that manufacture custom products or batches of similar products.
A process cost system provides product costs for each manufacturing department or process. Process cost systems are used by companies that manufacture products that are indistinguishable from each other and manufactured using a continuous process. They are similar in that both systems are widely used and a company may use both -job order for some products and process costing for others.
Q2) Activity-based costing is a method of accumulating and allocating costs by department.
A)True
B)False
Answer: False
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Page 3
Chapter 3: Process Cost Systems
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Sample Questions
Q1) If 30,000 units of materials enter production during the first year of operations, 25,000 of the units are finished, and 5,000 are 50% completed, the number of equivalent units of production would be 28,500.
A)True
B)False
Answer: False
Q2) The FIFO method of process costing is simpler than the Average cost method. A)True
B)False
Answer: False
Q3) The two categories of cost comprising conversion costs are:
A) direct labor and indirect labor
B) direct labor and factory overhead
C) factory overhead and direct materials
D) direct labor and direct materials
Answer: B
Q4) Job order manufacturing and process manufacturing are two major costing systems used in manufacturing. Briefly contrast the characteristics of these two systems. Answer: 11ea8e07_02a7_ae04_b636_29edde59da01_TB2143_00
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Chapter 4: Cost Behavior and Cost-Volume-Profit Analysis
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Sample Questions
Q1) Which of the following is an example of a cost that varies in total as the number of units produced changes?
A) Salary of a production supervisor
B) Direct materials cost
C) Property taxes on factory buildings
D) Straight-line depreciation on factory equipment
Q2) Explain how variable costing net income will be different than absorption costing net income under the following situations:
(1) A company had no beginning or ending inventory. During the year they produced and sold 10,000 units.
(2) A company had no beginning inventory. During the year they produced 10,000 units and sold 8,000 units.
(3) A company had 2,000 units in beginning inventory. During the year they produced 10,000 units and sold 12,000 units.
Q3) Break-even analysis is one type of cost-volume-profit analysis.
A)True
B)False
Q4) The cost graphs in the illustration below shows various types of cost behaviors.
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Page 5
Chapter 5: Variable Costing for Management Analysis
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Sample Questions
Q1) In contribution margin analysis, the increase or decrease in unit sales price or unit cost on the number of units sold is referred to as the:
A) sales factor
B) cost of goods sold factor
C) quantity factor
D) unit price or unit cost factor
Q2) In determining cost of goods sold, two alternate costing concepts can be used: absorption costing and variable costing.
A)True
B)False
Q3) For a period during which the quantity of product manufactured was less than the quantity sold, income from operations reported under absorption costing will be larger than income from operations reported under variable costing.
A)True
B)False
Q4) The contribution margin and the manufacturing margin are usually equal.
A)True
B)False
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Chapter 6: Budgeting
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Sample Questions
Q1) A sporting goods store purchased $7,000 of ski boots in October. The store had $3,000 of ski boots in inventory at the beginning of October, and expects to have $2,000 of ski boots in inventory at the end of October to cover part of anticipated November sales. What is the budgeted cost of goods sold for October?
A) $10,000
B) $5,700
C) $8,000
D) $9,500
Q2) At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct material of $165,000 and fixed factory overhead of $15,000 for 9,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting?
A) $416,000
B) $370,556
C) $368,889
D) $335,000
Q3) What is a cash budget? How does management use a cash budget?
Q4) What is a capital expenditures budget?
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Chapter 7: Performance Evaluation Using Variances From
Standard Costs
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Sample Questions
Q1) In most businesses, cost standards are established principally by accountants.
A)True
B)False
Q2) If at the end of the fiscal year the variances from standard are significant, the variances should be transferred to the:
A) work in process account only
B) cost of goods sold account only
C) finished goods account only
D) work in process, cost of goods sold, and finished goods accounts
Q3) A variable cost system is an accounting system where standards are set for each manufacturing cost element.
A)True
B)False
Q4) The principle of exceptions allows managers to
A) focus on correcting variances between standard costs and actual costs.
B) focus on correcting variances between variable costs and actual costs.
C) focus on correcting variances between competitor's costs and actual costs.
D) focus on correcting variances between competitor's costs and standard costs.
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Chapter 8: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) Division X of O'Blarney Company has sales of $300,000, cost of goods sold of $120,000, operating expenses of $58,000, and invested assets of $150,000. What is the rate of return on investment for Division X?
A) 9.15%
B) 81.3%
C) 40.7%
D) 200%
Q2) Controllable expenses are those that can be influenced by the decisions of the profit center management.
A)True
B)False
Q3) If income from operations for a division is $6,000, invested assets are $25,000, and sales are $30,000, the investment turnover is 5.
A)True
B)False
Q4) The profit center income statement should include only revenues and expenses that are controlled by the manager.
A)True
B)False
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Chapter 9: Differential Analysis and Product Pricing
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Sample Questions
Q1) Raptor Company is considering replacing equipment which originally cost $500,000 and which has $420,000 accumulated depreciation to date. A new machine will cost $790,000 and the old equipment can be sold for $8,000. What is the sunk cost in this situation?
A) $72,000
B) $80,000
C) $88,000
D) $290,000
Q2) Flyer Company sells a product in a competitive marketplace. Market analysis indicates that their product would probably sell at $48 per unit. Flyer management desires a 12.5% profit margin on sales. Their current full cost per unit for the product is $44 per unit. What is the desired profit per unit?
A) $6
B) $8
C) $5
D) $4
Q3) Using the variable cost concept determine the selling price for 30,000 units using the following data: Variable cost per unit $15.00, total fixed costs $90,000 and desired profit $150,000.
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Page 10
Chapter 10: Capital Investment Analysis
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Sample Questions
Q1) A company is considering the purchase of a new machine for $48,000. Management expects that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,000 per year plus depreciation of $4,000 per year. All revenues and expenses except depreciation are on a cash basis. The payback period for the machine is 12 years. A)True
B)False
Q2) If in evaluating a proposal by use of the net present value method there is an excess of the present value of future cash inflows over the amount to be invested, the rate of return on the proposal exceeds the rate used in the analysis. A)True B)False
Q3) In calculating the net present value of an investment in equipment, the required investment and its terminal residual value should be subtracted from the present value of all future cash inflows.
A)True B)False
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Chapter 11: Cost Allocation and Activity-Based Costing
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Sample Questions
Q1) Blackwelder Factory produces two similar products - small lamps and desk lamps. The total plant overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small lamp production will require 275,000 direct labor hours and desk lamp production will need 125,000 direct labor hours. Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the small lamp production if the actual direct hours for the period is 285,000?
A) $275,000
B) $285,000
C) $440,000
D) $456,000
Q2) ABC is used to allocate selling and administrative expenses to each product based on the product's individual differences in consuming these activities.
A)True
B)False
Q3) A single plantwide overhead rate method is very expensive to apply.
A)True
B)False
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12
Chapter 12: Cost Management for Just-In-Time
Environments
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Sample Questions
Q1) Large batch sizes increase lead time.
A)True
B)False
Q2) Which of the following is an example of a non-financial measure?
A) lead time
B) setup time
C) units scrapped
D) all of the above
Q3) Make-to-order companies produce mainly to stock inventory.
A)True
B)False
Q4) Just-in-Time (JIT) manufacturing favors organizing work around products rather than around processes.
A)True
B)False
Q5) Which of the following is characteristic of the traditional cost system?
A) Many work in process account transactions.
B) Reliance on financial performance measures.
C) Many process control points.
D) All of the above.
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) The statement of cash flows reports a firm's major sources of cash receipts and major uses of cash payments for a period.
A)True
B)False
Q2) Preferred stock issued in exchange for land would be reported in the statement of cash flows in
A) the cash flows from financing activities section
B) the cash flows from investing activities section
C) a separate schedule
D) the cash flows from operating activities section
Q3) Accounts receivable from sales transactions were $51,000 at the beginning of the year and $64,000 at the end of the year. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is
A) $105,000
B) $118,000
C) $92,000
D) $169,000
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) When the rate of return on total assets ratio is greater than the rate of return on common stockholders' equity ratio, the management of the company has effectively used leverage.
A)True
B)False
Q2) Those unusual items reported as deductions from income from continuing operations should be listed net of the related income tax.
A)True
B)False
Q3) Ratios and various other analytical measures are a substitute for sound judgment, nor do they provide definitive guides for action.
A)True
B)False
Q4) The ratio of the sum of cash, receivables, and marketable securities to current liabilities is referred to as the current ratio.
A)True
B)False
Q5) Define solvency and profitability. How are they alike?
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Chapter 15: Managerial Accounting Concepts and Principles
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Sample Questions
Q1) Product costs are not expensed until the product is sold.
A)True
B)False
Q2) Which of the following would be least likely to be considered a managerial accounting report?
A) a report to analyze potential efficiencies and savings for the purchase of new production equipment.
B) a schedule of total manufacturing costs incurred
C) a statement of cost of goods manufactured
D) a statement of stockholders' equity
Q3) Goods that are partway through the manufacturing process, but not yet complete, are referred to as materials inventory.
A)True
B)False
Q4) The controller's staff consists of management accountants responsible for systems and procedures, general accounting, budgets, taxes, and cost accounting.
A)True
B)False
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