Business Decision Making
Exam Solutions
Course Introduction
Business Decision Making explores the processes, tools, and approaches used by managers and business professionals to make sound and effective decisions in complex and uncertain environments. The course emphasizes problem identification, data collection and analysis, application of decision models, and evaluation of alternatives. Topics include decision-making under risk and uncertainty, group decision-making dynamics, use of quantitative and qualitative data, ethical considerations, and the role of technology and information systems. Students will engage in case studies, simulations, and real-world scenarios to develop critical thinking and practical skills for making strategic and operational business decisions.
Recommended Textbook
MANAGERIAL ACCOUNTING Version 1.0 by Kurt Heisinger and Joe Hoyle
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13 Chapters
878 Verified Questions
878 Flashcards
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Chapter 1: What Is Managerial Accounting
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83 Verified Questions
83 Flashcards
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Sample Questions
Q1) All of the following are included in the overarching principles of the IMA's Ethical Professional Practice except:
A)Objectivity.
B)Fairness.
C)Honesty.
D)Professionalism.
E)None of the above.
Answer: D
Q2) The term "factory burden" is synonymous with manufacturing overhead.
A)True
B)False
Answer: True
Q3) Direct labor and direct materials are typically easily traceable to a product.
A)True
B)False
Answer: True
Q4) Tax accountant
Answer: E
Q5) Managerial accountant
Answer: F
Page 3
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Chapter 2: How Is Job Costing Used to Track Production Costs
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44 Verified Questions
44 Flashcards
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Sample Questions
Q1) All of the following are reasons that companies prefer normal costing except:
A)Normal costing averages overhead costs and levels out overhead fluctuations that might occur from month to month.
B)Normal costing tracks actual direct materials,actual direct labor costs,and actual manufacturing overhead costs.
C)Normal costing simplifies recordkeeping.
D)Normal costing provides information for managers to quote customers the price of products based on estimated costs.
E)None of the answer choices is correct.
Answer: B
Q2) Underapplied overhead occurs when actual overhead costs are lower than overhead costs applied to jobs.
A)True
B)False
Answer: False
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Chapter 3: How Does an Organization Use Activity-Based
Costing to Allocate Overhead Costs
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71 Verified Questions
71 Flashcards
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Sample Questions
Q1) Organizations that use activity-based costing to allocate overhead typically have many different products and complex operations.
A)True
B)False
Answer: True
Q2) Which of the following items is not a batch-level activity?
A)Direct materials used by workers to assemble products.
B)Machines set up to produce groups of products.
C)Purchase requisitions issued for raw materials needed to produce groups of products.
D)Quality inspections of groups of products.
E)None of the answer choices is correct.
Answer: A
Q3) As costing systems become more complex,they become more expensive to implement.
A)True
B)False
Answer: True
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Page 5
Chapter 4: How Is Process Costing Used to Track
Production Costs
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58 Verified Questions
58 Flashcards
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Sample Questions
Q1) Which of the following statements is true regarding cost per equivalent unit?
A)This calculation only includes variable costs.
B)This measure is used to assign costs to units transferred out.
C)This measure always stays the same from one month to the next regardless of different levels of production.
D)The formula to calculate this measure uses total equivalent units accounted for divided by total costs to be accounted for.
E)None of the answer choices is correct.
Q2) Two important double-checks included in a production cost report are: (1)units to be accounted for matches units accounted for and (2)total costs to be accounted for matches total costs accounted for.
A)True
B)False
Q3) The production cost report is often prepared using computerized software to minimize math errors and to speed up the process.
A)True
B)False
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Page 6
Chapter 5: How Do Organizations Identify Cost Behavior
Patterns
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69 Verified Questions
69 Flashcards
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Sample Questions
Q1) Regression analysis is one of the most accurate methods for estimating costs,because its estimates are based on the data set as a whole.
A)True
B)False
Q2) Cost estimates made using activity levels outside the relevant range:
A)Are more accurate.
B)May result in poor decisions.
C)Mean that cost behavior patterns are accurate at all levels of activity.
D)Mean the cost estimates will be relevant.
E)None of the answer choices is correct.
Q3) Refer to Exhibit 5-5.What are Tyler's total costs each month?
A)$3,000
B)$9,250
C)$6,250
D)$7,250
E)None of the answer choices is correct.
Q4) The traditional income statement does not separate costs into fixed and variable components.
A)True B)False
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Chapter 6: How Is Cost-Volume-Profit Analysis Used for Decision Making
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79 Verified Questions
79 Flashcards
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Sample Questions
Q1) Operating leverage refers to the level of fixed costs within an organization. A)True
B)False
Q2) Refer to Exhibit 6-2.What would be the operating profit if the unit sales price increases 10 percent?
A)$312,500
B)$212,500
C)$362,500
D)$262,500
E)None of the answer choices is correct.
Q3) Refer to Exhibit 6-6.Which of the following is the correct contribution margin per direct labor hour?
A)$12.50
B)$6.25
C)$0.08
D)$0.10
E)None of the answer choices is correct.
Q4) A decrease in variable costs will reduce the margin of safety.
A)True B)False
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Chapter 7: How Are Relevant Revenues and Costs Used to
Make Decisions
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76 Verified Questions
76 Flashcards
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Sample Questions
Q1) Refer to Exhibit 7-8.What amount of joint costs is allocated to product B using the physical quantities method (pounds)?
A)$360,000
B)$240,000
C)$80,000
D)$60,000
E)None of the answer choices is correct.
Q2) Refer to Exhibit 7-4.If allocated fixed costs are based on sales revenue for each product line as a proportion of total sales revenue,what is the total profit or (loss)for all product lines?
A)$250,000
B)$164,000
C)$126,000
D)$36,000
E)None of the answer choices is correct.
Q3) Production capacity is the only consideration when evaluating special orders.
A)True
B)False
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Chapter 8: How Is Capital Budgeting Used to Make Decisions
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71 Flashcards
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Sample Questions
Q1) Revenue and expense cash flows must be multiplied by one minus the tax rate to get the after-tax cash flow.
A)True
B)False
Q2) Most managers use spreadsheets to calculate the internal rate of return for an investment proposal.
A)True
B)False
Q3) The payback period is typically stated :
A)in days,months,or years.
B)as a percent.
C)as a dollar amount.
D)in the same format as the required rate of return.
E)None of the answer choices is correct.
Q4) The hurdle rate used to evaluate an investment is also called the discount rate.
A)True B)False
Q5) The required rate of return is typically based on the company's cost of capital. A)True
B)False
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Chapter 9: How Are Operating Budgets Created
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Sample Questions
Q1) The first line that appears on the direct materials purchases budget is:
A)units to be produced.
B)projected sales in units.
C)quantity of direct materials to be purchased.
D)quantity of beginning direct materials ending inventory.
E)None of the answer choices is correct.
Q2) Refer to Exhibit 9-1.What will cash collections be in April?
A)$1,880,000
B)$2,060,000
C)$2,000,000
D)$1,920,000
E)None of the answer choices is correct.
Q3) Sales personnel who are paid a bonus for exceeding budgeted sales have an incentive to underestimate sales when establishing the sales budget.
A)True
B)False
Q4) Conflicts rarely exist between the planning and control phases of budgeting.
A)True
B)False
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Chapter 10: How Do Managers Evaluate Performance Using Cost Variance Analysis
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Sample Questions
Q1) Jake's Cheese Company produces gourmet cheese for resale at local grocery stores.Jake's expected to use 3.0 pounds of direct materials to produce one unit (batch)of product at a cost of $8 per pound.Actual results are in for last year,which indicates 45,000 batches of cheese were sold.The company purchased 160,000 pounds of materials at $7.50 per pound,and used 145,000 pounds in production.
(1)Calculate the materials price variance.
(2)Calculate the materials quantity variance.
(3)Suggest several possible reasons for the materials price and quantity variances calculated in requirements (1)and (2).
Q2) Refer to Exhibit 10-5.What is the variable overhead efficiency variance for the purchase order activity?
A)$2,000 favorable
B)$2,000 unfavorable
C)$8,000 favorable
D)$8,000 unfavorable
E)None of the answer choices is correct.
Q3) The cause of one variance might influence another variance.
A)True
B)False
Page 12
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Chapter 11: How Do Managers Evaluate Performance in
Decentralized Organizations
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63 Verified Questions
63 Flashcards
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Sample Questions
Q1) Return on investment (ROI)can be improved by decreasing operating profit margin.
A)True
B)False
Q2) Refer to Exhibit 11-2.Assume the Refrigerator Division has average operating assets totaling $24,000,000 for the year and the company's cost of capital rate is 15 percent.What is the residual income for the Refrigerator division?
A)$2,200,000
B)$2,580,000
C)$6,400,000
D)$480,000
E)None of the answer choices is correct.
Q3) The term decentralized organization refers to an organization that delegates decision-making and operational responsibilities to managers of each segment of the organization.
A)True
B)False
Q4) Asset turnover is calculated as sales divided by average operating assets.
A)True
B)False
13
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Chapter 12: How Is the Statement of Cash Flows Prepared and Used
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Sample Questions
Q1) When preparing the operating activities
A)True
B)False
Q2) Refer to Exhibit 12-2.Which of these items would appear in the investing activities
A)1,3,4,& 6
B)1 & 5
C)2 & 3
D)4 & 6
E)None of the answer choices is correct.
Q3) Refer to Exhibit 12-2.Which of these items would appear in the operating activities
A)2,3,4,& 6
B)1 & 5
C)2 & 3
D)4 & 6
E)None of the answer choices is correct.
Q4) Factory equipment sold for cash would appear in the financing activities
A)True
B)False
14
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Chapter 13: How Do Managers Use Financial and
Nonfinancial Performance Measures
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Sample Questions
Q1) The current ratio is the same as the quick ratio.
A)True
B)False
Q2) A common-size analysis converts each line of financial statement data to an easily comparable amount measured in percent form.
A)True
B)False
Q3) All of the following measures evaluate profitability except:
A)profit margin ratio.
B)return on assets.
C)market capitalization.
D)gross margin ratio.
E)None of the answer choices is correct.
Q4) All of the following are measures used in the balanced scorecard except:
A)external business process.
B)customer.
C)learning and growth.
D)internal business process.
E)None of the answer choices is correct.
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