Business Decision Making
Review Questions
Course Introduction
Business Decision Making is a course designed to equip students with the analytical skills, frameworks, and practical tools necessary to make informed and effective decisions in a dynamic business environment. The course covers various methodologies, including quantitative techniques, qualitative analysis, and decision-making models, to address complex problems faced by organizations. Students will learn to assess risks, evaluate alternatives, interpret data, and consider ethical implications when making decisions. Through case studies, simulations, and real-world scenarios, the course emphasizes the application of theory to practice, fostering critical thinking and strategic insight vital for successful leadership and management.
Recommended Textbook Cornerstones of Managerial Accounting 3rd Edition by Maryanne M. Mowen
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2120 Verified Questions
2120 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Managerial accounting information is used only by manufacturing organizations.
A)True
B)False
Answer: False
Q2) In Canada, new accounting students currently have a choice of pursuing their choice any of the following professional accounting designations: CMA, CGA, CA, or CPA.
A)True
B)False
Answer: False
Q3) Positions that have direct responsibility for the basic objectives of an organization are normally referred to as staff positions.
A)True
B)False
Answer: False
Q4) Explain the term professional behaviour.
Answer: Professional Behaviour - Members conduct themselves at all times in a manner which will maintain the good reputation of the profession and its ability to serve the public interest.
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Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) List and describe the three categories of manufacturing costs.
Answer: Direct materials consist of the cost of materials requisitioned and used in production during the current period. Direct materials are materials that can be accurately and conveniently traced to the product. Direct labour consists of labour costs of workers directly involved in the manufacture of the product. Manufacturing overhead consists of all the manufacturing costs that do not fall into the direct material or direct labour category. Examples of manufacturing overhead costs include insurance on the factory, machinery deprecation, indirect labour, indirect materials, factory supplies, etc.
Q2) How is conversion cost calculated?
A) product costs plus period costs
B) direct materials cost plus prime costs
C) indirect labour cost plus opportunity costs
D) direct labour cost plus manufacturing overhead cost
Answer: D
Q3) Gross margin equals revenue minus cost of goods manufactured.
A)True
B)False
Answer: False
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4
Chapter 3: Cost Behaviour
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Sample Questions
Q1) Mixed costs have both a fixed and a variable component.
A)True
B)False
Answer: True
Q2) What is characteristic of variable costs within the relevant range?
A) decrease in total as output increases
B) stay constant in total as output increases
C) decrease on a per unit basis as output increases
D) stay constant on a per unit basis as output changes
Answer: D
Q3) When a mixed cost is graphed, what does the slope of the line represent?
A) the total cost per unit
B) the sales price per unit
C) the fixed cost per unit of output
D) the variable cost per unit of the activity driver
Answer: D
Q4) "Outliers" are points that do NOT seem to fit the general pattern of behaviour.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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154 Flashcards
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Sample Questions
Q1) Refer to ePiano. How many professional models are sold at break-even?
A) 220
B) 400
C) 440
D) 850
Q2) Refer to Date Company. What is the variable cost per unit?
A) $1.30
B) $3.70
C) $4.00
D) $4.60
Q3) Suppose fixed costs increase. What will be the effect on the break-even point in units?
A) The break-even point will increase.
B) The break-even point will decrease.
C) The break-even point will remain the same.
D) The break-even point will remain the same; however, contribution per unit will decrease.
Q4) If the break-even point increases, the margin of safety increases.
A)True B)False
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Chapter 5: Job-Order Costing
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Sample Questions
Q1) Which department is responsible for creating products or services that are sold to customers?
A) cost centre
B) support department
C) producing department
D) profit making department
Q2) Refer to Valley Water Slides. What is the Cost of Goods Sold for September?
A) $3,575.00
B) $5,129.00
C) $5,720.00
D) $8,206.40
Q3) Process costing is used for manufacturing and service firms producing unique products or services.
A)True
B)False
Q4) Refer to Company Inc. What is the overhead applied for January?
A) $26,800
B) $40,200
C) $44,000
D) $48,000
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Chapter 6: Process Costing
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Sample Questions
Q1) Refer to LuLu, Inc. What would be the total costs to account for?
A) $176,000
B) $240,000
C) $264,000
D) $304,000
Q2) The weighted average costing method combines beginning inventory costs and work done with current period costs and work to calculate this period's unit cost.
A)True
B)False
Q3) What two categories of completed units are needed in the FIFO costing method so that each category can be costed correctly?
A) beginning Work-in-Process Inventory units and units started
B) units started and completed and ending Work-in-Process Inventory
C) units started and completed and ending Work-in-Process Inventory units
D) beginning Work-in-Process Inventory units and units started and completed
Q4) Paint manufacturer
A)Process costing
B)Job-order costing
Q5) Explain how nonuniform inputs and multiple departments affect process costing.
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Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) Which term reflects the number of units that can be produced in a given period of time?
A) velocity
B) activity time
C) activity output
D) cycle production
Q2) Refer to Powen. What is the cost for inspection?
A) $50,500
B) $52,000
C) $54,000
D) $56,000
Q3) Result or product of an activity
A)Activity analysis
B)Value-added costs
C)Velocity
D)Activity inputs
E)Activity output measure
F)Activity output
Q4) What is the activity based costing hierarchy? Give an example for each.
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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Sample Questions
Q1) 2L1S Company orders 250 units at a time and places 15 orders per year. Total ordering cost is $1,100, and total carrying cost is $1,750. Which statement best describes the economic order quantity?
A) The economic order quantity (EOQ) is 15.
B) The economic order quantity (EOQ) is 250.
C) The economic order quantity (EOQ) is less than 250.
D) The economic order quantity (EOQ) is more than 250.
Q2) If the demand for a product is known, total inventory-related costs consist of ordering costs and carrying costs.
A)True
B)False
Q3) Which type of cost is NOT included in product cost?
A) direct materials
B) variable selling expense
C) manufacturing overhead
D) fixed manufacturing overhead
Q4) JIT relies on a push system to control Finished Goods Inventory.
A)True
B)False
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Chapter 9: Budgeting, Production, Cash, and Master Budget
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Sample Questions
Q1) Refer to Bingimton Company. What was the gross profit?
A) $2,400
B) $7,400
C) $9,400
D) $14,600
Q2) Budgets should be based on ideal standards to encourage everyone to reach for the highest level of performance.
A)True
B)False
Q3) Individual behaviour that is in basic conflict with the goals of the organization is called dysfunctional behaviour.
A)True
B)False
Q4) Which of the following appears on the budgeted balance sheet?
A) estimated sales
B) estimated cost of goods sold
C) estimated fixed selling expense
D) estimated ending accounts receivable
Q5) Is budgeting relevant for not-for-profit organizations? Explain your position.
Q6) What are the advantages of budgeting?
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) Refer to Allan Company. What is the materials price variance?
A) $30,000 U
B) $30,000 F
C) $31,250 U
D) $31,250 F
Q2) Actual usage of inputs is less than the standard usage.
A)Quantity standards
B)Ideal standards
C)Price standards
D)Standard cost sheet
E)Upper control limit
F)Currently attainable standards
G)Kaizen standards
Q3) Which formula is used to calculate the labour efficiency variance?
A) (standard hours × actual hours) - (actual hours × standard rate)
B) (actual rate × actual hours) - (standard rate × actual hours)
C) (actual hours × standard rate) - (standard hours × standard rate)
D) (standard hours × actual rate) - (actual hours × actual rate)
Q4) Explain the kaizen approach to costing.
Q5) How are standards developed?
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) Briefly explain the concept of fixed overhead volume variance. Suppose that the fixed overhead volume variance is unfavourable; what does that mean?
Q2) Refer to Bridgestone Company. What is the after-the-fact overhead budget for the actual level of activity?
A) $15,000
B) $18,600
C) $31,600
D) $33,600
Q3) What is characteristic of the fixed overhead spending variance?
A) It is usually significant.
B) It is made up of a single item.
C) It is investigated only if the variance is immaterial.
D) It is the difference between actual costs and budgeted costs.
Q4) Refer to Bridgestone Company. Prepare an overhead budget for the expected activity level of 10,000 units. What is the total budgeted overhead?
A) $12,400
B) $17,400
C) $27,400
D) $139,400
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) Refer to Giga-Stuff, Inc. Assume that Sophistosand and Videostuff have agreed on a transfer price of $2.20. What is the total benefit for Sophistosand?
A) $18,000
B) $63,000
C) $69,000
D) $81,000
Q2) Dynex Company had the following income statement for last year: \(\begin{array}{lr}
\text { Sales } & \$ 200,000 \\
\text { Less: COGS } & 100,000 \\
\text { Gross Profit } & \$ 100,000 \\
\text { Less: Selling \& Admin. Expense } & 40,000\\
\text { Operating income }& \$ 60,000
\end{array}\) Beginning assets were $280,000, and ending assets were $300,000
Required:
A. Average operating assets were $__________________.
B. Margin was __________________.
C. Turnover was __________________.
D. Return on investment was __________________%.
Q3) Describe the four perspectives of the Balanced Scorecard.
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) In keep-or-drop decisions, both the segment's contribution margin and its segment margin are useful in evaluating the performance of the segment.
A)True
B)False
Q2) Future costs that differ across alternatives are irrelevant.
A)True
B)False
Q3) Refer to Victor's Detailing. Assume the company uses target costing. The company requires a 40% profit on each job. What should the company do?
A) find a way to reduce costs
B) ask customers to pay more
C) reduce the required percentage to stay in business
D) sell services at the price customers are willing to pay
Q4) A choice between internal and external production is a make-or-buy decision.
A)True B)False
Q5) Demand and supply are on opposite sides of the pricing equation.
A)True
B)False
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) Refer to Columbus Company. Which project is preferred?
A) Project 1
B) Project 2
C) Project 3
D) Project 4
Q2) Which statement does NOT accurately describe the internal rate of return for a project?
A) If the internal rate of return is less than the required rate of return, the project will be rejected.
B) If the internal rate of return is more than the required rate of return, the project will be accepted.
C) If the internal rate of return is equal to the required rate of return, the net present value of the project is zero.
D) If the internal rate of return is equal to the required rate of return, the net present value of the project is positive.
Q3) Postaudits ensure that resources are used wisely by evaluating profitability.
A)True
B)False
Q4) Which model of capital investment decision making is most widely used? Why?
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