Business Decision Making Review
Questions
Course Introduction
Business Decision Making explores the methodologies and analytical tools essential for making informed and effective choices in complex business environments. The course covers a range of decision-making models, quantitative and qualitative analysis techniques, and the integration of data-driven insights into strategic planning. Students learn to evaluate risk, forecast outcomes, and solve real-world business problems by applying critical thinking and ethical considerations. Emphasis is placed on decision processes, problem identification, alternative evaluation, and the implementation of optimal solutions across various business functions.
Recommended Textbook
Managerial Accounting 3rd Edition by Charles E. Davis
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17 Chapters
2529 Verified Questions
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Page 2
Chapter 1: Accounting As a Tool for Management
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162 Flashcards
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Sample Questions
Q1) Managerial accounting is used by managers to
A)plan
B)evaluate
C)control
D)plan,evaluate,and control
Answer: D
Q2) Which of the following is least likely to be in a company's code of ethics?
A)Transparency of information
B)Commitment to the environment
C)Maximum amount of bonuses to be paid to executives
D)Discrimination
Answer: C
Q3) Managerial accounting differs from financial accounting in that managerial accounting has no comparable set of rules governing what information must be provided to decision makers or how that information is presented.
A)True
B)False
Answer: True
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Chapter 2: Cost Behavior and Cost Estimation
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Sample Questions
Q1) GAAP-based income statements categorize expenses based on A)product,contribution,selling or administrative.
B)product,selling or administrative.
C)contribution,product,administrative.
D)variable costs and fixed costs.
Answer: A
Q2) Suppose you are charged a $10 per month base charge for your electrical service.You are also charged an additional $0.08 for every kwh of electricity you use.The cost is an example of a A)variable cost.
B)fixed cost.
C)mixed cost.
D)step cost.
Answer: D
Q3) If activity level decreases,what happens to the A)It decreases.
B)It increases.
C)It remains the same.
D)It depends on how much the activity level increases.
Answer: A
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) When volume changes,total sales revenue,total variable costs,total contribution margin,and total fixed cost all change.
A)True
B)False
Answer: False
Q2) Monty's has one product with a variable cost of $19.80 and a cost of goods sold per
A)25%; 35%
B)35%; 25%
C)26%; 20%
D)20%; 26%
Answer: A
Q3) Breakeven point can be expressed in terms of A)Units.
B)Unit sales price.
C)Unit contribution margin.
D).
Answer: A
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Page 5
Chapter 4: Product Costs and Job Order Costing
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Sample
Questions
Q1) Randy's Garden Supply Manufacturing Company had $105,000 in raw materials inventory at the beginning of the month.During the month Randy used $920,000 and had $120,000 remaining in inventory at the end of the month.How much inventory did Randy purchase during the month?
A)$815,000
B)$905,000
C)$920,000
D)$935,000
Q2) Explain the flow of a product through the production process.In your explanation include the events that increase and decrease each inventory account.In addition,discuss the effect of transactions related to the flow of products on the balance sheet and income statements.
Q3) Finished Goods Inventory decreases by the
A)cost of goods manufactured.
B)overhead applied.
C)cost of selling the product.
D)cost of goods sold.
Q4) Predetermined overhead rates and manufacturing overhead application
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Chapter 5: Planning and Forecasting
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Sample Questions
Q1) Tanger Products plans to produce 10,000
A)$2
B)$6
C)$3,333
D)$5,000
Q2) Martin,Inc.is preparing a direct labor budget for the next quarter.Which of the following items will Martin not need to complete the budget?
A)Actual sales
B)Standard hourly labor rate
C)Standard direct labor hours per unit
D)Budgeted production
Q3) Preparing a budget does not allow managers to
A)eliminate any variances that would have been created without a budget.
B)help divisions within the organization to communicate with one another.
C)assess whether a division's strategic direction is in line with corporate strategy.
D)All of these answer choices are things which preparing a budget allows managers to do.
Q4) Berry Products Company manufactures and sells a single product.Each
Q5) What is budgetary slack and why is it an issue in budget preparation?
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) The difference between the static budget sales revenue and the flexible budget sales revenue is referred to as the
A)flexible budget variance.
B)static budget variance.
C)sales price variance.
D)sales volume variance.
Q2) Sterling Industries manufactures saddles for show horses.Sterling's actual fixed overhead for the year was $123,400.During the year Sterling produced 12,300 saddles using 129,150 direct labor hours.Sterling had budgeted to produce 13,000 saddles and had budgeted to use 130,000 direct labor hours.Sterling's fixed overhead spending variance was $4,200 favorable for the year.What was Sterling's budgeted fixed overhead for the year if necessary,round your answer to the nearest dollar?
A)$140,257
B)$127,600
C)$120,955
D)$128,412
Q3) Adler Industries uses a standard cost system in which direct material is carried at standard cost.Adler has established the following standards: standard quantity of 8 pounds per
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Page 8
Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) The main reason for generating new information provided by activity-based costing is to
A)help managers make better decisions.
B)provide employees in the accounting department with work to do.
C)calculate variances.
D)help human resources hire new staff.
Q2) Those activities that create the product the customer wants to buy are referred to as
A)profitability activities.
B)manufacturing burden.
C)value-added activities.
D)period costs.
Q3) In order to increase a company's bottom line,it can A)increase sales.
B)decrease costs.
C)either increase sales or decrease costs.
D)neither increase sales or decrease costs.
Q4) The process of using activity-based costing information to manage a business's activities,and thus its costs,is called activity-based management.How do managers use the information provided by an activity-based costing system?
Page 9
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) Which of the following is not one of the top ten reasons companies outsource their operations?
A)More effective than producing all the components of a product
B)Provides a cash infusing as freed-up assets are sold
C)Provides world-class capabilities at lower cost
D)Transfers a portion of business risk to an outsource provider
Q2) Which of the following is not relevant to a decision involving the allocation of a single constrained resource among multiple products? aaa.
Q3) The option of accepting a special order should always be chosen if the price exceeds the relevant costs to produce and deliver the order to the customer.
A)True
B)False
Q4) Your professor is considering retirement.Which of the following will not be relevant in his decision?
A)The amount of retirement benefits he will receive if he retires
B)The amount of salary he will receive if he does not retire
C)The cost of commuting to and from school
D)The cost of the old building
Page 10
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Chapter 9: Capital Budgeting
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Sample Questions
Q1) To determine the present value of any future amount,you need to know all of the following except?
A)The interest rate
B)The future amount to be received
C)Screening rate
D)When the future amount will be received
Q2) Which of the following is a weakness of the accounting rate of return?
A)It does not consider cash flows
B)It does not consider the time value of money
C)Both that it does not consider cash flows and that it does not consider the time value of money
D)Neither that it does not consider cash flows nor that it does not consider the time value of money
Q3) Capital assets are also referred to as
A)Long-lived assets.
B)Balance sheet asset.
C)Cash assets.
D)Investment assets.
Q4) What are the three factors needed to determine the present value of any future amount?
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Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) Net operating profit is defined as
A)Operating income minus income taxes.
B)Sales minus variable costs.
C)Contribution margin minus traceable fixed costs.
D)Contribution margin minus traceable and allocated fixed costs.
Q2) Wrightsville Beach Company produces ice packs and various sizes of cooler bags.The Lunch Box division would like to buy 125,000
A)$1.14
B)$1.25
C)$1.65
D)$1.75
Q3) In the most recent reporting period,Athens Corporation's Legion division generated net revenues of $2,000,000 and variable expenses of $700,000.Direct fixed expenses were $500,000 and common corporate fixed expenses were $250,000.What is the division's segment margin?
a.$550,000
b.$800,000
c.$1,050,000
d.$1,300,000
Q4) What is EVA and how is it calculated?
Page 12
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) Which of the following is a measure that relates to the learning and growth perspective?
A)Earnings per share
B)Response time to customer request
C)Revenue per employee
D)Market share
Q2) The key to using key performance indicators to drive performance is to understand the cause-and-effect relationships they represent.
A)True
B)False
Q3) As a measure of a salesperson's performance,"corporate profit margin" is an example of an actionable measure.
A)True
B)False
Q4) Manufacturing cycle efficiency is calculated as
A)Value-added processing time divided by non-valued added processing time.
B)Non-value-added processing time divided by total manufacturing cycle time.
C)Value-added processing time divided by total manufacturing cycle time.
D)Direct cost of manufacturing divided by total manufacturing cost.
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) Gant Wholesale Company has $2,000 in cash,$20,000 in accounts receivable,$34,000 in inventory,and $1,600 in prepaid expenses.Liabilities totaled $120,000,with $36,000 current and $84,000 long-term.What is Gant's current ratio?
Q2) The inventory turnover measures
A)How many days,on average,it takes between when an order is placed until the inventory is shipped.
B)How many times,on average,a company's inventory is sold during the year.
C)How many times,on average,the company takes to replace inventory during the year.
D)How many days,on average,it takes between when inventory is received to its sale to customers.
Q3) The first step in preparing a horizontal analysis of a firm's financial statements is to break down the balance sheet to indicate which assets are expected to sold in within the next two years.
A)True
B)False
Q4) The current ratio is also referred to as the quick ratio.
A)True
B)False
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Page 14
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) In preparing cash flows provided by operating activities using the indirect method,which of the following is not deducted from net income?
A)Gains on investing and financing transactions
B)Increases in current asset balances
C)Decreases in current liability balances
D)Non-cash expenses such as depreciation
Q2) When a company declares a cash dividend,which of the following is the correct reporting on the statement of cash flows?
A)A use of cash in the operating section
B)A use of cash in the investing section
C)A use of cash in the financing section
D)Declaring a dividend is not reported on the statement of cash flows
Q3) Which of the following is a use of cash?
A)Purchasing equipment for cash
B)Purchasing supplies on account
C)Declaring a dividend
D)All of these answer choices are uses of cash
Q4) What is the basic form of the statement of cash flows?
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Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) The inventories used in a process costing system are the same as those used in a job order costing system.
A)True
B)False
Q2) Costs incurred in a process costing system include direct material,direct labor and overhead.
A)True
B)False
Q3) When a department has work in process at the end of the period,we need to determine the percentage of completion for the work in process.Based on that percentage we calculate
A)actual units of production.
B)particular units of production.
C)equivalent units of production.
D)half-
Q4) In a job order costing system,all product costs for the period are accumulated and divided evenly over all
A)True B)False
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Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) Monroe Corporation produced 20,000
a.Under the absorption costing method,what is the average unit product cost?
b.Under the variable costing method,what is the average unit product cost?
Q2) Which of the following is not a product cost?
A)Direct material
B)Direct labor
C)Selling expenses
D)Manufacturing overhead
Q3) Absorption costing is also referred to as
A)variable costing.
B)full costing.
C)nominal costing.
D)period costing.
Q4) Based on the matching principle,all product cost flow through
A)Raw Material Inventory,Work in Process Inventory and Finished Goods until the goods are sold.
B)Raw Material Inventory,Work in Process Inventory and Manufacturing Overhead until the goods are sold.
C)Raw Material Inventory,Direct Materials and Conversion,and Work in Process.
D)Raw Material Inventory,Conversion,and Finished Goods until the goods are sold.
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Chapter 16: Topic Focus Standard Costing Systems
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Sample Questions
Q1) A costing system where all product costs are recorded at standard cost while the products are being made is referred to as
A)Normal costing
B)Variable costing
C)Full costing
D)Standard costing
Q2) Suggest one reason for each of the following variances.
a.Unfavorable direct material quantity variance
b.Favorable direct labor rate variance
c.Favorable variable overhead spending variance
d.Unfavorable fixed overhead volume variance
Q3) Haven Industries purchased 1,000
Q4) What is the difference between a normal costing system and a standard costing system?
Q5) Wolfe Manufacturing Company has the following information related to variable overhead:
Standard hours per
a.Calculate the variable overhead spending variance for the period.
b.Calculate the variable overhead efficiency variance for the period.
Q6) Haven Industries transferred 5,500
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Chapter 17: Topic Focus Customer Profitability
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Sample Questions
Q1) Which of the following measures shows manager how many dollars a customer contributes to the company's bottom line?
A)Customer net profit
B)Customer revenue margin
C)Times revenue earned per customer
D)Customer profit margin
Q2) The customer profit margin divides
A)Customer net profit by customer revenue.
B)Customer net profit by customer profit margin.
C)Customer revenue by customer net profit.
D)Customer profit margin by customer revenue.
Q3) Raising prices for unprofitable customers is a reflection of the cost of doing business with them.
A)True
B)False
Q4) Which of the following is not an administrative expense?
A)Factory supervisor's salary
B)Depreciation on office equipment
C)Payroll clerk's salary
D)Janitorial supplies
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