Business Decision Making
Test Questions
Course Introduction
Business Decision Making is a comprehensive course that equips students with the analytical tools and frameworks necessary to make effective and informed decisions within a business setting. The course emphasizes the application of quantitative and qualitative approaches to problem-solving, empowering students to analyze complex business scenarios, consider alternatives, and select optimal solutions. Topics include decision-making models, risk and uncertainty assessment, use of data and evidence in planning, ethical considerations, and the influence of psychological biases. Through case studies, simulations, and real-world projects, students develop critical thinking skills and practical competence essential for strategic decision-making in a dynamic business environment.
Recommended Textbook
Managerial Accounting The Cornerstone of Business Decision Making 7th Edition by
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15 Chapters
2443 Verified Questions
2443 Flashcards
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Maryanne M.
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) The detailed formulation of action to achieve a particular end is the management activity called:
A) planning.
B) controlling.
C) decision making.
D) all of these are correct.
Answer: A
Q2) Which of the following is an example of the management activity referred to as planning?
A) Developing a strategy for disposing of hazardous waste
B) Tracking the cost of employee absence
C) Ensuring that the most competent candidates are recruited by a company
D) All of these are correct.
Answer: A
Q3) The managerial activity of monitoring a plan's implementation and taking corrective action as needed is referred to as ______________.
Answer: controlling
Q4) _________ is a crucial element in all phases of the value chain.
Answer: Time
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Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) The total product costs were:
A) $199,500.
B) $100,000.
C) $150,000.
D) $236,000.
Answer: A
Q2) Materials that become part of a product usually are classified as _______________.
Answer: direct materials.
Q3) Product costs consist of
A) period costs.
B) indirect materials, indirect labor, and administrative costs.
C) direct materials, direct labor, and selling costs.
D) direct materials, direct labor, and overhead.
Answer: D
Q4) _________________ equals the sum of direct materials, direct labor, and manufacturing overhead.
Answer: Total product cost
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Chapter 3: Cost Behavior, Cost Forecasting, and Segmented Income Statements
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Sample Questions
Q1) A type of cost behavior where the true total cost function is increasing at a decreasing rate is called ______________.
Answer: semi-variable.
Q2) The high-low method is an objective method to separate the cost behavior of a mixed cost.
A)True
B)False
Answer: True
Q3) depreciation
A)discretionary
B)committed
Answer: B
Q4) cost of car stereos
A)variable
B)fixed
Answer: A
Q5) A cost __________ is a casual factor that measures the output of the activity that leads costs to change.
Answer: driver
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Chapter 4: Job-Order Costing and Normal Cost Overhead Application
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Sample
Questions
Q1) A source document by which direct labor costs are assigned to individual jobs is known as a _______________.
Q2) Compute the total cost of Job #3.
A) $240,000
B) $987,000
C) $134,600
D) $220,800
E) $359,600
Q3) Overhead is applied at the rate of 110% of direct labor cost.Jobs are sold at cost plus 50%.Selling and administrative expenses for October totaled $3,000.By October 31, Jobs 812 and 816 are sold, but the customer who ordered Job 814 decided he did not want the slide, so it is still in the warehouse.
What is the selling price of Job 816?
A) $4,000
B) $2,000
C) $1,800
D) $2,970
E) $0, it is not completed yet.
Page 6
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Chapter 5: Activity-Based Costing and Management
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Sample Questions
Q1) One of the questions answered by activity analysis should be "What activities are done?"
A)True
B)False
Q2) ______________ is concerned with doing the activity right the first time it is performed.
Q3) A product currently requires 6 moves.By changing the plant layout, the number of moves can be reduced to 2.The cost per move is $40.Calculate the reduction in the nonvalue-added cost of the moving activity.
A) $7
B) $30
C) $0
D) $160
E) $150
Q4) Compute the velocity in units per hour.(Note: Round answer to two decimal places.)
A) 16.50 units per hour
B) 15.50 units per hour
C) 14.44 units per hour
D) 18.45 units per hour
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Chapter 6: Process Costing
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Sample Questions
Q1) Under the _______________ method equivalent units of output are computed by adding units completed to equivalent units in ending working-in-process.
Q2) If changes occur in the ________ of the manufacturing inputs from one period to the next, then FIFO produces a more accurate unit cost than does the weighted average method.
Q3) Large manufacturing plants, such as chemical, food, and tire manufacturers, use process costing.
A)True
B)False
Q4) Manufacturers that produce a large number of homogeneous products are most likely to use which of the following?
A) job-order costing
B) process costing
C) sequential costing
D) parallel costing
Q5) When inputs are added _______________, equivalent units and unit cost are calculated for each separate input category.
Q6) ___________ costs are a type of raw material cost.
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Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) What is the break-even point in sales dollars?
A) $498,000
B) $400,000
C) $171,429
D) $112,500
E) $150,000
Q2) What is the variable cost ratio?
A) 50%
B) 40%
C) 33%
D) 67%
E) 60%
Q3) The linear equation for total cost is (Unit variable cost × Units) + Fixed cost.
A)True B)False
Q4) _____________________ is the use of fixed costs to extract higher percentage changes in profits as sales activity changes.
Q5) A company's mix of fixed costs relative to variable costs is referred to as its
9
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Chapter 8: Tactical Decision-Making and Relevant Costing
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Sample Questions
Q1) In deciding the optimal mix of products that use a constrained resource, it is important to determine the contribution margin per unit of scarce resource.
A)True
B)False
Q2) ____________________ consists of choosing among alternatives with an immediate or limited end in view.
Q3) Which of the following is a qualitative factor that Fuller would consider in making the decision to accept or reject the special order?
A) cost of yarn and backing
B) cost of setup labor
C) the no-layoff policy
D) the use of machinery
E) the machining and electricity
Q4) In the presence of multiple constraints the solution is considerably more complex than for one constraint and requires a technique known as
Q5) The profit contribution each segment makes toward covering a company's common fixed costs is called ______________.
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Chapter 9: Profit Planning and Flexible Budgets
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Sample Questions
Q1) Which of the following is true of a continuous budget?
A) It forces managers to plan ahead constantly.
B) It is broken down into quarterly and monthly budgets.
C) It rules out the comparison of actual data with budgeted data.
D) It is a quarterly budget used only by manufacturing firms.
E) It is a moving 6-month budget.
Q2) Bickford Company plans to sell 135,000 units in November and 180,000 units in December.Bickford's policy is that 10% of the following month's sales must be in ending inventory.On November 1, there were 14,000 units in inventory. It takes 30 minutes of direct labor time to make one unit.Direct labor wages average $17 per hour.Variable overhead is applied at the rate of $5 per direct labor hour.Fixed overhead is budgeted at $56,500 per month.What is the direct labor cost budgeted for November?
A) $1,181,500
B) $950,600
C) $707,600
D) $2,152,000
E) $622,800
Q3) Salaries expense, advertising expense and depreciation expense would be included in the ______________________ budget.
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Chapter 10: Standard Costing and Variance Analysis
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Sample Questions
Q1) Which of the following formulas calculates the standard hours allowed for the actual output?
A) Unit Labor Standard × Actual Output
B) Total Labor Standard × Standard Output
C) Unit Labor Standard × Normal Input
D) Total Labor Standard × Real Input
E) None of these is correct.
Q2) Standards are set by using historical experiences, ___________________, and input from operating personnel, marketing, and accounting.
Q3) Labor Rate Variance
A)Actual Quantity × Actual Price
B)(Actual Hours × Actual Rate) (Standard Hours × Standard Rate)
C)(Actual Quantity × Actual Price) (Standard Quantity × Standard Price)
D)(Actual Hours Standard Hours) × Standard Rate
E)(Actual Price Standard Price) × Actual Quantity
F)Standard Quantity × Standard Price
G)(Actual Rate Standard Rate) × Actual Hours
H)(Actual Quantity Standard Quantity) × Standard Price
Q4) The __________________ provides the products data needed to calculate the standard unit cost.
Page 12
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Chapter 11: Performance Evaluation and Decentralization
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Sample Questions
Q1) A price charged for a component by the selling division to the buying division of the same company is called a(n)
A) transfer price.
B) economic value added.
C) market price.
D) cost-based price.
E) None of these.
Q2) The difference between operating income and the minimum dollar return required on a company's operating assets is:
A) the return on investment (ROI).
B) the residual income.
C) economic value added (EVA).
D) the gross margin.
E) the operating turnover.
Q3) _________________ emphasizes only effectiveness of implementation.
Q4) The difference between operating income and the minimum dollar return required on a company's operating assets is the _______________.
Q5) When a manager is responsible for only costs it is known as a(n)
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Chapter 12: Capital Investment Decisions
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Sample Questions
Q1) In general, it is best if postaudits are done by company management, since they understand the actual operating conditions.
A)True
B)False
Q2) For independent projects, net present value analysis and internal rate of return analysis yield the same decision.
A)True
B)False
Q3) In practice, managers often choose a discount rate that is higher than the cost of capital.
A)True
B)False
Q4) Which of the following methods helps in choosing the project that maximizes the wealth of shareholders?
A) The net present value
B) The accounting rate of return
C) The payback period
D) The variance analysis
E) None of these
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Sustainability, Quality Cost, Lean Accounting, International
Issues, Enterprise Risk Management, the Managerial Accountant in Forensicfraud Accounting
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Sample Questions
Q1) When quality costs reach the optimal range of 2 to 4% of sales, control costs typically account for about _____ of total quality costs.
A) 10 to 15%
B) 80 to 85%
C) 20 to 30%
D) 40 to 50%
Q2) ?Costs incurred to determine whether products and services are conforming to their requirements
A)?Risk response net benefit
B)?Sustainability assurance
C)?Internal failure costs
D)?Duration-based costing
E)?Transaction risk
F)?Fraud
Q3) Which of the following is an external failure cost?
A) Rework
B) Reinspection
C) Prototype inspection
D) Warranties Page 15
Q4) A _________ is one that does not conform to quality specifications.
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Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is
A) added to net income.
B) deducted from net income.
C) ignored because it does not affect cash.
D) not reported on a statement of cash flows.
Q2) Under the indirect method, the net cash flow from operating activities is computed by adjusting net income to remove the effect of all deferrals of past operating cash receipts and payments, and all accruals of future operating cash receipts or payments.
A)True
B)False
Q3) Which one of the following items is not necessary in preparing a statement of cash flows?
A) Determine the change in cash.
B) Determine the cash provided by operating activities.
C) Determine cash from financing and investing activities.
D) Determine the cash in all bank accounts.
Q4) Activities that decrease cash are uses of cash and are referred to as
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) If a company has an acid-test ratio of 1.2, what respective effects will the borrowing of cash by short-term debt and the collection of accounts receivable have on the ratio? Short-term Collection of Borrowing Receivable
A) Increase No effect
B) Increase Increase
C) Decrease No effect
D) Decrease Decrease
Q2) For meaningful analysis, ratios should be compared with a ____________.
Q3) A company has a receivables turnover of 15 times.The average net receivables during the period are $430,000.What is the amount of net credit sales for the period?
A) $430,000
B) $6,450,000
C) $6,000,000
D) $500,000
Q4) The ___________________ is calculated by dividing the market price per share by earnings per share.
Q5) The _________________ uses the income statement to assess a company's ability to service its debt.
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