Contemporary Issues in Management Accounting Pre-Test
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Course Introduction
This course explores current trends and emerging challenges in management accounting, focusing on how contemporary organizations use accounting information for strategic decision-making and performance management. Topics include the impact of globalization, advancements in technology, sustainability reporting, and ethical considerations in management accounting practices. Students will analyze case studies, discuss recent research, and evaluate the implications of evolving management accounting techniques, such as activity-based costing and balanced scorecard approaches, to enhance organizational effectiveness in a dynamic business environment.
Recommended Textbook Managerial Accounting 16th Edition by Ray H Garrison
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Page 2
Chapter 1: Managerial Accounting and Cost Concepts
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Sample Questions
Q1) Depreciation is always considered a period cost for external financial reporting purposes in a manufacturing company.
A)True
B)False
Answer: False
Q2) Gabel Inc.is a merchandising company.Last month the company's merchandise purchases totaled $63,000.The company's beginning merchandise inventory was $13,000 and its ending merchandise inventory was $15,000.What was the company's cost of goods sold for the month?
A) $91,000
B) $63,000
C) $65,000
D) $61,000
Answer: D
Q3) Manufacturing overhead includes:
A) all direct material, direct labor and administrative costs.
B) all manufacturing costs except direct labor.
C) all manufacturing costs except direct labor and direct materials.
D) all selling and administrative costs.
Answer: C
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Chapter 2: Job-Order Costing: Calculating Unit Production Costs
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Sample Questions
Q1) The estimated total manufacturing overhead for the Assembly Department is closest to:
A) $77,600
B) $101,600
C) $56,674
D) $24,000
Answer: B
Q2) The unit product cost for Job P951 is closest to:
A) $237.75
B) $264.75
C) $64.75
D) $52.95
Answer: B
Q3) The predetermined overhead rate for the Forming Department is closest to:
A) $5.70 per machine-hour
B) $7.70 per machine-hour
C) $2.00 per machine-hour
D) $18.70 per machine-hour
Answer: B
4
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Chapter 3: Job-Order Costing: Cost Flows and External Reporting
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Sample Questions
Q1) How much is the adjusted cost of goods sold on the Schedule of Cost of Goods Sold?
A) $123,000
B) $171,000
C) $136,000
D) $117,000
Answer: D
Q2) The direct materials cost in the May 1 Work in Process inventory account totaled:
A) $9,900
B) $5,400
C) $9,000
D) $4,500
Answer: B
Q3) The cost of goods available for sale is:
A) $1,376,000
B) $1,567,000
C) $1,769,750
D) $1,597,000
Answer: D
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Chapter 4: Process Costing
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Sample Questions
Q1) The cost per equivalent unit for materials for the month in the first processing department is closest to:
A) $19.01
B) $19.61
C) $20.50
D) $18.19
Q2) When computing the cost per equivalent unit,it is necessary to consider the percentage completion of the units in beginning inventory under the weighted-average method.
A)True
B)False
Q3) In August,one of the processing departments at Khatak Corporation had beginning work in process inventory of $34,000 and ending work in process inventory of $30,000.During the month,the cost of units transferred out from the department was $374,000.
Required:
Construct a cost reconciliation report for the department for the month of August.
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Page 6
Chapter 5: Cost-Volume-Profit Relationships
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Sample Questions
Q1) Mio Canoe Livery rents canoes and transports canoes and customers to and from their canoe trip on a local river.The trip is priced at $20 per person and has a CM ratio of 30%.Mio's fixed expenses are $84,000.Last year,sales were $400,000 and profit was $36,000.How many units need to be sold to break-even,and how many need to be sold to earn a profit of $42,000?
A) 1,800 and 2,100
B) 6,000 and 8,143
C) 14,000 and 21,000
D) 4,200 and 6,300
Q2) The break-even point can be determined by simply adding together all of the expenses from the income statement.
A)True
B)False
Q3) For a capital intensive,automated company the break-even point will tend to be higher and the margin of safety will be lower than for a less capital intensive company with the same sales.
A)True
B)False
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Chapter 6: Variable Costing and Segment Reporting: Tools for Management
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Sample Questions
Q1) The Northern Division's break-even sales is closest to:
A) $141,558
B) $197,078
C) $244,701
D) $386,408
Q2) What is the total period cost for the month under variable costing?
A) $54,400
B) $69,400
C) $57,400
D) $15,000
Q3) Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division.The Governmental Products Division's divisional segment margin is $255,000 and the Export Products Division's divisional segment margin is $59,800.The total amount of common fixed expenses not traceable to the individual divisions is $163,700.What is the company's net operating income?
A) $314,800
B) ($314,800)
C) $151,100
D) $478,500
Page 8
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Chapter 7: Super-Variable Costing
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Sample Questions
Q1) The unit product cost under super-variable costing is:
A) $117 per unit
B) $215 per unit
C) $94 per unit
D) $181 per unit
Q2) Super-variable costing is most appropriate where:
A) direct labor is a fixed cost.
B) it is easy to accurately separate the variable and fixed components of manufacturing overhead.
C) direct labor is a variable cost.
D) manufacturing overhead consists entirely of variable cost.
Q3) The super-variable costing net operating income period can be computed by multiplying the number of units sold by the gross margin per unit.
A)True
B)False
Q4) The net operating income for the year under super-variable costing is:
A) $735,000
B) $1,035,000
C) $691,000
D) $315,000
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Chapter 8: Master Budgeting
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Sample Questions
Q1) When preparing a direct materials budget,the required purchases of raw materials in units equals:
A) raw materials needed to meet the production schedule + desired ending inventory of raw materials beginning inventory of raw materials.
B) raw materials needed to meet the production schedule desired ending inventory of raw materials beginning inventory of raw materials.
C) raw materials needed to meet the production schedule desired ending inventory of raw materials + beginning inventory of raw materials.
D) raw materials needed to meet the production schedule + desired ending inventory of raw materials + beginning inventory of raw materials.
Q2) The estimated finished goods inventory balance at the end of February is closest to:
A) $335,160
B) $245,385
C) $281,295
D) $89,775
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Chapter 9: Flexible Budgets and Performance Analysis
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Sample Questions
Q1) The activity variance for wages and salaries in April would be closest to:
A) $228 F
B) $112 F
C) $228 U
D) $112 U
Q2) The activity variance for "Servicing materials" for May would have been closest to:
A) $2,800 U
B) $3,000 F
C) $2,800 F
D) $3,000 U
Q3) The revenue variance for May would be closest to:
A) $6,920 F
B) $6,920 U
C) $8,224 U
D) $8,224 F
Q4) A flexible budget report should exclude variable costs because they can be expected to change with a change in the level of activity.
A)True
B)False
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Chapter 10: Standard Costs and Variances
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Sample Questions
Q1) The variable overhead efficiency variance for July is:
A) $380 F
B) $399 U
C) $380 U
D) $399 F
Q2) The materials price variance for September is:
A) $1,150 U
B) $1,150 F
C) $1,160 F
D) $1,160 U
Q3) The variable overhead rate variance for power is closest to:
A) $7,097 U
B) $7,097 F
C) $896 F
D) $7,993 U
Q4) The variable overhead rate variance is:
A) $1,000 Favorable
B) $1,000 Unfavorable
C) $3,500 Unfavorable
D) $3,500 Favorable
Page 12
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Chapter 11: Performance Measurement in Decentralized Organizations
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Sample Questions
Q1) Last year's residual income was closest to:
A) $567,000
B) $597,000
C) ($33,000)
D) ($686,700)
Q2) Which of the following would not be included in operating assets in return on investment calculations?
A) Cash.
B) Accounts Receivable.
C) Equipment
D) Factory building rented to (and occupied by) another company.
Q3) ROI and residual income are tools used to evaluate managerial performance in investment centers.
A)True
B)False
Q4) Under a responsibility accounting system,fewer expenses are charged against managers the higher one moves upward in an organization.
A)True
B)False
Page 13
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Chapter 12: Differential Analysis: The Key to Decision Making
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Sample Questions
Q1) Future costs that do not differ between the alternatives in a decision are avoidable costs.
A)True
B)False
Q2) The split-off point in a process that produces joint products is the point in the manufacturing process at which the joint products can be recognized as separate products.
A)True
B)False
Q3) A study has been conducted to determine if Product A should be dropped.Sales of the product total $500,000; variable expenses total $340,000.Fixed expenses charged to the product total $210,000.The company estimates that $60,000 of these fixed expenses are not avoidable even if the product is dropped.If Product A is dropped,the annual financial advantage (disadvantage)for the company of eliminating this product should be:
A) ($10,000)
B) $10,000
C) ($50,000)
D) $50,000
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Page 14
Chapter 13: Capital Budgeting Decisions
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Sample Questions
Q1) The profitability index of investment project D is closest to:
A) 0.16
B) 0.84
C) 0.14
D) 1.16
Q2) (Ignore income taxes in this problem.)Charlie Corporation is considering buying a new donut maker.This machine will replace an old donut maker that still has a useful life of 6 years.The new machine will cost $3,600 a year to operate,as opposed to the old machine,which costs $3,800 per year to operate.Also,because of increased capacity,an additional 20,000 donuts a year can be produced.The company makes a contribution margin of $0.10 per donut.The old machine can be sold for $7,000 and the new machine costs $30,000.The incremental annual net cash inflows provided by the new machine would be:
A) $2,200
B) $200
C) $2,000
D) $5,000
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Page 15
Chapter 14: Statement of Cash Flows
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Q1) Kaze Corporation's cash and cash equivalents consist of cash and marketable securities.Last year the company's cash account increased by $25,000 and its marketable securities account decreased by $15,000.Net cash provided by (used in)operating activities was $38,000.Net cash provided by (used in)investing activities was $9,000.Based on this information,the net cash provided by (used in)financing activities on the statement of cash flows was:
A) $(37,000) .
B) $37,000 .
C) $(47,000) .
D) $47,000 .
Q2) Which one of the following transactions should be classified as a financing activity on the statement of cash flows?
A) Purchase of equipment.
B) Purchase of the company's own stock.
C) Sale of a long-term investment.
D) Payment of interest to a lender.
Q3) Free cash flow decreases when a company issues common stock for cash.
A)True
B)False
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Page 16
Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) The company's price-earnings ratio for Year 2 is closest to:
A) 0.38
B) 4.53
C) 5.70
D) 8.11
Q2) The company's working capital is:
A) $671,000
B) $665,000
C) $418,000
D) $983,000
Q3) The market price of Friden Company's common stock increased from $15 to $18.Earnings per share of common stock remained unchanged.The company's price-earnings ratio would:
A) increase.
B) decrease.
C) remain unchanged.
D) impossible to determine.
Q4) Purchasing inventory on credit increases the book value per share of a retailer.
A)True
B)False
Page 17
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Chapter 16: Cost of Quality
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Sample Questions
Q1) Which of the following would be classified as an appraisal cost on a quality cost report?
A) Maintenance of test equipment.
B) Re-entering data because of keying errors.
C) Debugging software errors.
D) Warranty repairs and replacements.
Q2) What is the total of the internal failure costs for Circle K?
A) $ 53,000
B) $ 99,000
C) $517,000
D) $ 38,000
Q3) What would be the total external failure cost appearing on the quality cost report?
A) $57,000
B) $62,000
C) $205,000
D) $424,000
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Chapter 17: Activity-Based Absorption Costing
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Q1) The manufacturing overhead that would be applied to a unit of product M09K under the activity-based costing system is closest to:
A) $76.73
B) $92.08
C) $11.00
D) $168.81
Q2) The unit product cost of product R78S under the company's traditional costing system is closest to:
A) $36.00
B) $59.83
C) $47.20
D) $59.78
Q3) The unit product cost of product N32Y under the activity-based costing system is closest to:
A) $136.00
B) $76.70
C) $59.30
D) $136.16
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19
Chapter 18: The Predetermined Overhead Rate and Capacity
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Q1) The management of Schneiter Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 42,000 machine-hours.In addition,capacity is 46,000 machine-hours and the actual activity for the year is 43,000 machine-hours.All of the manufacturing overhead is fixed and is $734,160 per year.
Required:
a.Determine the predetermined overhead rate if the predetermined overhead rate is based on activity at capacity.
b.Determine the cost of unused capacity for the year if the predetermined overhead rate is based on activity at capacity.
Q2) The manufacturing overhead applied is closest to:
A) $7,943
B) $8,000
C) $5,778
D) $10,998
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Page 20
Chapter 19: Job-Order Costing: a Microsoft Excel-Based Approach
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Q1) The equation "Ending balance in retained earnings = Beginning balance in retained earnings + Net operating income - Dividends" highlights the connection between the balance sheet and income statement and recognizes the fact that net operating income is essentially embedded within retained earnings on the balance sheet.
A)True
B)False
Q2) In the Excel,or spreadsheet,approach to recording financial transactions,the cost of goods sold is recorded as a decrease in the Finished Goods column and as a decrease in the Retained Earnings column.
A)True
B)False
Q3) In the Excel,or spreadsheet,approach to recording financial transactions,the revenues and expenses on the income statement can be determined by summing each column.
A)True
B)False
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Chapter 20: Fifo Method
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Sample Questions
Q1) What was the cost per equivalent unit for materials during the month?
A) $3.95
B) $4.50
C) $2.00
D) $5.00
Q2) Intask Corporation uses the FIFO method in its process costing system.Beginning inventory in the mixing department consisted of 6,000 units that were 75% complete with respect to conversion costs.Ending work in process inventory consisted of 5,000 units that were 60% complete with respect to conversion costs.If 12,000 units were transferred to the next processing department during the period,the equivalent units of production for conversion cost would be:
A) 12,500 units
B) 10,500 units
C) 13,500 units
D) 13,000 units
Q3) The equivalent units for material for the month,using the FIFO method,is:
A) 80,000
B) 70,000
C) 74,000
D) 90,000
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Chapter 21: Service Department Allocations
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Q1) In the first step of the allocation,the amount of Administration Department cost allocated to the Assembly Department is closest to:
A) $4,476
B) $12,838
C) $11,310
D) $12,180
Q2) In the first step of the allocation,the amount of Service Department A cost allocated to the Operating Department X is closest to:
A) $24,360
B) $21,924
C) $16,948
D) $24,914
Q3) Assume that SJM uses the step-down method to allocate service department costs,starting with Maintenance.The total overhead allocated from Cafeteria to Processing would be closest to:
A) $21,316
B) $22,398
C) $21,279
D) $23,643
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Page 23
Chapter 22: Analyzing Mixed Costs
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Q1) Using the least-squares regression method,the estimate of the fixed component of inspection cost per month is closest to:
A) $9,608
B) $15,640
C) $9,587
D) $15,271
Q2) In a scattergraph of cost and activity,activity is the independent variable because it causes variations in the cost.
A)True
B)False
Q3) Using the high-low method,the estimate of the variable component of electrical cost per machine-hour is closest to:
A) $2.11
B) $1.80
C) $2.21
D) $0.47
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Page 24
Chapter
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Q1) On the Customer Cost Analysis report in time-driven activity-based costing,the total cost assigned to Customer U would be closest to:
A) $0.00
B) $80.50
C) $61.60
D) $18.90
Q2) On the Customer Cost Analysis report in time-driven activity-based costing,the Receiving Calls cost assigned to Customer M would be closest to:
A) $216.00
B) $117.60
C) $7.20
D) $113.60
Q3) On the Customer Cost Analysis report in time-driven activity-based costing,the Resolving Queries cost assigned to Customer G would be closest to:
A) $10.36
B) $127.77
C) $186.48
D) $108.20
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Chapter 24: Predetermined Overhead Rates and Overhead
Analysis in a Standard Costing System
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Q1) Diehl Corporation uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours.The company's total applied factory overhead was $315,000 last year when the company used 32,000 direct labor-hours as the denominator activity.If the variable factory overhead rate was $8 per direct labor-hour,and if 30,000 standard direct labor-hours were allowed for the output of the year,then the total budgeted fixed factory overhead for the year must have been:
A) $60,000
B) $80,000
C) $90,000
D) $100,000
Q2) The fixed manufacturing overhead budget variance for April was:
A) $40,000 Unfavorable
B) $40,000 Favorable
C) $60,000 Favorable
D) $60,000 Unfavorable
Q3) There can be no volume variance for variable manufacturing overhead.
A)True
B)False
Page 26
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Chapter 25: Standard Cost Systems: a Financial Reporting
Perspective Using Microsoft Excel
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Q1) The ending balance in the Finished Goods account will be closest to:
A) $865,815
B) $830,505
C) $76,830
D) $65,010
Q2) As defined it the text,the ending balance in retained earnings equals the beginning balance in retained earnings plus net operating income minus dividends.
A)True
B)False
Q3) When the raw materials used in production are recorded in transaction (b)above,which of the following entries will be made?
A) $650 in the Materials Quantity Variance column
B) ($650) in the Materials Price Variance column
C) ($650) in the Materials Quantity Variance column
D) $650 in the Materials Price Variance column
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Chapter 26: Transfer Pricing
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Q1) The Southern Division of Barstol Company makes and sells a single product,which is a part used in manufacturing trucks.The annual production capacity is 12,000 units and the variable cost of each unit is $35.Presently the Southern Division sells 11,000 units per year to outside customers at $49 per unit.The Northern Division of Barstol Company would like to buy 4,000 units a year from Southern to use in its production.There would be no savings in variable costs from transferring the units internally rather than selling them externally.The lowest acceptable transfer price from the standpoint of the Southern Division should be closest to:
A) $45.50 per unit
B) $35.00 per unit
C) $32.00 per unit
D) $49.00 per unit
Q2) Assume that Division A is presently operating at capacity.According to the formula in the text,what is the lowest acceptable transfer price from the viewpoint of the selling division?
A) $37 per unit
B) $39 per unit
C) $36 per unit
D) $38 per unit
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Chapter 27: Service Department Charges
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Q1) How much Maintenance Department cost should be allocated to the Stains Division at the end of the year?
A) $395,313
B) $414,187
C) $405,610
D) $386,960
Q2) Since sales dollars represents "ability to pay," it is superior to most other bases used for allocating or charging service department costs.
A)True
B)False
Q3) The long-run average or peak period needs of operating departments would be the most suitable base for allocating:
A) the variable element of power costs.
B) the fixed element of power costs.
C) total power costs.
D) any spending variance associated with power costs.
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Chapter 28: Pricing Decisions
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Q1) What is the net operating income for product Omicron52 at the current price?
A) $6,720,000
B) $4,650,000
C) $330,000
D) $2,400,000
Q2) Variable selling and administrative costs are excluded from the cost base used to set a selling price under the absorption approach to cost-plus pricing described in the text.
A)True
B)False
Q3) From a value-based pricing standpoint what is the differentiation value offered by model IA-05 relative to the competitor's offering for each 2,000 hours of usage?
A) $68,000
B) $60,000
C) $6,000
D) $108,000
Q4) Target costing is primarily used with well-established products.
A)True
B)False
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Chapter 29: The Concept of Present Value
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Q1) The present value of a cash flow increases as it moves further into the future.
A)True
B)False
Q2) An increase in the discount rate:
A) will increase the present value of future cash flows.
B) will have no effect on net present value.
C) will reduce the present value of future cash flows.
D) is one method of compensating for reduced risk.
Q3) The present value of a given future cash flow will decrease as the discount rate decreases.
A)True
B)False
Q4) (Ignore income taxes in this problem.)In order to receive $12,000 at the end of three years and $10,000 at the end of five years,how much must be invested now if you can earn 14% rate of return?
A) $12,978
B) $8,100
C) $13,290
D) $32,054
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Chapter 30: Income Taxes and the Present Value Method
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Sample Questions
Q1) The total cash flow net of income taxes in year 3 is:
A) $58,000
B) $158,000
C) $100,000
D) $88,000
Q2) The total cash flow net of income taxes in year 3 is:
A) $53,000
B) $60,000
C) $28,500
D) $98,500
Q3) The income tax expense in year 2 is:
A) $3,000
B) $9,000
C) $21,000
D) $6,000
Q4) The net present value of the entire project is closest to:
A) $182,000
B) $50,724
C) $70,494
D) $147,770
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Chapter 31: the Direct Method of Determining the Net Cash
Provided by Operating Activities
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Q1) Last year Lawn Corporation reported sales of $115,000 on its income statement.During the year,accounts receivable decreased by $10,000 and accounts payable increased by $15,000.The company uses the direct method to determine the net cash provided by (used in)operating activities on the statement of cash flows.The sales revenue adjusted to a cash basis for the year would be:
A) $125,000
B) $90,000
C) $140,000
D) $100,000
Q2) Under the direct method of determining the net cash provided by (used in)operating activities on the statement of cash flows,a decrease in prepaid expenses would be added to selling and administrative expenses to convert selling and administrative expenses to a cash basis.
A)True
B)False
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