Cost and Management Accounting Final Exam Questions
Course Introduction
Cost and Management Accounting provides a comprehensive understanding of the methods and techniques used to determine, record, and analyze the costs associated with the production of goods and services. The course covers essential topics such as cost classification, job and process costing, budgeting, variance analysis, and standard costing, while also exploring the vital role of management accounting in strategic planning, performance evaluation, and decision-making. Students will gain practical insights into how accurate cost information supports effective control of resources and enhances the overall efficiency and profitability of organizations.
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ACCT Managerial Asia Pacific Edition 1st Edition by Prabhu Sivabalan
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Which of the following statements is true?
A) External and internal users of accounting information have exactly the same information needs.
B) Financial accounting is less flexible than managerial accounting.
C) Managerial accounting provides the best information to external users.
D) Managerial accounting emphasises the organisation as a whole more than financial accounting.
Answer: B
Q2) Which type of business manager would most likely be involved in product packaging decisions?
A) Marketing manager
B) Operations/production manager
C) Finance manager
D) Human resource manager
Answer: A
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Chapter 2: Product Costing: Manufacturing Processes, cost
Terminology and Cost Flows
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Sample Questions
Q1) Net income for November is: (ignore taxes)
A) $371 950
B) $411 950
C) $369 150
D) $382 000
Answer: A
Q2) Products and their costs flow through a production facility in the following order:
A) Work-in-process,finished goods,cost of goods sold
B) Raw materials,work-in-process,finished goods,cost of goods sold
C) Work-in-process,raw materials,cost of goods sold,finished goods
D) Work-in-process,cost of goods manufactured,cost of goods sold
Answer: B
Q3) Which of the following is not a type of manufacturing cost?
A) Direct material costs
B) Administrative costs
C) Factory overhead costs
D) Direct labour costs
Answer: B
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Chapter 3: Cost Behaviour
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Sample Questions
Q1) You are given the following cost and volume information:
\[\begin{array} { c c }
\begin{array} { c }
\text { Volume } \\
(\text { in units })
\end{array} & \begin{array} { c }
\text { Total Cost } \\
( \text { in \$ })
\end{array} \\
\hline 200 & \$ 1000 \\
400 & 1000 \\
600 & 1000
\end{array}\]
Which type of cost is given?
A) Variable
B) Fixed
C) Mixed
D) Can not be determined
Answer: B
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Chapter 4: Job Costing and Overhead Costing Systems
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Sample Questions
Q1) Which of the following statements is correct?
A) Overhead consists of a limited variety of costs that should have the same cost driver.
B) Overhead consists of a wide variety of costs that should have the same cost driver.
C) Overhead consists of a variety of costs that may potentially have different cost drivers.
D) Overhead consists of a limited variety of costs that must each have a unique cost driver.
Q2) The amount of overhead applied for June is:
A) $3450.00
B) $3000.00
C) $3737.50
D) $5900.00
Q3) How much overhead was applied to Job #99 during the year if the company uses direct labour hours as its overhead driver?
A) $3000
B) $2000
C) $2500
D) $3500
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Chapter 5: Process Costing Systems
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Q1) Which of the following statements is false regarding process costing?
A) Units that are partially complete can be expressed in terms of equivalent units.
B) Only one work-in-process account is allowed.
C) The products produced by a certain process are all identical.
D) The use of a predetermined overhead rate is allowed.
Q2) Which of the following statements is true regarding the weighted-average method of process costing?
A) It assumes that there are an equal number of units in beginning and ending inventories.
B) It assumes that the units in beginning inventory were started in the current period.
C) It assumes that the units in beginning inventory were finished last in the current period.
D) It assumes that the units in beginning inventory were the same percentage complete as the units in ending inventory.
Q3) Discuss the differences between normal spoilage and abnormal spoilage.
Q4) Why do different resources have different equivalent units of production?
Q5) What is the FIFO and process costing method?
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Page 7
Chapter 6: Service and Operations Costing
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Sample Questions
Q1) Jameson Inc.applies overhead using machine hours.The following data are available for the year:
\(\begin{array}{lr}
\text {Estimated direct labour hours } &2000000\\
\text {Actual direct labour hours } &1850000\\
\text { Overhead applied } &\$3700000\\
\text { Actual overhead } &\$3200000\\
\end{array}\)
Required:
What predetermined overhead rate did Jameson Inc.use?
Q2) How might retail organisations utilise service costing principles?
Q3) The amount of applied overhead for March will be:
A) $7800
B) $8400
C) $8610
D) $8000
Q4) What are service shop organisations? Please provide examples of such organisations.
Q5) How are professional service firms different to mass service firms?
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Chapter 7: Departmental Overhead Costing
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Sample Questions
Q1) What is the overhead allocated to a product that uses 3 direct labour hours in Assembly and 5 machine hours in Machinery?
A) $960
B) $0
C) $1020
D) $900
Q2) Which of the following would be classified as a service department?
A) The bottling department of a soft drink manufacturer
B) The painting department of an automobile manufacturer
C) The accounting department of a manufacturing company
D) The claims processing department of an insurance company
Q3) Assuming that Sharon Manufacturing Company allocates service department 1 costs first,the amount of service department 1 costs allocated to service department 2 under the step method would be:
A) $ 0
B) $1600
C) $2000
D) $2400
Q4) What is the reciprocal method? What assumptions are necessary to make it relevant?
Page 9
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Chapter 8: Activity-Based Costing
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Sample Questions
Q1) Troxler Inc.produces various types of floor rugs with many different designs.They typically produce at least 200 rugs with a single machine setup.A cost incurred each time a new rug design is developed is called a(n):
A) product-level cost.
B) batch-level cost.
C) unit-level cost.
D) facility-level cost.
Q2) Which of the following statements is false regarding activities in an ABC system?
A) As a business becomes more complex,more activities will probably need to be identified.
B) Two different manufacturing companies that make the same products may come up with different sets of activities and cost drivers.
C) The maximum number of activities that should be identified as batch-level is two.
D) Overhead costs may be allocated to more than one activity.
Q3) Define 'cross subsidies' and say what kind of product costing system is likely to have them.What happens to cross subsidies in activity-based costing (ABC)?
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Chapter 9: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Jazz Products has the following information available for the month of March: \(\begin{array}{lr}
\text { Sales (4000 units) } & \$ 40000 \\
\text { Variable costs } & 18000 \\
\text { Fixed costs } & 5000 \\
\text { income } & \$ 17000 \end{array}\)
The company's manager is considering several options to increase net income.By what amount do sales dollars need to increase in order for net income to increase to $25 000?
A) $14 545
B) $25 000
C) $ 3000
D) $18 820
Q2) If the software had a sales price of $30 per unit,what is the variable cost per unit?
A) $165.00
B) $ .20
C) $ 25.05
D) $ 4.95
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Chapter 10: Relevant Costs and Product Planning Decisions
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Sample Questions
Q1) In order to maximise profits,how many of each type of tent should be produced?
A) Single-wall: 3000 Double-wall: 1000
B) Single-wall: 0 Double-wall: 3000
C) Single-wall: 1800 Double-wall: 1800
D) Single-wall: 1500 Double-wall: 4000
Q2) Which of the following statements regarding resource utilisation is not true?
A) Resource utilisation decisions are usually short-term in nature.
B) Resource utilisation decisions require the identification of a constraint.
C) Resource utilisation decisions require an analysis of which fixed costs are unavoidable.
D) Resource utilisation decisions require managers to compute a product's contribution margin.
Q3) Which of the following costs is least likely to be relevant in deciding whether to accept a special order?
A) Variable direct labour costs
B) Variable selling costs
C) Fixed manufacturing overhead
D) Variable packaging and shipping costs
Q4) When are fixed costs relevant in a make or buy decision? Give one example of a relevant fixed cost.
Page 12
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Chapter 11: Long-Term Capital Investmentdecisions
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Sample Questions
Q1) Newman Auto Repair is considering the purchase of a hydraulic machine costing approximately $35 000.Using a discount rate of 18 per cent,the present value of future cash inflows are calculated to be $42 000.To yield at least an 18 per cent return,the actual cost of the machine should not exceed the $35 000 estimate by more than:
A) $28 000
B) $49 000
C) $ 7000
D) $ 6300
Q2) Which of the following statements is false regarding the impact of taxes on net present value computations?
A) Most for-profit companies should take into account the impact of income taxes on capital investment decisions.
B) The disposal of a long-term asset may have tax consequences.
C) After-tax cash inflows will be less than before-tax cash inflows.
D) All tax-deductible expenses involve cash outflows.
Q3) Why do capital investment decisions require consideration of the time value of money?
Q4) What is the difference between a screening decision and a preference decision?
Q5) How is net present value (NPV)computed and interpreted?
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Chapter 12: Fixed and Rolling Budgets for Planning and Decision Making
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Sample Questions
Q1) Sunshine Inc.manufactures kiddie pools.On 31 March,the company had 750 pools in inventory.Each pool sells for $25.00.The company's policy is to maintain a pool inventory equal to 15 per cent of next month's sales.The company expects the following sales activity for the second quarter of the year: \(\begin{array}{lr}
\text { April } & 5000 \text { units } \\
\text { May } & 9000 \text { units } \\
\text { June } & 16000 \text { units } \end{array}\)
In addition,July's sales are expected to be 20 000 units.
Required:
A. Prepare a sales budget for the second quarter of the year.
B. Prepare a production budget for the second quarter of the year.
Q2) A disadvantage of rolling budgets is that they:
A) cost more to execute than annual budgets.
B) require organisations to re-think how they manage their business.
C) only relevant in uncertain environments.
D) are very complicated relative to annual budgets.
Q3) There are many advantages of budgeting.List four of these advantages.
Q4) How might rolling forecasts help organisations beyond the annual budget?
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Chapter 13: Management Accounting for Cost Control and Performance Evaluation Flexible Budgets and Variance Analysis
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Q1) Supreme Catering's flexible budget for February would show net income of:
A) $31 000
B) $20 500
C) $27 400
D) $19 000
Q2) Which of the following statements regarding the standard cost for direct materials is true?
A) It would be used on a static budget but not a flexible budget.
B) It would consist of two components - a standard quantity and a standard price.
C) It must be determined after materials are purchased for the year.
D) It can not be determined if a company uses a just-in-time inventory system.
Q3) For purposes of the calculation for the direct materials usage variance when the quantity of materials purchased and used are different,which quantity of materials is relevant?
A) Actual quantity purchased
B) Actual quantity used
C) The lower of the standard quantity allowed or actual quantity purchased
Page 15
D) The lower of the actual quantity used or actual quantity purchased
Q4) What is 'task analysis' and how is it used in the context of variance analysis?
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Chapter 14: Decentralisation and Modern Performance
Management Systems the Balanced Scorecard
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Sample Questions
Q1) A local chain department store grants each of its store managers the authority to make buying decisions for their stores.Granting managers this kind of authority is found in which type of organisation?
A) Segmented
B) Centralised
C) Desegmented
D) Decentralised
Q2) Which of the following questions would the learning and growth perspective of the balanced scorecard attempt to answer?
A) How does the company continue to improve and learn?
B) How do customers view the company?
C) Which business processes must the company excel in?
D) How does the company create value for its stakeholders?
Q3) As a new manager of a production division,you have made the decision to incur more quality costs than the previous manager of the division incurred.How can you defend quality costs to executive management?
Q4) Describe the internal business perspective of the balanced scorecard and provide an example of a critical success factor for this perspective.
Page 16
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Chapter 15: Accounting for Sustainability Social
Reporting,environmental Reporting and Management
Accounting
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Sample Questions
Q1) Which of the following is an example of an appraisal cost?
A) Fines for breach of environmental standards
B) Employee health costs
C) Implementation costs of new technology minimising risk of environmental damage
D) Costs to monitor existing environmental systems in the organisation
Q2) Why can't accounting systems capture external costs at present?
Q3) Which of the following is an example of an external failure cost?
A) Fines for breach of environmental standards
B) Employee health costs
C) Implementation costs of new technology minimising risk of environmental damage
D) Costs to monitor existing environmental systems in the organisation
Q4) What are the four environmental cost types in organisations?
A) Profit,revenues,costs,expenses
B) Variable and fixed costs,variable and fixed expenses
C) Prevention,appraisal,internal failure and external failure costs
D) Prevention,appraisal,variable and external failure costs
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Q5) How might the Epstein and Roy framework aid in the justification of sustainability investments?