Decision Making for Managers
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Course Introduction
Decision Making for Managers explores the theories, processes, and practical tools used by effective leaders to make sound decisions in complex and dynamic organizational environments. The course covers key topics such as problem identification, the impact of cognitive biases, risk assessment, ethical considerations, and data-driven decision-making. Through real-world case studies, group discussions, and simulations, students develop their analytical skills and learn to apply both qualitative and quantitative methods to solve managerial problems. Emphasis is placed on enhancing critical thinking, fostering collaboration, and navigating uncertainty in order to make informed, strategic choices that drive organizational success.
Recommended Textbook Managerial Accounting 3rd Edition by Charles E. Davis
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Chapter 1: Accounting As a Tool for Management
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Sample Questions
Q1) Long-term planning is often referred to as strategic planning.
A)True
B)False
Answer: True
Q2) If a company follows a strategy of product differentiation,it will seek ways to set it products apart in terms of
A)quality,design or service.
B)price,demand or service.
C)design,price or popularity.
D)quality,demand or life cycle.
Answer: A
Q3) Managerial accounting provides reports and information for a range of decision makers outside an organization.
A)True
B)False
Answer: False
Q4) Ethical business behavior is compliance with the law.
A)True
B)False
Answer: False
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Chapter 2: Cost Behavior and Cost Estimation
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Sample Questions
Q1) If activity level increases,what happens to the total fixed cost?
A)It decreases.
B)It increases.
C)It remains the same.
D)It depends on how much the activity level increases.
Answer: A
Q2) A contribution format income statement classifies costs by A)behavior.
B)function.
C)constraints.
D)product.
Answer: A
Q3) The amount of income presented on a contribution format income statement
A)will always be greater than that shown on a traditional GAAP income statement.
B)will always be less than that shown on a traditional GAAP income statement.
C)will always be the same as that shown on a traditional GAAP income statement.
D)may or may not differ from that shown on a traditional GAAP income statement depending on the level of production and sales.
Answer: D
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) Which of the following formulas is not used to calculate the breakeven point?
A)Total fixed costs divided by contribution margin per unit.
B)Total fixed costs divided by sales price per unit less variable cost per unit.
C)Total fixed costs divided by contribution margin ratio.
D)Total fixed cost divided by total contribution margin.
Answer: D
Q2) If a company sells a single product and the selling price per
A)Contribution margin per unit increases and breakeven in units increases.
B)Contribution margin per unit increases and breakeven in units decreases.
C)Contribution margin remains the same and breakeven in units increases.
D)Contribution margin decreases and breakeven in
Answer: B
Q3) On the breakeven graph,if sales price and variable cost remain constant and fixed costs decrease,the breakeven point will
A)Shift upward.
B)Not shift.
C)Shift to the right.
D)Shift to the left.
Answer: D
Page 5
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Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) Which of the following is an example of direct labor for Dole Food Company?
A)Truck driver who transports fruit to customers.
B)Truck driver who transports labors to field
C)Plant supervisor
D)Canning machine operator
Q2) The predetermined overhead rate is calculated by dividing budgeted total manufacturing overhead by budgeted activity level of application base.
A)True
B)False
Q3) At what point are manufacturing costs expensed?
A)When the finished goods are sold
B)When the costs are transferred out of Work in Process
C)When the production process begins
D)At the end of the accounting period
Q4) What items decrease the following accounts: Raw Materials Inventory,Work in Process Inventory,Finished Goods Inventory,Manufacturing Overhead,and Cost of Goods Sold?
Q5) The fabric used to manufacture a tote bag is an example of indirect material.
A)True
B)False
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Chapter 5: Planning and Forecasting
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Sample Questions
Q1) Simple Styles is a dress manufacturer.The company purchases fabric with a list price of $200 per bolt and pays shipping charges of $3 per bolt.Each bolt contains 100 yards of fabric.Simply Styles receives a volume discount of 15% per bolt.Each dress uses a standard quantity of 2 yards of fabric.
Required:
Calculate the standard cost of material for one dress.
Q2) Which of the following is not a component of the master budget?
A)Selling and administrative expenses budget
B)Ending inventory and cost of goods sold budget
C)Capital expenditures budget
D)All of these answer choices are components of the master budget.
Q3) To determine the cash payments for direct materials during a period,companies prepare a
A)cash payment for materials budget.
B)cash flow from operating activities.
C)cash disbursements schedule.
D)None of these answer choices are correct.
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) Which of the following is a factor that could influence worker productivity?
A)The level of skill and training workers possess will affect their productivity
B)Workers' level of fatigue
C)The quality of direct material used
D)All of these answer choices are correct.
Q2) The difference between actual results and budgeted,or expected,results is referred to as
A)a variance.
B)a production flaw.
C)an unfavorable outcome.
D)a favorable outcome.
Q3) The flexible budget variance reflects how efficiently the company operated in producing a given level of sales.
A)True
B)False
Q4) Variances have very important meanings,even before their causes are identified.
A)True
B)False
Q5) Nantucket,Inc.uses a standard cost system with the following labor standards for one
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Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) In implementing an activity-based costing system,after all the activities have been identified and the appropriate level of detail selected,the activities are combined into activity cost pools based on their A)behavior.
B)function.
C)cost drivers.
D)cost levels.
Q2) Assume you have been hired by a company that is considering implementing an activity-based costing system.One of your co-workers is not eager to change and believes the benefits of moving to activity-based costing will not be worth the time and effort of implementing the new system.Explain to your co-worker the characteristics of an organization that make it a good candidate to implement activity-based costing and how activity-based costing might benefit the company.
Q3) Activity-based costing information can be used to make decisions regarding pricing,customer profitability,distribution channel profitability,and process improvement. A)True B)False
Q4) What is an activity cost pool and how are activity cost pool rates calculated?
Page 9
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) 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
Q2) Which of the following is not a qualitative issue in a special order pricing decision?
A)Will it generate a positive contribution margin?
B)If the special order generates new business,will the customer purchase again at the regular price?
C)If the special order uses a lower quality component that is used for regular orders,will it negatively affect the company's reputation?
D)Will accepting the special order require the hiring of extra workers or payment of overtime?
Q3) Accepting special orders may produce additional revenues,but may also result in some negative consequences.Discuss the quantitative and qualitative factors that impact the decision to accept a special order.
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Page 10
Chapter 9: Capital Budgeting
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Sample Questions
Q1) In a predictable decision,a proposed project is compared to a performance benchmark to determine whether the project should be considered further.
A)True
B)False
Q2) Lorman Manufacturing purchases equipment with an expected life of 10 years for $50,000.The equipment has an estimated salvage value of $2,000.Lorman expects the new equipment to generate cost savings of $8,000.What is the payback period for the equipment?
A)6 years
B)6.25 years
C)6.50 years
D)10 years
Q3) When the annual cash flows are uneven,you must use the annuity table method to calculate the internal rate of return.
A)True
B)False
Q4) If you wish to have $25,000 at the end of five years,how much must your deposit each year if you earn 12% compounded annually?
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Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) Breton Corporation's Longboat division's segment margin as a percentage of net sales is 12% for the current reporting period.The division has net sales revenue of $2,500,000.Operating assets were $800,000 at the beginning of the period and $1,200,000 at the end.What is the division's asset turnover?
A)2.08
B)2.8
C)2.5
D)3.13
Q2) Warner Company produces flash drives.The Custom division would like to buy 1,000,000
A)$4.35
B)$4.55
C)$6.83
D)$9.75
Q3) After an organization implements a certain level of decentralization,it is committed to maintaining that level for the life of the organization.
A)True
B)False
Q4) What is EVA and how is it calculated?
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) Direct material variance is a measure of A)outcomes.
B)inputs.
C)qualitative factors.
D)None of these answer choices are correct.
Q2) Which of the following does benchmarking not focus on?
A)Identifying best practices
B)Studying best practices
C)Analyzing best practices
D)Eliminating non-value-added processes
Q3) Qualitative indicators
A)tend to be based on feelings.
B)tend to be based on perceptions.
C)do not rely on accounting records.
D)All of these answer choices are correct.
Q4) Benchmarking is about trying to achieve another company's metrics.
A)True
B)False
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Q5) Explain the difference between a leading indicator and a lagging indicator and give one example of each relating to your performance in this class.
Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) Rather than looking only at the balances reported on the financial statements,it is helpful to look at the changes in the account balances over time.This is called
A)Common analysis.
B)Vertical analysis.
C)Horizontal analysis.
D)Benchmarking
Q2) Investors,employees,managers,and creditors are all interested in a company's ability to remain profitable over the long-run.Answer the following questions relating to profitability ratios.
a.What does the gross margin percentage measure and how is it calculated?
b.What does the return on assets measure and how is it calculated?
c.What does the return on common stockholders' equity measure and how is it calculated?
Unit 12-3,
Q3) The current ratio is also referred to as the quick ratio.
A)True
B)False
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) A company's inventory account decreased by $1,000 during the year.Which of the following would appear on the statement of cash flows prepared using the indirect method?
A)An addition under investing activities
B)A deduction under investing activities
C)An addition under operating activities
D)A deduction under operating activities
Q2) Which of the following is a use of cash?
A)Exchanging old auto for new auto and taking a note for balance due
B)Paying employees monthly payroll
C)Issuing long-term bonds
D)All of these answer choices uses of cash
Q3) On the cash flow statement,the gain on the sale of a delivery truck is an investing activity.
A)True
B)False
Q4) The statement of cash flows is organized into three sections: operating activities,investing activities,and financing activities.
A)True
B)False
Page 15
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Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) Equivalent units for direct materials and conversion costs should be added separately to total units completed to arrive at the total equivalent units for materials and the total equivalent units for conversion.
A)True
B)False
Q2) Like process costing,job order costing makes no attempt to track an individual product's costs,all the products have similar costs.
A)True
B)False
Q3) Which of the following is a similarity between job order costing and process costing systems?
A)Both mass-produce identical products
B)Both accumulate direct materials,direct labor and manufacturing overhead costs
C)Both accumulate product cost on a departmental production report
D)None of these answer choices are similarities between job costing and process costing systems.
Q4) When using a process costing system,explain the steps you use in assigning costs to
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Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) The underlying principle that absorption costing satisfies is the historical cost principle.
A)True
B)False
Q2) When production volume exceeds sales volume,net income will be higher when using absorption costing than when using variable costing.
A)True
B)False
Q3) To make predictions about costs and income,costs must be classified as either
A)fixed or variable.
B)product or administrative.
C)direct material or conversion.
D)direct or indirect.
Q4) Absorption costing is also referred to as variable costing.
A)True
B)False
Q5) In variable costing,fixed manufacturing overhead is treated as a product cost. A)True
B)False
Q6) Describe the format for a variable costing income statement.
Page 17
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Chapter 16: Topic Focus Standard Costing Systems
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Sample Questions
Q1) Wolfe Manufacturing Company has the following direct labor standards: Standard labor hours for each
a.Calculate the direct labor rate variance.
b.Calculate the direct labor efficiency variance.
Q2) When using a standard costing system,which of the following should be recorded when direct materials are transferred to the production floor?
A)Debit raw materials inventory for the actual amount at the standard price and credit work in process for the actual amount at the standard price.
B)Debit raw materials inventory for the standard amount at the standard price and credit work in process for the actual amount at the actual price with a debit or credit to direct material quantity variance.
C)Credit raw materials inventory for the standard amount at the standard price and debit work in process for the standard amount at the actual price with a debit or credit to direct material quantity variance.
D)Credit raw materials inventory for the actual amount at the standard price and debit work in process for the standard amount at the standard price with a debit or credit to direct material quantity variance.
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Chapter 17: Topic Focus Customer Profitability
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Sample Questions
Q1) The revenue a customer generates should cover which of the following costs?
A)Product
B)Selling
C)Administrative
D)Product,Selling,and Administrative
Q2) In their book Killer Customers,Larry Selden and Geoffrey Colvin estimate what percentage of a company's customers generates approximately 120% of a company's profits?
A)20%
B)40%
C)60%
D)80%
Q3) Which of the following is not an administrative expense?
A)Controller's salary
B)Depreciation on office equipment
C)Fixed overhead
D)Controller's salary,Depreciation on office equipment ,and fixed overhead.
Q4) Customer net profit divides customer net profit by customer revenues.
A)True
B)False
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