Financial and Managerial Accounting
Chapter Exam Questions
Course Introduction
Financial and Managerial Accounting introduces the foundational concepts and principles of accounting, emphasizing the role of accounting information in decision-making for both external and internal users. The course covers the preparation and interpretation of financial statements, enabling students to analyze an organization's performance and financial position. It also explores managerial accounting techniques such as budgeting, cost analysis, and performance measurement, which support planning and control within organizations. By integrating both financial and managerial perspectives, this course equips students with essential tools to understand, evaluate, and communicate accounting information in a business context.
Recommended Textbook
Introduction to Managerial Accounting 8th Edition by Peter Brewer
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Page 2
Chapter 1: Managerial Accounting and Cost Concepts
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Q1) If Lonnie were to sell 50,000 units, the total expected cost per unit would be:
A)$2.20
B)$2.30
C)$2.50
D)$2.00
Answer: B
Q2) What is the total amount of the costs listed above that are direct costs of the Shoe Department?
A)$66,000
B)$74,000
C)$106,000
D)$71,000
Answer: B
Q3) Selling and administrative expenses are period costs under generally accepted accounting principles.
A)True
B)False
Answer: True
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Chapter 2: Job-Order Costing: Calculating Unit Product
Costs
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Q1) A bill of materials is a document that lists the type and quantity of each type of direct material needed to complete a unit of product.
A)True
B)False
Answer: True
Q2) The amount of overhead applied in the Forming Department to Job A460 is closest to:
A)$184,000.00
B)$184.00
C)$736.00
D)$664.00
Answer: C
Q3) The amount of overhead applied in the Assembly Department to Job A460 is closest to:
A)$415.00
B)$150.00
C)$565.00
D)$79,100.00
Answer: C
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Chapter 3: Job-Order Costing: Cost Flows and External Reporting
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Q1) If the applied manufacturing overhead was $223,900, the actual manufacturing overhead cost for the year was:
A)$200,700
B)$260,600
C)$200,200
D)$187,200
Answer: D
Q2) The cost of goods sold for June after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to:
A)$301,410
B)$299,790
C)$299,600
D)$301,600
Answer: B
Q3) In the Schedule of Cost of Goods Manufactured, Total direct materials = Raw materials used in production - Ending raw materials inventory.
A)True
B)False
Answer: False
5
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Chapter 4: Activity-Based Costing
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Q1) The unit product cost of Product T6 under activity-based costing is closest to:
A)$2,075.92 per unit
B)$1,551.27 per unit
C)$1,703.82 per unit
D)$1,507.51 per unit
Q2) Which of the following would probably be the most accurate measure of activity to use for allocating the costs associated with a factory's purchasing department?
A)Machine-hours
B)Direct labor-hours
C)Number of orders processed
D)Cost of materials purchased
Q3) If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate would be closest to:
A)$32.59 per DLH
B)$44.54 per DLH
C)$69.99 per DLH
D)$93.63 per DLH
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Chapter 5: Process Costing6 Cost-Volume-Profit
Relationships
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Q1) Under the weighted-average method, the cost of units transferred out of a department is computed as follows for a cost category:
A)Costs added during the period + Cost of beginning work in process inventory
B)Units transferred to the next department × Cost per equivalent unit
C)Units in ending work in process inventory × Cost per equivalent unit
D)Cost of ending work in process inventory - Cost of beginning work in process inventory
Q2) What are the Molding Department's equivalent units related to materials for January?
A)79,000
B)86,000
C)89,000
D)93,000
Q3) 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
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Chapter 6: Cost-Volume-Profit Relationships
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Q1) Liz, Inc., produces and sells a single product.The product sells for $130.00 per unit and its variable expense is $48.10 per unit.The company's monthly fixed expense is $223,587.
Required:
Determine the monthly break-even in unit sales.Show your work!
Q2) Assume the company's target profit is $16,000.The dollar sales to attain that target profit is closest to:
A)$564,328
B)$1,710,085
C)$1,038,898
D)$842,281
Q3) If the selling price increases by $3 per unit and the sales volume decreases by 400 units, the net operating income would be closest to:
A)$19,000
B)$16,800
C)$13,800
D)$17,733
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Chapter 7: Variable Costing and Segment Reporting: Tools for Management
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Q1) The unit product cost under variable costing in Year 1 is closest to:
A)$21.00
B)$57.00
C)$62.00
D)$26.00
Q2) What is the company's overall net operating income if it operates at the break-even points for its two divisions?
A)$34,100
B)$0
C)$(69,020)
D)$(260,020)
Q3) A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:
A)$66,000
B)($144,000)
C)$423,000
D)$276,000
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Chapter 8: Master Budgeting
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Q1) The selling and administrative expense budget of Garney Corporation is based on the number of units sold, which are budgeted to be 1,800 units in October.The variable selling and administrative expense is $2.00 per unit.The budgeted fixed selling and administrative expense is $22,680 per month, which includes depreciation of $7,020.The remainder of the fixed selling and administrative expense represents current cash flows. Required:
Prepare the selling and administrative expense budget for October.
Q2) The budgeted direct labor cost per Pod is closest to:
A)$13.44
B)$9.60
C)$7.38
D)$11.00
Q3) The budgeted cash disbursements for December are:
A)$382,500
B)$442,500
C)$472,500
D)$477,500
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Chapter 10: Performance Measurement in Decentralized Organizations
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Q1) The average operating assets for Year 2 were:
A)$1,000,000
B)$1,080,000
C)$1,200,000
D)$1,388,889
Q2) The division's turnover is closest to:
A)3.40
B)10.75
C)2.58
D)0.32
Q3) Largo Company recorded for the past year sales of $750,000 and average operating assets of $375,000.What is the margin that Largo Company needed to earn in order to achieve an ROI of 15%?
A)2.00%
B)15.00%
C)9.99%
D)7.50%
Q4) Net operating income is income before interest and taxes.
A)True
B)False
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Chapter 11: Differential Analysis: The Key to Decision Making
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Q1) The Anaconda Mining Company currently is operating at less than 50 percent of practical capacity.The management of the company expects sales to drop below the present level of 15,000 tons of ore per month very soon.The selling price per ton of ore is $2 and the variable cost per ton is $1.Fixed costs per month total $15,000.
Management is concerned that a further drop in sales volume will generate a loss and, accordingly, is considering the temporary suspension of operations until demand in the metals markets returns to normal levels and prices rebound.Management has implemented a cost reduction program over the past year that has been successful in reducing costs.Nevertheless, suspension of operations appears to be the only viable alternative.Management estimates that suspension of operations would reduce fixed costs from $15,000 to $5,000 per month.
Required:
a.Why does management estimate that fixed costs will persist at $5,000 per month even though the mine is temporarily closed?
b.At what sales volume should management suspend operations at the mine?
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Chapter 12: Capital Budgeting Decisions
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Q1) If the internal rate of return is less than the required rate of return for a project, then the net present value of that project is positive.
A)True B)False
Q2) The simple rate of return for the investment (rounded to the nearest tenth of a percent)is:
A)20.0%
B)13.3%
C)18.0%
D)10.0%
Q3) Discounted cash flow techniques automatically take into account recovery of the initial investment.
A)True B)False
Q4) The net present value of Project A is:
A)$51,000
B)$60,120
C)$55,560
D)$94,450
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Chapter 9: Flexible Budgets Standard Costs and Variance Analysis
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Q1) The variable overhead rate variance for July is:
A)$213 F
B)$216 F
C)$216 U
D)$213 U
Q2) The net operating income in the planning budget for January would be closest to:
A)$15,231
B)$10,885
C)$14,547
D)$12,280
Q3) The net operating income in the planning budget for September would be closest to:
A)$9,500
B)$7,259
C)$10,260
D)$7,503
Q4) When the materials price variance is recorded at the time of purchase, raw materials are recorded as inventory at standard cost. A)True
B)False
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Chapter 13: Statement of Cash Flows
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Q1) The free cash flow for the year was:
A)$123,000
B)$87,000
C)$142,000
D)$269,000
Q2) The net cash provided by (used in)operating activities last year was:
A)$105,000
B)$58,000
C)$130,000
D)$152,000
Q3) Which of the following would be added to net income in the operating activities section of a statement of cash flows prepared using the indirect method?
A)an increase in accounts receivable.
B)an increase in prepaid expenses.
C)an increase in accrued liabilities.
D)an increase in property, plant and equipment.
Q4) Free cash flow is net cash provided by operating activities less capital expenditures.
A)True B)False
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Chapter 14: Financial Statement Analysis
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Q1) A common-size financial statement is a vertical analysis in which each financial statement account is expressed as a percentage.
A)True
B)False
Q2) Purchasing marketable securities with cash will have no effect on a company's acid-test ratio.
A)True
B)False
Q3) If the acid-test ratio is less than one, then paying off some current liabilities with cash will increase the acid-test (quick)ratio.
A)True
B)False
Q4) The average sale period for Year 2 is closest to:
A)28.1 days
B)45.0 days
C)50.0 days
D)227.7 days
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Chapter 15: Job-Order Costing: Cost Flows and External Reporting
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Q1) In the Excel, or spreadsheet, approach to recording financial transactions, manufacturing overhead applied is recorded as an increase in the Work in Process column and as a decrease in the Manufacturing Overhead column.
A)True
B)False
Q2) In the Excel, or spreadsheet, approach to recording financial transactions, indirect labor paid in cash is recorded as a decrease in the Cash column and as an increase in the Work in Process column.
A)True
B)False
Q3) In the Excel, or spreadsheet, approach to recording financial transactions, the Manufacturing Overhead account is used to record two things-all actual overhead expenses and the amount of manufacturing overhead applied to production using the predetermined overhead rate.
A)True
B)False
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Chapter 16: Process Costing6 Cost-Volume-Profit Relationships
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Q1) The equivalent units for materials for March, using the weighted-average method, are:
A)69,000 units
B)65,000 units
C)68,400 units
D)67,000 units
Q2) The cost per equivalent unit for conversion costs for the first department for the month is closest to:
A)$48.79
B)$45.20
C)$44.68
D)$43.05
Q3) Assuming that Owens Corporation uses the weighted-average method, which of the following is closest to the cost per equivalent unit for processing cost for March?
A)$4.08
B)$3.87
C)$3.68
D)$3.50
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Chapter 17: Cost-Volume-Profit Relationships
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Q1) Using the high-low method, the estimate of the fixed component of inspection cost per month is closest to:
A)$10,344
B)$10,441
C)$3,852
D)$10,176
Q2) A quick look at a scattergraph of cost versus activity can reveal that there is little relation between the cost and the activity or that the relation is something other than a simple straight line.In such cases, least square regression is highly recommended for estimating fixed and variable costs.
A)True
B)False
Q3) Using the high-low method of analysis, the estimated variable lubrication cost per machine hour is closest to:
A)$1.50
B)$1.25
C)$0.67
D)$1.40
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Chapter 18:Flexible Budgets, Standard Costs, and Variance Analysis
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Q1) The total amount of manufacturing overhead applied is closest to:
A)$484,972
B)$490,504
C)$499,720
D)$505,400
Q2) The total manufacturing overhead is underapplied or overapplied by how much?
A)$10,708 Overapplied
B)$9,956 Underapplied
C)$10,708 Underapplied
D)$9,956 Overapplied
Q3) If the standard hours allowed for the actual output of the period is greater than the denominator level of activity (in hours), then the overhead volume variance will be favorable.
A)True
B)False
Q4) The fixed manufacturing overhead budget variance for the period is closest to:
A)$2,440 F
B)$1,200 U
C)$1,999 U
D)$704 F
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Chapter 19: Flexible Budgets, Standard Costs, and Variance Analysis
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Q1) When the work in process is completed and transferred to finished goods in transaction (e)above, the Finished Goods inventory account will increase (decrease)by:
A)$2,096,130
B)($2,096,130)
C)$2,098,894
D)($2,098,894)
Q2) The net operating income for the year is closest to:
A)$107,269
B)$6,150
C)$89,348
D)$72,960
Q3) When the direct labor cost is recorded, which of the following entries will be made?
A)$1,800 in the Labor Efficiency Variance column
B)($1,800)in the Labor Rate Variance column
C)$1,800 in the Labor Rate Variance column
D)($1,800)in the Labor Efficiency Variance column
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Chapter 20: A Capital Budgeting Decisions
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Q1) (Ignore income taxes in this problem.)At an interest rate of 14%, approximately how much would you need to invest today if you wanted to have $2,000,000 in 10 years?
A)$383,436
B)$540,000
C)$740,741
D)$1,043,200
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) (Ignore income taxes in this problem.)How much would you have to invest today in the bank at an interest rate of 8% to have an annuity of $4,800 per year for 7 years, with nothing left in the bank at the end of the 7 years? Select the amount below that is closest to your answer.
A)$33,600
B)$2,798
C)$24,989
D)$31,111
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Chapter 21: A Statement of Cash Flows
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Q1) The net cash provided by (used in)investing activities for the year was:
A)$57
B)$(57)
C)$33
D)$(33)
Q2) The net cash provided by (used in)investing activities for the year was:
A)$19
B)$(118)
C)$(137)
D)$118
Q3) Using the direct method, sales adjusted to a cash basis would be:
A)$300,000
B)$302,000
C)$298,000
D)$305,000
Q4) Under the direct method, cost of goods sold adjusted to a cash basis would be:
A)$105,000
B)$125,000
C)$175,000
D)$155,000
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