Financial and Managerial Accounting Final Exam
Course Introduction
Financial and Managerial Accounting introduces students to the fundamental principles and practices of accounting as they apply to both external and internal decision-making. The course covers key financial accounting concepts, including the preparation and analysis of financial statements, understanding assets, liabilities, and equity, and adherence to accounting standards. It also explores essential managerial accounting topics such as budgeting, cost behavior, performance measurement, and decision-making tools used by managers to plan, control, and evaluate business operations. By integrating both financial and managerial perspectives, this course equips students with the analytical skills needed to interpret financial data and make informed business decisions.
Recommended Textbook
Managerial Accounting 12th Edition by Carl
S. Warren
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Page 2
Chapter 2: Job Order Costing
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Sample Questions
Q1) During the period, labor costs incurred on account amounted to $275,000 including $200,000 for production orders and $75,000 for general factory use. In addition, factory overhead applied to production was $32,000. From the following, select the entry to record the factory overhead applied to production.
A) Work in Process 75,000 Factory Overhead 75,000
B) Factory Overhead 32,000 Work in Process 32,000
C) Work in Process 32,000 Factory Overhead 32,000
D) Factory Overhead 75,000 Accounts Payable 75,000
Answer: C
Q2) Depreciation expense on factory equipment is part of factory overhead cost. A)True
B)False
Answer: True
Q3) In a factory with several processing departments, a single factory overhead rate may not provide accurate product costs and effective cost control.
A)True
B)False
Answer: True
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Chapter 3: Process Cost Systems
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Sample Questions
Q1) If the principal products of a manufacturing process are identical, a process cost system is more appropriate than a job order cost system.
A)True
B)False
Answer: True
Q2) The FIFO method of process costing is simpler than the Average cost method.
A)True
B)False
Answer: False
Q3) Which of the following is not characteristic of a process cost system?
A) The system may use several work in process inventory accounts.
B) Manufacturing costs are grouped by department rather than by jobs.
C) The system accumulates costs per job.
D) The system emphasizes time periods rather than the time it takes to complete a job. Answer: C
Q4) Process cost systems use job order cost cards to accumulate cost data.
A)True
B)False
Answer: False
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Chapter 4: Cost Behavior and Cost-Volume-Profit Analysis
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Sample Questions
Q1) Which of the following costs is a mixed cost?
A) Salary of a factory supervisor
B) Electricity costs of $3 per kilowatt-hour
C) Rental costs of $10,000 per month plus $.30 per machine hour of use
D) Straight-line depreciation on factory equipment
Q2) The three most common cost behavior classifications are:
A) variable costs, product costs, and sunk costs
B) fixed costs, variable costs, and mixed costs
C) variable costs, period costs, and differential costs
D) variable costs, sunk costs, and opportunity costs
Q3) If fixed costs are $500,000 and variable costs are 60% of break-even sales, profit is zero when sales revenue is $930,000.
A)True
B)False
Q4) Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?
Q5) Break-even analysis is one type of cost-volume-profit analysis.
A)True
B)False
Page 5
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Chapter 5: Variable Costing for Management Analysis
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Sample Questions
Q1) Fixed costs are $10 per unit and variable costs are $25 per unit. Production was 13,000 units, while sales were 12,000 units. Determine (a) whether variable cost income from operations is less than or greater than absorption costing income from operations, and (b) the difference in variable costing and absorption costing income from operations.
Q2) The relative distribution of sales among various products sold is referred to as the:
A) by-product mix
B) joint product mix
C) profit mix
D) sales mix
Q3) Which of the following would be included in the cost of a product manufactured according to absorption costing?
A) advertising expense
B) sales salaries
C) depreciation expense on factory building
D) office supplies costs
Q4) Service firms can only have one activity base for analyzing changes in costs.
A)True
B)False
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Chapter 6: Budgeting
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Sample Questions
Q1) Which of the following budgets allow for adjustments in activity levels?
A) Static Budget
B) Continuous Budget
C) Zero-Based Budget
D) Flexible Budget
Q2) Sweet Dreams, Inc. manufactures bedding sets. The budgeted production is for 52,000 comforters in 2012. Each comforter requires 1.5 hours to cut and sew the material. If cutting and sewing labor costs $11.00 per hour, determine the direct labor budget for 2012.
Q3) If the expected sales volume for the current period is 7,000 units, the desired ending inventory is 400 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is:
A) 6,900
B) 7,000
C) 7,200
D) 7,100
Q4) A capital expenditures budget is prepared before the operating budgets.
A)True
B)False
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Chapter 7: Performance Evaluation Using Variances From
Standard Costs
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Sample Questions
Q1) Standards are performance goals used to evaluate and control operations. A)True
B)False
Q2) If the standard to produce a given amount of product is 600 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 unfavorable. A)True
B)False
Q3) Robin Company purchased and used 520 pounds of direct materials to produce a product with a 510 pound standard direct materials requirement. The standard materials price is $2.10 per pound. The actual materials price was $2.00 per pound. Prepare the journal entries to record (1) the purchase of the materials and (2) the material entering production. Robin records standards and variances in the general ledger.
Q4) Trumpet Company produced 8,700 units of product that required 3.25 standard hours per unit. The standard variable overhead cost per unit is $4.00 per hour. The actual variance factory overhead was $111,000. Determine the variable factory overhead controllable variance.
Q5) Define ideal and currently attainable standards. Which type of standard should be used and why?
Page 8
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Chapter 8: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) Assume that divisional income from operations amounts to $192,000 and top management has established 15% as the minimum rate of return on divisional assets totaling $1,000,000. The residual income for the division is:
A) $42,000
B) $28,800
C) $92,000
D) $0
Q2) Determining the transfer price as the price at which the product or service transferred could be sold to outside buyers is known as the:
A) Cost price approach
B) Negotiated price approach
C) Revenue price approach
D) Market price approach
Q3) A factor in determining the rate of return on investment--the ratio of income from operations to sales--is called:
A) profit margin
B) indirect expenses
C) investment turnover
D) cost
Page 9
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Chapter 9: Differential Analysis and Product Pricing
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Sample Questions
Q1) Eliminating a product or segment may have the long-term effect of reducing fixed costs.
A)True
B)False
Q2) Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process, Tales take 7 hours, and Wales take 1 hour. Assume that Widgeon produced enough product with the highest contribution margin per unit to use 1,000 hours of machine time. Product demand does not warrant any more production of that product. What is the maximum additional contribution margin that can be realized by utilizing the remaining 1,000 hours on the product with the second highest contribution margin per hour?
A) $35,000
B) $7,000
C) $4,000
D) $28,000
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Page 10
Chapter 10: Capital Investment Analysis
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Sample Questions
Q1) A company is planning to purchase a machine that will cost $24,000, have a six-year life, and have no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. Total income over the life of the machine is estimated to be $12,000. The machine will generate cash flows per year of $6,000. The payback period for the machine is 4 years.
A)True
B)False
Q2) Which of the following is an advantage of the cash payback method?
A) It is easy to use.
B) It takes into consideration the time value of money.
C) It includes the cash flow over the entire life of the proposal.
D) It emphasizes accounting income.
Q3) The computations involved in the net present value method of analyzing capital investment proposals are less involved than those for the average rate of return method.
A)True
B)False
Q4) Determine the average rate of return for a project that is estimated to yield total income of $250,000 over four years, cost $480,000, and has a $20,000 residual value.
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Page 11
Chapter 11: Cost Allocation and Activity-Based Costing
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Sample Questions
Q1) If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours).
A)True
B)False
Q2) Challenger Factory produces two similar products - regular widgets and deluxe widgets. The total plant overhead budget is $675,000 with 300,000 estimated direct labor hours. It is further estimated that deluxe widget production will need 3 direct labor hours for each unit and regular widget production will require 2 direct labor hours for each unit. Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the deluxe widget production if the budgeted production for the period is 50,000 units and actual production for the period is 58,000 units?
A) $391,500
B) $225,000
C) $261,000
D) $337,500
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Page 12
Chapter 12: Cost Management for Just-In-Time
Environments
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Sample Questions
Q1) Examples of transforming a traditional manufacturing environment to a just-in-time environment is to do all of the following except
A) form partnerships with reliable suppliers.
B) reorganize operational processes to organized product lines.
C) train employees to perform various operations.
D) increase raw materials to produce more thereby increasing finished goods inventory.
Q2) Push manufacturing (made-to-stock) is a traditional approach to manufacturing.
A)True
B)False
Q3) The just-in-time (JIT) philosophy views inventory as an unnecessary waste of resources.
A)True
B)False
Q4) In a just-in-time (JIT) system, there are more transactions to record than there are in a traditional system.
A)True
B)False
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Chapter 13: Statement of Cash Flows
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Q1) A building with a cost of $153,000 and accumulated depreciation of $42,000 was sold for a $11,000 gain. When using the indirect method, the cash generated from this investing activity was $121,000.
A)True
B)False
Q2) Net income for the year was $29,500. Accounts receivable increased $2,500, and accounts payable increased $5,400. Under the indirect method, the cash flow from operations is $32,400.
A)True
B)False
Q3) Baxter Company reported a net loss of $13,000 for the year ended December 31, 2010. During the year, accounts receivable decreased by $5,000, merchandise inventory increased by $8,000, accounts payable increased by $10,000, and depreciation expense of $4,000 was recorded. During 2010, operating activities
A) provided net cash of $8,000.
B) provided net cash of $2,000.
C) used net cash of $8,000.
D) used net cash of $2,000.
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Page 14
Chapter 14: Financial Statement Analysis
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Q1) A financial statement showing each item on the statement as a percentage of one key item on the statement is called common-sized financial statements.
A)True
B)False
Q2) In performing a vertical analysis, the base for cost of goods sold is
A) total selling expenses.
B) net sales.
C) total expenses.
D) gross profit.
Q3) Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?
A) ratio of fixed assets to long-term liabilities
B) ratio of net sales to assets
C) number of days' sales in receivables
D) rate earned on stockholders' equity
Q4) What information is generally included in the Management Discussion and Analysis (MD&A) section of a corporate annual report?
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15
Chapter 15: Managerial Accounting Concepts and Principles
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Sample Questions
Q1) Managerial accountants would most likely prepare all of the following reports except:
A) A performance report identifying amounts of scrap.
B) A control report comparing direct material usage over time.
C) A sales report targeting monthly sales and potential bonuses.
D) An annual report for external regulators such as the SEC.
Q2) Product costs are also referred to as inventoriable costs.
A)True
B)False
Q3) Period costs are operating costs that are expensed in the period in which the goods are sold.
A)True
B)False
Q4) Factory overhead includes all manufacturing costs except direct materials and direct labor.
A)True
B)False
Q5) Direct labor costs are included in the conversion costs of a product.
A)True
B)False
Page 16
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