Financial Decision Making
Final Exam Questions
Course Introduction
Financial Decision Making explores the principles, tools, and techniques used to evaluate and make sound financial choices in both personal and organizational contexts. The course covers the fundamentals of financial analysis, budgeting, forecasting, and risk assessment, with a focus on applying quantitative and qualitative information to real-world scenarios. Students learn how to interpret financial statements, assess investment opportunities, calculate the cost of capital, and make decisions regarding capital structure and dividend policy. Through case studies and problem-solving exercises, the course develops critical thinking and analytical skills necessary for effective financial planning and strategic decision-making.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 10th Edition by Tracie L. Miller Nobles
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9 Chapters
1348 Verified Questions
1348 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) The cost of goods manufactured includes selling expenses, administrative expenses, and manufacturing overhead.
A)True
B)False
Answer: False
Q2) Which of the following is an objective of management accounting?
A) to generate financial statements of a company for tax reporting
B) to provide information to business managers to assist them in controlling their business
C) to provide information to shareholders to assist them with their investment decisions
D) to ensure that the reports produced for internal and external business purposes are GAAP compliant
Answer: B
Q3) A merchandiser need not calculate cost per unit as it resells goods that are already manufactured.
A)True
B)False
Answer: False
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Chapter 2: Job Order Costing
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) The cost of goods manufactured is recorded with a debit to the Work-in-Process Inventory account and a credit to the Cost of Goods Manufactured account.
A)True
B)False
Answer: False
Q2) Dora Travel Services provided the following information:
Cost allocation rate for direct labor: $40 per hour
Cost allocation rate for indirect costs: $22 per hour
If Dora receives $350 for a job requiring 5 hours of direct labor, then Dora will make a profit of $40.
A)True
B)False
Answer: True
Q3) The cost of goods manufactured is recorded with a debit to the Finished Goods Inventory account and a credit to the Work-in-Process Inventory account.
A)True
B)False
Answer: True
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4
Chapter 3: Process Costing
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) A report prepared by a processing department for equivalent units of production, production costs, and the assignment of those costs to the completed and in process units is called a(n):
A) organizational report.
B) sales revenue report.
C) job costing report.
D) production cost report.
Answer: D
Q2) Production cost reports prepared using first-in, first-out (FIFO) method assumes that the first units started in the production process are the last units completed and sold.
A)True
B)False
Answer: False
Q3) A production cost report aids in preparing an income statement by:
A) providing data for period costs incurred during the period.
B) providing data for various inventory accounts.
C) providing data for cost of goods sold during the period.
D) providing data for revenues generated during the period.
Answer: C
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Page 5
Chapter 4: Cost-Volume-Profit Analysis
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) Porterhouse Company incurs both fixed and variable production costs. Assuming the production is within the relevant range, if volume goes up by 20%, then the total variable costs would:
A) increase by 20%.
B) remain the same.
C) increase by an amount less than 20%.
D) decrease by 20%.
Q2) Variable cost per unit is constant throughout various relevant ranges.
A)True
B)False
Q3) Williams Company has variable costs of $0.60 per unit of product. In August, the volume of production was 24,000 units and units sold were 20,000. The total production costs incurred were $31,900. What are the fixed costs per month?
A) $17,500
B) $19,900
C) $9,600
D) $14,400
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Chapter 5: Master Budgets
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) Calculate total cash payments made in October for purchases.
A) $72,630
B) $70,680
C) $70,520
D) $74,290
Q2) While preparing the budgeted balance sheet of a merchandiser, the amount of merchandise inventory can be obtained from:
A) the merchandise inventory account.
B) the inventory, purchases and cost of goods sold budget.
C) the production budget
D) the capital expenditure budget and cash budget.
Q3) Based on the above data, calculate the projected cash balance at the end of May.
A) $22,000
B) $21,900
C) $23,700
D) $46,100
Q4) A master budget is the financial plan for a specific segment of an organization.
A)True
B)False
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Chapter 6: Flexible Budgets and Standard Cost Systems
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) Which of the following amounts of a flexible budget change with changes in sales volume?
A) selling price per unit
B) total fixed costs
C) variable expense per unit
D) total contribution margin
Q2) Flexible budget variance is the difference between expected results in the flexible budget for the actual units sold and the static budget.
A)True
B)False
Q3) Calculate the variable overhead efficiency variance.
A) $1,800 F
B) $1,800 U
C) $4,200 F
D) $4,200 U
Q4) A favorable variance reflects a decrease in operating income.
A)True
B)False
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Chapter 7: Cost Allocation and Responsibility Accounting
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) A high rate of employee turnover indicates that:
A) employees of the organization leave jobs frequently.
B) pay packages of employees are at par with that of industry.
C) the employees' retention ratio is also high.
D) employees also participate in the decision making process.
Q2) A lag indicator is a performance measure that forecasts future performance.
A)True
B)False
Q3) WAX-D Inc. has a division that manufactures a component that sells for $150 and has a variable cost of $45. Another division of the company wants to purchase the component. Fixed cost per unit of component is $25. What is the minimum transfer price if the division is operating at capacity?
A) $150
B) $45
C) $55
D) $140
Q4) Companies with diverse products can obtain better costing information by using a single plant wide rate.
A)True
B)False
9
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Chapter 8: Short-Term Business Decisions
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161 Flashcards
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Sample Questions
Q1) Potlatch Company manufactures sonars for fishing boats. Model 100 sells for $200. Potlatch produces and sells 5,000 of them per year. Cost data are as follows: \(\begin{array}{|l|r|r|}
\hline\text { Variable manufacturing } & \$ 105& \text { per unit } \\
\hline \text { Variable marketing } & \$ 5 &\text { per unit }\\
\hline\text { Fixed manufacturing } & \$ 270,000 &\text { per year } \\
\hline \text { Fixed marketing \& admin } & \$ 140,000 &\text { per year }\\\hline
\end{array}\) An offer has come in for a one-time sale of 100 units at a special price of $120 per unit. The marketing manager says that the sale will not negatively affect the company's regular sales activities, and that it will not require any variable marketing costs. The production manager says that there is plenty of excess capacity and the deal will not impact fixed costs in any way. What is the effect of this deal on operating income?
A) increase $200
B) increase $500
C) decrease $1,000
D) increase $1,500
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Chapter 9: Capital Investment Decisions
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122 Flashcards
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Sample Questions
Q1) Nylan Company is considering an investment in new equipment costing $850,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to have a salvage value of $50,000. The equipment is expected to generate net cash inflows of $1,000,000 in total during the five years life. What is the accounting rate of return associated with the equipment investment?
A) 9.99%
B) 8.89%
C) 7.56%
D) 9.32%
Q2) Calculate accounting rate of return for Proposal Y. A) 8.95%
B) 10.21%
C) 7.50%
D) 6.57%
Q3) The NPV method of evaluating capital investments suggests that a project with positive net cash inflows that exceed the cost of the investment should be accepted. A)True B)False
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