Financial Management Exam
Bank
Course Introduction
Financial Management is a comprehensive course designed to introduce students to the fundamental principles and practices involved in managing the financial resources of organizations. The course covers key topics such as financial statement analysis, time value of money, risk and return concepts, capital budgeting, cost of capital, capital structure, working capital management, and dividend policies. Through case studies and real-world examples, students learn how to make informed financial decisions that enhance an organizations value. Emphasis is placed on analytical problem-solving, ethical considerations, and strategic financial planning within a dynamic economic environment.
Recommended Textbook
Managerial Accounting 3rd Canadian Edition by Karen
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12 Chapters
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W. Braun
Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Which of the following cost items should be classified as a prevention cost on a cost of quality report?
A) Warranty expenses on defective products
B) Technical support provided to employees
C) Supervision of quality inspections
D) Net cost of spoiled units
Answer: B
Q2) Evaluating results against the plan is an example of the management function of
A) controlling.
B) decision-making.
C) directing.
D) planning.
Answer: A
Q3) Budgets are the quantitative expression of management's plans.
A)True
B)False
Answer: True
Q4) Discuss at least four differences between financial accounting and managerial accounting.
Answer: 11ea895a_9460_6ae2_861b_d9f5afb1f84f_TB1238_00
Page 3
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Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) The owner of Spicy's Gourmet Popcorn is concerned because the stand has been averaging sales of only 7,500 cartons per month, the stand and staff can make 15,000 cartons of popcorn per month. The variable cost of each carton is $1.50. Monthly fixed costs are (taxes, licenses, space rent and salaries) are $10,000. The owner believes he could sell 15,000 cartons per month if he cuts the sales price from $5.50 to $5.00 per carton. How much extra profit (above the current level) would he generate if he decreased the sales price?
Answer: New profit = (15,000 × $5.00) - (15,000 × $1.50) - $10,000 = $42,500
Current profit = (7,500 × $5.50) - (7,500 × $1.50) - $10,000 = $20,000
Increased profit = $42,500 - $20,000 = $22,500
Q2) A(n) ________ cost is one whose total amount changes in direct proportion to a change in volume.
A) fixed
B) irrelevant
C) mixed
D) variable Answer: D
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Page 4
Chapter 3: Cost Behaviour
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Sample Questions
Q1) At any given volume, average fixed costs must equal average variable costs.
A)True
B)False
Answer: False
Q2) Using absorption costing, what is cost of goods available for sale at Preston Racquets for last month?
A) $180,000
B) $150,000
C) $200,000
D) $48,000
Answer: A
Q3) What is the total cost of producing 2,000 birdhouses?
A) $20.00
B) $2,020
C) $40,000
D) $80,000
Answer: C
Q4) What are three methods used to estimate cost behaviour? What are the advantages and disadvantages of each method?
Answer: 11ea895a_940c_2fdf_861b_89d27bd0efa7_TB1238_00
Page 5
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Chapter 4: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Operating leverage refers to the relative amount of fixed and variable costs that make up total costs for a company.
A)True
B)False
Q2) If a unit sells for $11.40 and has a variable cost of $3.80, its contribution margin per unit is $7.60.
A)True
B)False
Q3) If the sale price per unit is $75, the variable expense per unit is $45, and total fixed expenses are $1,155,000, what will the break-even sales in units be?
A) 15,400
B) 25,667
C) 38,500
D) 9,625
Q4) Break-even sales in dollars for The Snack Hut is
A) $12,188.
B) $25,000.
C) $48,750.
D) $34,125.
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Chapter 5: Job Costing
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Sample Questions
Q1) The entry to allocate manufacturing overhead costs to work in process requires a debit to work in process.
A)True
B)False
Q2) What is the predetermined overhead rate for Department 2?
A) $3.45
B) $3.75
C) $4.60
D) $7.50
Q3) Manufacturing overhead costs can have more than one cost driver.
A)True
B)False
Q4) Manufacturers follow four steps to implement a manufacturing overhead allocation system. The first step is to
A) select an allocation base and estimate the total amount that will be used during the year.
B) allocate some manufacturing overhead to each individual job.
C) estimate total manufacturing overhead costs for the coming year.
D) calculate a predetermined manufacturing overhead rate.
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Chapter 6: Process Costing
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Sample Questions
Q1) When the units are sold, Finished Goods Inventory is debited.
A)True
B)False
Q2) The first-in, first-out method computes unit costs by
A) dividing total units by units completed this period.
B) confining equivalent units to the work completed during the current period only.
C) the standard-costing method.
D) separately identifying the conversion costs of beginning and ending inventories.
E) adding opening inventory units to work-in-process units and dividing by total cost.
Q3) What are the total equivalent units for direct materials at Sunrise Corporation?
A) 139,700
B) 130,500
C) 135,900
D) 143,500
Q4) In a job cost system, all costs flow to a particular job.
A)True
B)False
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8
Chapter 7: Activity Based Costing
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Sample Questions
Q1) What was the total cost of Job 542 if Bond Industries used the departmental overhead rates to allocate manufacturing overhead?
A) $1,375
B) $1,425
C) $1,500
D) $1,600
Q2) The cost of maintenance on the entire production plant would be considered a batch-level cost.
A)True
B)False
Q3) If the cost to purchase the same pillow from a supplier is $17.00, what should Traditions Home Accessories do to maximize profits?
A) Purchase the pillow from the supplier.
B) Continue to manufacture the pillow.
C) Since the cost to manufacture the pillow is also $17.00, the company would make the same profit whether it bought the pillow or manufactured it.
D) Close down the business.
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Chapter 8: Short-Term Business Decisions
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Sample Questions
Q1) What would be the effect on operating income of accepting a special order for 1,500 units at a sale price of $50 per product assuming additional fixed manufacturing overhead costs of $10,000 are incurred? The company has excess capacity and regular sales will not be affected by this special order.
A) Decrease by $42,000
B) Decrease by $32,000
C) Increase by $32,000
D) Increase by $42,000
Q2) Kathy has the following information to evaluate her current salary of $53,000 versus total revenues of $82,000 and expenses of $69,000 from starting a new business. How much is the opportunity cost associated with staying at her current job?
A) $53,000
B) $16,000
C) $13,000
D) $151,000
Q3) Define the term constraints and give an example. What product should be made first when resource constraints exist?
Q4) What the reasons a firm would adopt target costing?
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Page 10
Chapter 9: The Master Budget and Responsibility Accounting
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Sample Questions
Q1) The fresh food section of a local grocery store reporting operating income for the current year would be a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.
Q2) Coiffure Inc. owns a chain of hair stylist shops. Management expected to serve 20,000 customers at an average fee of $125. Variable expenses were budgeted to be 60% of sales revenue, and the total fixed expense was budgeted to be $150,000. The actual results for the year showed 18,000 customers were served at an average fee of $150. The actual variable expenses percentage was 70% of sales revenue and the total fixed expenses were as budgeted.
Management has asked you to prepare a performance report for the year.
Q3) What are the Samson Company cash disbursements in August for June purchases?
A) $7,120
B) $27,480
C) $21,360
D) $35,600
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Chapter 10: Flexible Budgets and Standard Costs
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Sample Questions
Q1) A company's flexible budget for 80,000 units of production showed sales of $240,000; variable costs of $120,000; and fixed costs of $80,000. What net operating income would you expect the company to earn if it produces and sells 83,000 units? (Assume 83,000 units is in the relevant range.)
Q2) June's direct material flexible-budget variance is
A) $980 unfavourable.
B) $680 favourable.
C) $980 favourable.
D) $680 unfavourable.
Q3) What is the direct materials rate variance for the clay pots?
A) $560 unfavourable
B) $560 favourable
C) $800 favourable
D) $1,040 favourable
Q4) A variance is considered to be
A) the gap between an actual result and a benchmark amount.
B) the required number of inputs for one standard output.
C) the difference between an actual result and a budget amount.
D) the difference between a budgeted amount and a standard amount.
Q5) Identify five benefits of standard costs.
Page 12
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Chapter 11: Performance Evaluation and the Balanced Scorecard
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Sample Questions
Q1) The Frito-Lay division of PepsiCo is most likely treated as a(n) A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.
Q2) What is the Beverage Division's Residual Income (RI)?
A) $722,400
B) $688,800
C) $411,600
D) $151,200
Q3) The number of warranty claims would be an example of the A) financial perspective.
B) customer perspective.
C) internal business perspective.
D) learning and growth perspective.
Q4) What is the Light Bulb Division's Economic Value Added (EVA)?
A) $4,605,500
B) $7,230,500
C) $4,545,000
D) $4,507,500
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Chapter 12: Capital Investment Decisions and the Time
Value of Money
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Sample Questions
Q1) The Harris Corporation bought a new machine that cost $170,000 with a 15-year life and a residual value of $20,000. They plan to generate annual cash inflows of $40,000 over 15 years. Calculate the accounting rate of return.
Q2) Next Service Centre is considering purchasing a new computer network for $95,000. Its anticipated eight-year life will generate additional client revenue of $33,000 annually with operating costs, excluding depreciation, of $15,000. At the end of eight years, it will have a salvage value of $14,500 and return $5,000 in working capital. Taxes are not considered.
Required:
a. If the company has a required rate of return of 14%, what is the net present value of the proposed investment?
b. What is the internal rate of return?
Q3) Post-audits of capital investments help determine the net cash flows generated by capital investments.
A)True
B)False
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Page 14