Financial Planning and Analysis
Final Exam
Course Introduction
Financial Planning and Analysis introduces students to the principles and methods used to guide an organizations financial strategy. The course covers budgeting techniques, forecasting models, performance measurement, variance analysis, and financial statement analysis, enabling students to assess and improve the financial health of businesses. Emphasis is placed on problem-solving, strategic planning, and decision-making using real-world case studies and spreadsheet modeling. By the end of the course, students develop the analytical skills required to interpret financial data and contribute effectively to organizational planning and resource allocation.
Recommended Textbook
Cost Management A Strategic Emphasis 5th Edition by Edward Blocher
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Page 2
Chapter 1: Cost Management and Strategy
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Sample Questions
Q1) Cost management information typically is the responsibility of the:
A)Chief Financial Officer.
B)Controller.
C)Treasurer.
D)Chief Information Officer.
Answer: B
Q2) Which of the following is the primary user of management accounting information regarding business units?
A)Company management.
B)Investors.
C)Creditors.
D)Industry and governmental organizations.
Answer: A
Q3) The strategy map is a tool that is used
A)as one of the key aspects of the contemporary management environment
B)to enhance the sustainability of the organization
C)to link the perspectives of the balanced scorecard
D)to organize the critical success factors of a company
E)to implement strategy
Answer: C
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Chapter
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Q1) Which of the following statements concerning value chain analysis is false?
A)The goal of value chain analysis is to find areas where a company can either add value or reduce cost.
B)The value chain focuses on the entire production process,as well as the sale of the product and service after the sale.
C)If a company cannot compete in a specific area of the value chain,it might consider the option of outsourcing that portion of the value chain to someone who can perform it better.
D)Throughout most industries,the most successful firms are the ones that operate within the entire value chain,thereby overseeing every aspect of the value chain for the customer.
Answer: D
Q2) Which one of the following critical success customer factors is best measured by warranty expense?
A)Quality.
B)Dealer and distributor efficiency and effectiveness.
C)Timeliness of delivery.
D)Customer satisfaction.
Answer: A
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Chapter 3: Basic Cost Management Concepts
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Q1) The term relevant range as used in cost accounting means the range over which:
A)Costs may fluctuate.
B)Cost relationships are valid.
C)Production may vary.
D)Relevant costs are incurred.
Answer: B
Q2) The Gray Company has a staff of five clerks in its general accounting department.Three clerks who work during the day perform sundry accounting tasks;the two clerks who work in the evening are responsible for (1)collecting the cost data for the various jobs in process,(2)verifying manufacturing material and labor reports,and (3)supplying production reports to the supervisors by the next morning.The salaries of these two clerks who work at night should be classified as:
A)Period costs.
B)Direct costs.
C)Product costs.
D)Indirect costs.
Answer: A
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Chapter 4: Job Costing
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Sample Questions
Q1) Which of the following industries is more suitable for using a job costing system?
A)Chemical plants.
B)Petroleum product manufacturing.
C)Medical clinics.
D)Cement manufacturing.
E)Food processing.
Q2) The following are types of rework except:
A)Rework on normal defective units common to all jobs.
B)Rework on abnormal defective units not falling within the normal range.
C)Rework on normal defective units for a particular job.
D)Rework on returned merchandise.
Q3) With the increase in competition over the past several years,traditional cost accounting systems have become less common in product costing because
A)They use volume-based cost drivers.
B)They use structural cost drivers.
C)They use executional cost drivers.
D)They use indirect cost drivers.
Q4) Jones and Jones CPA firm has the following budget for the year:
Q5) KLM Company listed the following data for 2010:
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Chapter 5: Activity-Based Costing and Customer
Profitability Analysis
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Sample Questions
Q1) A company using a volume-based overhead assignment (allocation)method will tend to:
A)Overstate the cost of low volume products.
B)Understate the cost of low volume products.
C)Understate the cost of high volume products.
D)Understate the cost of all products.
E)Either understate or overstate the cost of high volume products depending on the specific manufacturing factors involved.
Q2) An activity that is performed for each unit of production is a(n):
A)Product-level activity.
B)Facility-level activity.
C)Unit-level activity.
D)Performance-level activity.
E)Batch-level activity.
Q3) Skateline Inc.designs and manufactures roller skates.The following data pertain to two of its major customers: FantasticSkates and SkateToday.
Q4) The controller for Alabama Cooking Oil Co.established the following overhead cost pools and cost drivers:
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Chapter 6: Process Costing
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Sample Questions
Q1) From the industries listed below,which one is most likely to use process costing in accounting for production costs?
A)Printing shop.
B)Accounting firm.
C)Electrical contractor.
D)Steel mill.
E)Automobile repair shop.
Q2) Which one of the following process costing methods includes only current costs in the calculations of cost per equivalent unit?
A)FIFO method.
B)LIFO method.
C)Throughput method.
D)Weighted-average method.
E)Moving-average method.
Q3) Williams Corporation's Department A has the following information:
Q4) Hartmann Company uses the process costing method with the following data for the month of July.
Q5) Each of the following cases is independent.Use the FIFO method.
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Chapter 7: Cost Allocation: Departments, Joint Products, and
By-Products
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Sample Questions
Q1) The departmental approach of cost allocation recognizes that the typical manufacturing operation involves which type(s)of departments?
A)Service departments and product departments.
B)Production departments and assembly departments.
C)Joint product departments and separable departments.
D)Cost pools and cost objects.
E)Support departments and other service departments.
Q2) Which one of the following methods of cost allocation is completed by taking the service flows to production departments only and determining each production department's share of that service?
A)Direct method.
B)Indirect method.
C)Step method.
D)Reciprocal method.
E)Cross-functional method.
Q3) Taylor Inc.produces joint products A,B,and C from a joint process.Information concerning a batch produced in May at a joint cost of $110,000 was as follows:
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Chapter 8: Cost Estimation
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Sample Questions
Q1) The standard error of the estimate (SE)in a regression analysis is:
A)A measure indicating the amount of a data falling within the relevant range.
B)A measure of explanatory power which is a number between zero and 1.
C)A measure of the accuracy of the regression's estimates.
D)A measure of reliability of each independent variable.
Q2) An R-squared value that approaches one (1.0)would indicate:
A)An average degree of explanatory power.
B)A low degree of explanatory power.
C)A high degree of explanatory power.
D)The presence of outliers.
E)The absence of outliers.
Q3) Which of the following five steps (out of six)of cost estimation is out of order?
A)Step 1: Define the cost object to be estimated.
B)Step 2: Determine the cost driver(s).
C)Step 3: Collect relevant data on the cost of the cost object and the cost driver.
D)Step 4: Evaluate the accuracy of the cost estimate.
E)Step 5: Graph the data.
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Chapter 9: Profit Planning: Cost-Volume-Profit Analysis
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Q1) Daley Co.manufactures computer monitors.Following is a summary of its basic cost and revenue data:
Q2) At the breakeven point,fixed cost is always:
A)Less than the total contribution margin.
B)Equal to the total contribution margin.
C)More than the total contribution margin.
D)More than the total variable cost.
Q3) Which of the following is not an assumption of cost/volume/profit analysis?
A)The variable cost per unit varies over the relevant range of activity.
B)The sales mix is unchanged over the relevant range of activity.
C)Total fixed cost is constant over the relevant range of activity.
D)Total variable cost changes in direct proportion to changes in the level of activity over the relevant range.
Q4) The CVP model assumes that over the relevant range of activity:
A)Only revenues are linear.
B)Only revenues and fixed costs are linear.
C)Only revenues and variable costs are linear.
D)Revenues and total costs are linear.
Q5) Daley Co.manufactures computer monitors.Following is a summary of its basic cost and revenue data:
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Chapter 10: Strategy and the Master Budget
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Q1) A plan showing the units of goods expected to be sold and the expected revenue from sales,which is the cornerstone of the master budget,is called the:
A)Cash budget.
B)Sales receipts budget.
C)Sales forecast.
D)Cash receipts budget.
E)Sales budget.
Q2) Which of the following factors is least likely to be considered in preparing a sales budget?
A)Plant capacity.
B)General economic and industry conditions.
C)Past sales volume.
D)The cash budget.
E)Proposed selling expenses.
Q3) Grey Company is considering replacing its existing cutting machine with a new machine that,according to the manufacturer,is more efficient in terms of energy consumption-a variable cost of production.In this regard,it would like to do some financial planning,including "what-if" analysis.Budgeted information regarding the two machines is as follows:
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Chapter 11: Decision Making With a Strategic Emphasis
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Q1) The Robinson Patman Act,administered by the U.S.Federal Trade Commission,addresses pricing that could substantially damage the competition in an industry.This pricing is called:
A)Competitive pricing.
B)Predatory pricing.
C)Cost-benefit pricing.
D)Variable pricing.
E)Incentive pricing.
Q2) Variable costs will generally be relevant for decision making because they:
A)Differ between options.
B)Are volume-based.
C)Have not been committed and differ between options.
D)Differ between options and have been committed.
E)Measure opportunity cost.
Q3) Apex Manufacturing Corporation is considering a significant shift in the mix of products it manufactures.The costs associated with current and proposed production schedules are shown below by category:
Q4) The following unit cost information pertained to the trumpet division of WGN Music Co.and was based on monthly demand and sales of 100 units:
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Chapter 12: Strategy and the Analysis of Capital Investments
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Q1) Income tax effects are associated with all of the following except:
A)Disposition (i.e. ,sale)of an existing asset.
B)Required increase in net working capital associated with an investment project.
C)Sale of an investment asset at the end of the asset's useful life.
D)Effect of depreciation expense associated with an investment project.
E)Annual net benefits associated with a proposed investment.
Q2) If a company must choose between two mutually exclusive investment projects,the best general method to employ for decision-making purposes is:
A)Cash-flow bailout
B)Cash-flow break-even
C)Net present value (NPV)
D)Discounted payback
E)Accounting (book)rate of return,based on average investment over the life of each project
Q3) Which of the following can a final disposal of a capital asset not produce?
A)A net cash outflow.
B)A net cash inflow.
C)An income tax consequence.
D)An operating gain or loss.
Page 14
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Chapter 13: Cost Planning for the Product Life Cycle: Target
Costing,Theory of Constraints,and Strategic Pricing
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Q1) Which one of the following is not one of the five steps in TOC analysis?
A)Identify the binding constraint(s).
B)Determine the most efficient utilization for each binding constraint.
C)Manage the flow through the binding constraint.
D)Identify those responsible for bottlenecks and make adjustments as needed.
E)Redesign the manufacturing process for flexibility and fast throughput.
Q2) Henry Ford was an early pioneer in the use of:
A)the theory of constraints.
B)target costing.
C)life cycle costing.
D)just-in-time manufacturing.
Q3) PureSwing Golf,Inc.manufactures swing analyzer systems for golf instructors.Two of its systems,Pure1000 and the Pure5000 have these characteristics:
Q4) A type of strategic pricing based on analytical methods is used to:
A)Optimally determine the best price.
B)Utilize knowledge of consumer behavior in setting price.
C)More accurately determine life cycle costs as a basis for setting price.
D)Employ improved design methods that reduce cost and improve price.
Q5) Life Cycle Costing Income Statements
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Chapter 14: Operational Performance Measurement: Sales
and Direct-Cost Variances, and the Role of Nonfinancial
Performance Measures
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Q1) All of the following are limitations of short-term financial performance indicators except:
A)Employees and managers can take actions that improve short-term financial performance at the expense of long-term performance.
B)Focusing on individual cost variances can result in optimum local but not global (i.e. ,firm-wide)performance.
C)Operating personnel may not readily understand or be able to interpret financial-performance indicators.
D)Senior managers typically find non-financial performance indicators more useful than summary financial-performance indicators.
Q2) What is a direct materials usage ratio? For what purpose is this ratio used?
Q3) Using continuous-improvement standards likely has the effect(s)of all the following except:
A)Reductions in inefficiencies.
B)Reduced product defects.
C)Constantly decreasing standard levels.
D)Improved productivity.
E)Increasing pressure on employees and managers.
Page 16
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Chapter 15: Operational Performance Measurement:
Indirect-Cost Variances and Resource- Capacity Management
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Q1) Carl Jones Company's master budget for the year just completed was based on 100% capacity and included 50,000 machine hours and $300,000 total factory overhead.(That is,the denominator volume,for purposes of calculating the fixed overhead application rate,is defined as 100% capacity. )Budgeted fixed overhead at 70% factory capacity is $200,000 (and 35,000 machine hours).The company operated at 80% capacity for the year,and incurred $275,000 total factory overhead.
Required: (a)Determine the factory overhead flexible-budget variance for the year just completed.Show calculations.(b)Calculate the factory overhead production-volume variance for the year just completed.Show calculations.(c)Supply an interpretation of each of the two variances calculated above.
Q2) A manufacturing company that uses standard costs and flexible budgets can break the variable factory overhead flexible-budget variance down into:
A)Volume and efficiency components.
B)Spending and efficiency variances.
C)Spending and production volume variances.
D)Spending variances only.
Q3) Erie Co.uses machine hours to apply standard overhead cost to production.The following data pertain to October:
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Chapter 16: Operational Performance Measurement:
Further Analysis of Productivity and Sales
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Q1) What is the sales volume variance for Spiders?
A)$0.
B)$1,125 favorable.
C)$1,500 favorable.
D)$1,650 unfavorable.
E)$12,375 unfavorable.
Q2) Which one of the following measures the relationship between the output attained and the total input costs of all the required input resources?
A)Financial partial productivity.
B)Total productivity.
C)Operational partial productivity.
D)Total financial productivity.
E)Partial productivity.
Q3) What is the sales quantity variance for Spiders?
A)$0
B)$1,500 favorable.
C)$9,843 favorable.
D)$11,250 favorable.
E)$15,468 favorable.
Q4) The Tempest Company has the following information for the current year.
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Chapter 17: The Management and Control of Quality
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Q1) Conformance to a quality specification expressed as a specified range around a target is:
A)End-zone conformance.
B)Target conformance.
C)Goalpost conformance.
D)Absolute quality conformance.
E)Zero-defect conformance.
Q2) Which of the following is not a characteristic of lean manufacturing?
A)Increase in product flow (that is,throughput).
B)Increase in product quality.
C)Increase in inventory.
D)Establishment of long-term relationships with suppliers.
Q3) An electronic component has an output voltage specification of 138 \(\pm\)5 milivolts.The loss to the firm for a component that is outside of the specifications is $220.The output voltage for a sample unit is 134 milivolts.
Required:
(1)Calculate the value of k.
(2)Calculate the amount of loss for the unit,L(x).
Q4) List and explain three tools that can be used to identify quality problems.
Q5) The Bulldog Company incurred the following quality-related costs:
Page 19
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Chapter 18: Strategic Performance Measurement: Cost
Centers, Profit Centers, and the Balanced Scorecard
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Q1) A strategic business unit (SBU)consists of a well-defined set of controllable operating activities
Over/about which the SBU manager is:
A)Knowledgeable.
B)Responsible for strategy.
C)Responsible for strategy and execution.
D)Responsible for strategy,execution,and performance.
Q2) The cost method that is input-oriented and considers costs largely uncontrollable at the planning stage is called the:
A)Engineered-cost method.
B)ABC costing.
C)Discretionary-cost method.
D)Job costing.
E)Standard costing.
Q3) Expenditures of revenue centers usually include:
A)Order-purchasing costs.
B)Order-getting costs.
C)Order-producing costs.
D)Order-scheduling costs.
E)Order-delivering costs.
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Chapter 19: Strategic Performance Measurement: Investment
Centers
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Q1) The historical cost of an asset less its accumulated depreciation is:
A)Net book value (NBV).
B)Return on equity (ROE).
C)Return on investment (ROI).
D)A rough measure of current replacement cost of the asset.
E)An estimate of liquidation value of the asset.
Q2) If after-tax income of Grey Division,adjusted for economic value,is 15% of sales,capital employed is $5,000,000 (adjusted for equity-equivalents),the divisional cost of capital (discount rate)is 8%,and sales are $12,000,000,then EVA\(\rarr\)is:
A)$1,800,000
B)$400,000
C)$1,400,000
D)$3,200,000
E)Undeterminable given the information above.
Q3) When the Bronx Company formed three divisions a year ago,the president told the division managers an annual bonus would be given to the most profitable division.The bonus would be based on either the return on investment or residual income of the division.Investment is to be measured using gross book value (GBV)or net book value (NBV).The following data are available:
Page 21
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Chapter 20: Management Compensation, Business
Analysis, and Business Valuation
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Q1) Analysts prefer the following three valuation methods over all others:
A)EVA,cash flow multiplier and sales multiplier
B)Enterprise value,discounted cash flow,and sales multiple
C)Sales multiple,earnings multiple,and discounted cash flow
D)EVA,return on equity and discounted cash flow
E)Enterprise value,earnings multiple,and sales multiple
Q2) Business Analysis Avantronics is a manufacturer of electronic components and accessories with total assets of $20,000,000.Selected financial ratios for Avantronics and the industry averages for firms of similar size are presented below.
Q3) In service firms,improvement in long term profitability is best measured by all the following except:
A)Staff utilization.
B)Net revenues.
C)Collections of customer accounts.
D)Materials usage.
Q4) Jackson Manufacturing has the following operating results for 2010.
Q5) Ginyard Company has the following financial statements for the year ended December 31,2010.
Page 22
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