Intermediate Managerial Accounting
Textbook Exam Questions
Course Introduction
Intermediate Managerial Accounting delves into the advanced techniques and concepts used by managers to plan, control, and evaluate business operations. Building upon foundational accounting principles, the course emphasizes cost behavior, budgeting processes, performance measurement, and decision-making tools that aid in formulating strategic and operational plans. Students analyze real-world business scenarios, explore various costing systems, and examine the use of accounting data in ethical and sustainable management practices. The course prepares students to interpret financial information critically, supporting effective management decisions in diverse organizational settings.
Recommended Textbook Cornerstones of Managerial Accounting 3rd Edition by
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14 Chapters
2120 Verified Questions
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Maryanne M. Mowen
Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) A management activity that involves the detailed formulation of action to achieve a particular end
A)Financial accounting
B)Managerial accounting
C)Planning
D)Controlling
E)Decision making
F)Value chain
G)Continuous improvement
H)Line positions
I)Time
J)Total quality management
K)Lean accounting
L)Staff positions
M)Controller
N)Treasurer
O)Ethical behaviour
Answer: C
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Page 3
Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) Refer to Katz Group. What was the gross margin percentage?
A) 17%
B) 19%
C) 48%
D) 52%
Answer: D
Q2) What is opportunity cost?
A) a benefit that is difficult to accurately trace to a cost object
B) a cost that increases as output increases and decreases as output decreases
C) a cost that decreases as output increases and increases as output decreases
D) a benefit given up or sacrificed when one alternative is chosen over another
Answer: D
Q3) Cost of goods sold is the total product cost of the units manufactured during a period.
A)True
B)False
Answer: False
Q4) Refer to Owen Sound Company. Assume production amounted to 86,000 fishing rods and 80,000 were sold. Calculate cost of goods sold.
Answer: (80,000 × $18.50) = $1,480,000
4
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Chapter 3: Cost Behaviour
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Sample Questions
Q1) $6.53 × independent variable
A)Variable rate
B)Fixed cost
C)Variable cost
D)Cost equation
E)Coefficient of determination
Answer: C
Q2) $9097.80
A)Variable rate
B)Fixed cost
C)Variable cost
D)Cost equation
E)Coefficient of determination
Answer: B
Q3) Cost of hourly assembly-line workers, with respect to number of hours worked
A)Variable cost
B)Fixed cost
Answer: A
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Page 5
Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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Sample Questions
Q1) The HoltTec Company manufactures two products. Information about the two product lines for the year is as follows: \(\begin{array}{lcc}\text { Model } &\text { Basic }&\text { Deluxe Model }\\
\text { Sales price per unit } & \$ 70 & \$ 100 \\ \text { Variable costs per unit } & \underline{30} & \underline{40} \\ \text { Contribution margin per unit } & \underline{\$ 40} &{\underline{\$ 60}} \end{array}\) The company expects fixed costs to be $192,000. The firm expects 60% of its sales (in units) to be Basic Model.
Required: Calculate the break-even point in units for both Basic Model and Deluxe Model.
Q2) Which term refers to the units sold or expected to be sold, or the sales revenue earned or expected to be earned, above the break-even volume?
A) margin of safety
B) break-even point
C) operating leverage
D) contribution margin
Q3) If variable costs per unit increase, the break-even point will increase.
A)True
B)False
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Chapter 5: Job-Order Costing
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Sample Questions
Q1) A costing system in which costs are collected and assigned to units of production for each individual job
A)Actual cost system
B)Job-order cost system
C)Normal cost system
D)Process-costing system
Q2) Which of the following is NOT a manufacturing cost?
A) overhead
B) direct labour
C) direct materials
D) distribution costs
Q3) Budgeted overhead is $40,000, budgeted direct labour hours are 2,000, actual overhead is $40,400, and direct labour hours are 3,230. Unadjusted Cost of Goods Sold is $140,800. Calculate the following:
A. Calculate the overhead variance.
B. Assuming the variance is insignificant, calculate adjusted Cost of Goods Sold.
Q4) Actual overhead costs are accumulated in the overhead control account.
A)True
B)False
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Chapter 6: Process Costing
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Sample Questions
Q1) The following information is provided: Units
Work-in-Process Inventory, May 1 (30% complete) 6,000
Started in June 40,000
Work-in-Process Inventory, May 31 (40% complete) 14,000
Materials are added at the beginning of the process.
What would be the equivalent units of production for conversion costs when using the weighted average costing method?
A) 27,600
B) 34,800
C) 35,600
D) 37,600
Q2) Which statement best describes sequential processing?
A) Only one process can be applied to a product in each department.
B) Several sequences of production are applied to a product in the department.
C) Units must pass through one process before they can be worked on in later processes.
D) Subcomponents can be worked on simultaneously in different processes and then brought together in a final process for completion.
Q3) List the five steps in preparing a production report.
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Page 8
Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) Which of the following is NOT a category of environmental cost?
A) detection costs
B) prevention costs
C) total quality costs
D) internal failure costs
Q2) Which term reflects increasing the efficiency of necessary activities by using economies of scale?
A) activity sharing
B) activity selection
C) activity elimination
D) activity management
Q3) What type of analysis is concerned with identifying the root causes of activity costs?
A) driver analysis
B) direct analysis
C) causal analysis
D) activity analysis
Q4) One of the three major dimensions of measuring activity performance is quality.
A)True
B)False
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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Sample Questions
Q1) Refer to Cara Company. What is the segment margin for the American Division?
A) $5,000
B) $55,000
C) $105,000
D) $155,000
Q2) Which inventory cost can include lost sales, cost of expediting, and cost of interrupted production?
A) the setup cost
B) the carrying cost
C) the ordering cost
D) the stockout cost
Q3) Stockout costs
A)The costs of not having a product available when demanded by a customer
B)The costs of carrying inventory
C)Approach that maintains goods should be pulled through the system by present demand
D)The number of units in the order quantity that minimizes the total cost
E)The costs of placing and receiving an order
Q4) Explain the difference between absorption costing income and variable costing income.
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Chapter 9: Budgeting, Production, Cash, and Master Budget
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Sample Questions
Q1) Budgeted income statement
A)Operating budget
B)Financial budget
Q2) What is NOT a characteristic of the master budget?
A) The sales forecast is prepared before the sales budget.
B) The production budget is prepared in units and dollars.
C) One approach to forecasting sales is the bottom-up approach.
D) The master budget is the comprehensive plan for the organization as a whole.
Q3) The direct materials purchases budget is based on the production budget.
A)True
B)False
Q4) Which statement highlights a potential problem of participative budgeting?
A) It encourages greater goal congruence.
B) It fosters a sense of creativity in managers.
C) It encourages a higher level of performance.
D) It encourages the introduction of budgetary slack.
Q5) Myopic behaviour is one of the advantages of participative budgeting.
A)True
B)False
Q6) What are the advantages of budgeting?
Page 11
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) Meeds Company uses the following rule to determine whether labour efficiency variances should be investigated:
A labour efficiency variance will be investigated when the variance is greater than either $100 or 10% of the standard labour cost.
During March, the company used 525 direct labour hours at a rate of $16 per hour. Its standard rate is 500 direct labour hours at a rate of $15.50 per hour.
Required:
A. Determine the company's labour efficiency variance and whether it is favourable or unfavourable.
B. Should the variance be investigated?
Q2) Which formula is used to calculate the materials price variance?
A) (actual price × actual quantity) - (standard price × actual quantity)
B) (standard price × actual quantity) - (actual price × actual quantity)
C) (actual price × actual quantity) - (standard price × standard quantity)
D) (standard price × standard quantity) - (actual price × actual quantity)
Q3) How are standards developed?
Q4) Explain the kaizen approach to costing.
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12
Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) How is the standard fixed overhead rate often calculated?
A) budgeted fixed overhead divided by actual hours
B) budgeted fixed overhead divided by practical capacity measured in actual hours
C) budgeted fixed overhead divided by actual capacity measured in standard hours
D) budgeted fixed overhead divided by practical capacity measured in standard hours
Q2) Which formula reflects the fixed overhead volume variance?
A) BFOH - (SFOR x SH)
B) (AFOH - SFOR) × SH
C) (AFOH - SFOR) × AH
D) (AFOH - SFOR) × SH.
Q3) What is characteristic of a performance report?
A) It uses static budgets.
B) It does not include variances.
C) It usually uses flexible budgets.
D) It compares actual costs with budgeted costs.
Q4) In an activity framework, controlling costs results from managing activities.
A)True
B)False
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) The practice of delegating decision-making authority to lower levels of management in a company is called centralization.
A)True
B)False
Q2) Suppose the operating asset turnover ratio increased by 35% and the margin increased by 25%. What would be the effect on the divisional ROI?
A) It would decrease by 60%.
B) It would decrease by 50%.
C) It would increase by 20%.
D) It would increase by 69%.
Q3) In the negotiated transfer pricing, the buying division sets the ceiling (maximum possible transfer price) for the bargaining range.
A)True
B)False
Q4) Transfer pricing does NOT affect divisional profits.
A)True
B)False
Q5) Describe the four perspectives of the Balanced Scorecard.
Q6) In terms of a Balanced Scorecard, define Strategy?
Page 14
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) Determines whether or not a segment should be kept or dropped
A)Differential cost
B)Keep-or-drop decision
C)Constraints
D)Decision-making model
E)Split-off point
F)Joint products
G)Make-or-buy decision
H)Target costing
I)Sunk costs
J)Markup
K)Special-order decision
L)Sell-or-process-further decision
M)Relevant costs
N)Opportunity cost
O)Cost-based pricing
Q2) Only costs and benefits associated with feasible alternatives are relevant in decision making.
A)True
B)False
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Page 15
Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) Which payback period will managers want when the risk of obsolescence is high?
A) a shorter payback period
B) a longer payback period
C) an extended payback period
D) a payback period equal to the life of the investment
Q2) Less objective results are obtainable if an independent party performs the postaudit of a capital investment.
A)True
B)False
Q3) Which measure results in the time required for a firm to recover its original investment?
A) the payback period
B) the net present value
C) the life of the project
D) the internal rate of return
Q4) Who should usually perform a postaudit of a company's capital investment?
A) the CEO
B) the board of directors
C) the internal audit staff
D) the manager of that investment
Page 16
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