Intermediate Managerial Accounting Exam Preparation Guide

Course Introduction

Intermediate Managerial Accounting delves deeper into the processes and analytical techniques used by managers to plan, control, and make decisions within organizations. Building on foundational accounting principles, this course explores cost classification, budgeting, variance analysis, performance measurement, and decision-making frameworks such as cost-volume-profit analysis and relevant costing. Students will also learn about activity-based costing, responsibility accounting, and the ethical dimensions of managerial decision-making. Through case studies and practical exercises, students will develop skills in interpreting financial and non-financial data to support strategic and operational objectives.

Recommended Textbook

Managerial Accounting 2nd Edition by

Karen W. Braun

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14 Chapters

2698 Verified Questions

2698 Flashcards

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Chapter 1: Introduction to Managerial Accounting

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Sample Questions

Q1) Under Sarbanes-Oxley,what is the maximum number of years of imprisonment for knowingly destroying or creating documents to obstruct any federal investigation?

A)5 years

B)10 years

C)15 years

D)20 years

Answer: D

Q2) An example of the IMA's competence standard is to:

A)abstain from engaging in or supporting any activity that might discredit the profession.

B)communicate information fairly and objectively.

C)keep information confidential,except when disclosure is legally required.

D)provide decision support that is accurate,clear,concise and timely.

Answer: D

Q3) The CMA designation is issued by the IMA.

A)True

B)False

Answer: True

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Chapter 2: Building Blocks of Managerial Accounting

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Sample Questions

Q1) Which statement describes direct materials in a manufacturing setting?

A)Direct materials are used to determine total inventoriable product costs.

B)Direct materials are used to determine total manufacturing overhead.

C)Direct materials cannot be separately and conveniently traced.

D)Direct materials do not become part of the finished product.

Answer: A

Q2) A company is deciding whether to purchase production equipment which can produce units more quickly than the current equipment.Which of the following costs would be relevant to its decision?

A)The cost of the new equipment

B)The salary of the factory manager

C)The cost of raw materials

D)The original purchase price of the current machinery

Answer: A

Q3) A law firm would be classified as a:

A)manufacturing company.

B)merchandising company.

C)service company.

D)simple company.

Answer: C

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Chapter 3: Job Costing

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Sample Questions

Q1) The manufacturing overhead account is credited for actual manufacturing overhead costs incurred in the period.

A)True

B)False

Answer: False

Q2) The most significant cost for a service firm is direct materials cost.

A)True

B)False

Answer: False

Q3) If a job consists of a batch of identical units,managers find the unit cost by:

A)tracing direct materials to each unit.

B)multiplying the total job cost by the number of units in the job.

C)tracing direct labor to each unit.

D)dividing the total job cost by the number of units in the job.

Answer: D

Q4) A labor time record is an essential component of accounting in a service firm.

A)True

B)False

Answer: True

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Chapter 4: Activity-Based Costing, lean Production, and the Costs of Quality

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201 Flashcards

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Sample Questions

Q1) Product testing is a prevention cost.

A)True

B)False

Q2) Which of the following terms best describes costs incurred to detect poor quality goods or services?

A)Appraisal costs

B)Activity-based costing

C)Value engineering

D)Prevention costs

Q3) ABC costing might lead to:

A)cutting back on high-volume products that appear unprofitable.

B)expanding low-volume products that appear profitable.

C)raising the sale price of high-volume products.

D)raising the sale price of low-volume products.

Q4) The cost of evaluating potential raw material suppliers is an example of a(n):

A)internal failure cost.

B)prevention cost.

C)external failure cost.

D)appraisal cost.

Chapter 5: Process Costing

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Sample Questions

Q1) What are the total equivalent units for direct materials?

A)134,800

B)132,000

C)117,790

D)129,200

Q2) The journal entry to record the use of direct labor in Processing Department #1 would include a credit to Wages Payable.

A)True

B)False

Q3) If all direct materials are added at the end of the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is 50%.

A)True

B)False

Q4) The cost per equivalent unit for conversion costs would be closest to:

A)$4.80.

B)$4.42.

C)$4.95.

D)$5.13.

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Chapter 6: Cost Behavior

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Sample Questions

Q1) A manager can increase income under absorption costing by increasing:

A)variable costs.

B)production.

C)fixed costs.

D)leased assets.

Q2) Feathered Nests produces decorative birdhouses.The company's average cost per unit is $20.00 at a production level of 2,000 birdhouses.What is the total cost of producing 2,000 birdhouses?

A)$20.00

B)$2,020

C)$40,000

D)$100

Q3) Sugartown Corporation has total sales revenues of $225,000.If their total fixed costs are $40,000 and their total variable costs are $65,000,then the total contribution margin is:

A)total revenue minus total fixed costs.

B)total variable costs minus total fixed costs.

C)total revenue minus total variable costs.

D)equal to operating income.

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Page 8

Chapter 7: Cost-Volume-Profit Analysis

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Sample Questions

Q1) American Corporation currently sells its products for $200 per unit.Management is contemplating a 20% increase in the selling price for the next year.Variable costs are currently 40% of sales revenue and are not expected to change next year.Fixed expenses are $120,000 per year. If fixed costs increase 10% next year,and the new selling price per unit goes into effect,how many units will need to be sold to breakeven?

A)413 units

B)1,100 units

C)132,000 units

D)825 units

Q2) The contribution margin derived from different products is used to motivate the sales force to increase sales of the most profitable products.

A)True

B)False

Q3) CVP stands for Cost-Volume-Profit.

A)True

B)False

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Chapter 8: Short Term Business Decisions

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Sample Questions

Q1) When making product mix decisions,companies are most profitable when they maximize production of the product with the greatest sales demand.

A)True

B)False

Q2) Which of the following are methods for a company to meet target total cost and profit goals if the current cost of the product is higher than the target cost?

A)Accept a lower profit

B)Cut fixed costs

C)Cut variable costs

D)Any of the above

Q3) In deciding whether to drop its electronics product line,a company's manager would consider which of the following?

A)The costs it could save by dropping the product line

B)The revenues it would lose from dropping the product line

C)How dropping the electronics product line would affect sales of its other products (like CDs)

D)All of the above

Q4) What will Burr Hill's revenue be at a market price of $65/round?

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Chapter 9: The Master Budget and Responsibility Accounting

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Sample Questions

Q1) The ___________ budget projects cash inflows and outflows and the budgeted balance sheet.

A)purchases

B)capital expenditures

C)cash

D)financial

Q2) The first step in preparing the operating budget is preparing the:

A)sales budget.

B)cash budget.

C)budgeted income statement.

D)purchases budget.

Q3) Purchases for May were $60,000,while expected purchases for June and July are $75,000 and $92,000,respectively.All purchases are paid 30% in the month of purchase and 70% the following month.At what amount are June payments for purchases budgeted?

A)$64,500

B)$70,500

C)$86,900

D)$92,100

Page 11

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Chapter 10: Flexible Budgets and Standard Costs

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Sample Questions

Q1) Which term below is best paired with "arises when actual production volume differs from expected production volume"?

A)Static budget

B)Standard budget

C)Overhead flexible budget variance

D)Production volume variance

Q2) The production volume variance is favorable whenever actual output is greater than expected output.

A)True

B)False

Q3) If actual units produced exceed the budgeted units to be produced,which of the following statements would be TRUE?

A)Production volume variance is expected to be unfavorable.

B)Overhead flexible budget variance is expected to be favorable.

C)Overhead flexible budget variance is expected to be unfavorable.

D)Production volume variance is expected to be favorable.

Q4) Journalize the purchase and usage of direct materials including the related variances.

Q5) Identify five benefits of standard costs.

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Chapter 11: Performance Evaluation and the Balanced Scorecard

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Sample Questions

Q1) The balanced scorecard considers both financial and operational performance measures.

A)True

B)False

Q2) What is the Toy Division's sales margin?

A)6%

B)24%

C)30%

D)400%

Q3) Comparing actual results to the results of competitors and comparing actual results to industry standards would be an example of:

A)promoting goal congruence and coordination.

B)motivating managers.

C)providing feedback.

D)benchmarking.

Q4) Performance evaluation systems provide top management with a framework for maintaining control over the organization.

A)True

B)False

Page 13

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Chapter 12: Capital Investment Decisions and the Time

Value of Money

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Sample Questions

Q1) Which of the following capital budgeting methods is based on cash flows,profitability,and the time value of money?

A)Payback and accounting rate of return

B)Payback and net present value

C)Accounting rate of return and internal rate of return

D)Net present value and internal rate of return

Q2) Sawyer & Cecil,Computer Consultants,is considering an investment in computer and network equipment costing $254,000.This equipment would allow them to offer new programming services to clients.The equipment will be depreciated on the straight-line basis over an eight- year period with an estimated residual value of $60,000.Using the accounting rate of return model,what is the minimum average annual operating income that must be generated from this investment in order to achieve a 12% accounting rate of return?

A)$7,200

B)$23,280

C)$30,480

D)$31,750

Q3) Accrual-based accounting is used in determining the accounting rate of return. A)True B)False

Page 14

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Chapter 13: Statement of Cash Flows

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Sample Questions

Q1) Paying cash dividends would be:

A)a cash outflow from financing.

B)a cash outflow from operations.

C)a cash outflow from investing.

D)none of the above.

Q2) Which of the following would NOT be done when calculating the change in cash from operating activities under the indirect method?

A)Add an increase in accrued interest payable

B)Deduct the purchase of equipment

C)Add a decrease in merchandise inventory

D)Deduct a decrease in accounts payable

Q3) Which of the following would be considered an investing activity on the statement of cash flows?

A)A sale of land

B)A purchase of treasury stock

C)Depreciation of equipment

D)A sale of inventory

Q4) Calculate the cash paid for merchandise for the year.

Q5) Compute the cash received from receivables customers during the year.

Q6) Compute the change in accounts payable for the year.

Page 15

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Chapter 14: Financial Statement Analysis

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Sample Questions

Q1) Which of the following is the formula to compute the debt ratio?

A)Total liabilities/total assets

B)Interest expense/income from operations

C)Income from operations/interest expense

D)Total assets/total liabilities

Q2) What should Johnston do to improve its performance to match or to exceed Haley's performance?

A)Reduce percentage of COGS.

B)Reduce percentage of income tax expense.

C)Reduce percentage of selling/general expenses.

D)Any of the above would be useful to improve performance.

Q3) What is the rate of return on common stockholder's equity for the current year?

A)34.24%

B)4.63%

C)36.87%

D)47.81%

Q4) In a vertical analysis of a balance sheet,total assets is assigned a percentage of 100.

A)True

B)False

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