Intermediate Managerial Accounting Exam Bank
Course Introduction
Intermediate Managerial Accounting builds upon foundational accounting concepts to deepen students understanding of how accounting information is used within organizations for planning, controlling, and decision-making. The course covers topics such as cost behavior analysis, budgeting, standard costing, variance analysis, performance measurement, and relevant cost analysis for decision-making. Students will explore various costing systems, including activity-based costing, and learn how to apply managerial accounting techniques in real-world scenarios to support strategic business objectives. Emphasis is placed on critical thinking, problem-solving, and the ethical implications of managerial decision-making.
Recommended Textbook
Managerial Accounting v. 2.1 by Kurt Heisinger and Joe Hoyle
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Chapter 1: What Is Managerial Accounting
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Sample Questions
Q1) The Securities and Exchange Commission (SEC)does not require a company to disclose whether it has adopted a code of ethics.
A)True
B)False
Answer: False
Q2) Managerial accounting can only use financial performance measures.
A)True
B)False
Answer: False
Q3) Which of the following is typically performed by a financial accountant?
A)Preparing an income statement for one segment of a company.
B)Preparing a balance sheet for the annual report in accordance with U.S.GAAP.
C)Preparing the budgeted income statement for the upcoming quarter.
D)Preparing a report on the percentage of defective product returned by customers.
E)None of the above.
Answer: B
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Chapter 2: How Is Job Costing Used to Track Production Costs
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Sample Questions
Q1) Service organizations often use a predetermined overhead rate similar to manufacturing companies.
A)True
B)False
Answer: True
Q2) The entry to record depreciation on the factory building should include a:
A)debit to Work in Process Inventory.
B)debit to Manufacturing Overhead.
C)debit to Cost of Goods Sold.
D)credit to Work in Process Inventory.
E)None of the answer choices is correct.
Answer: B
Q3) When using a job cost system,which of the following will not appear on a job cost sheet?
A)Direct labor.
B)Direct materials.
C)Actual manufacturing overhead incurred.
D)Manufacturing overhead applied.
E)None of the answer choices is correct.
Answer: C
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Chapter 3: How Does an Organization Use Activity-Based
Costing to Allocate Overhead Costs
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Sample Questions
Q1) Prevention costs are costs for activities that prevent product defects.
A)True
B)False
Answer: True
Q2) Which of the following items is a unit-level activity?
A)Purchase requisitions issued for raw materials needed to produce groups of products.
B)Direct labor assembling products.
C)Maintenance performed on the factory building.
D)Quality inspections of groups of products.
E)None of the answer choices is correct.
Answer: B
Q3) Refer to Exhibit 3-2.What is the overhead rate for the purchasing activity?
A)$8.00
B)$3.60
C)$18.00
D)$6.00
E)None of the answer choices is correct.
Answer: D
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Chapter 4: How Is Process Costing Used to Track
Production Costs
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Sample Questions
Q1) The following information is available for the current year for Pike company. \(\begin{array}{ll}
\text { Number of units in beginning WIP Inventory } & 12,000 \quad \text { (30\% complete) } \\
\text { Number of units started in the current period } & 160,000 \\
\text { Number of units in the ending WIP Inventory } & 18,000 \quad \text { (70\% complete) }
\end{array}\)
If Pike Company uses the weighted average process costing method,what is the total equivalent completed units transferred out and in WIP Inventory?
A)166,000
B)190,000
C)166,600
D)142,000
E)None of the answer choices is correct.
Q2) A company that uses process costing may use several Work-in-Process Inventory accounts.
A)True
B)False
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Chapter 5: How Do Organizations Identify Cost Behavior
Patterns
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Sample Questions
Q1) The contribution margin income statement is used for internal reporting purposes and presents the fixed and variable components of cost information.
A)True
B)False
Q2) All costs behave in a linear manner.
A)True
B)False
Q3) Randle Company ran a regression analysis comparing total units of production and maintenance costs for the past four months.The regression analysis shows an R-squared of 0.76.Which of the following statements best describes this measure?
A)76 percent of the total maintenance costs are fixed and 24 percent are variable.
B)76 percent of the variation in maintenance costs is not explained by the increase or decrease in production.
C)76 percent of the variation in maintenance costs is explained by the increase or decrease in production.
D)76 percent of the company's total costs are maintenance costs.
E)None of the answer choices is correct.
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Chapter 6: How Is Cost-Volume-Profit Analysis Used for Decision Making
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Sample Questions
Q1) Paco's Bikes sells 120 bicycles each month for $400 per unit.Variable cost per unit is $160 and fixed costs total $4,800 per month.What is the contribution margin per unit?
A)$160
B)$280
C)$200
D)$240
E)None of the answer choices is correct.
Q2) Using the information below,identify the mathematical equation used to find total profit.
S= Selling price per unit;
V= Variable cost per unit;
F= Total fixed costs;and
Q= Quantity of units produced and sold
A)(S/Q) -(V/Q) - F
B)(S * Q) - (V * Q) - F
C)[(S + V) * Q] - F
D)S - (V * Q) - (F * Q)
E)None of the answer choices is correct.
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Chapter 7: How Are Relevant Revenues and Costs Used to
Make Decisions
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Sample Questions
Q1) Refer to Exhibit 7-8.What amount of joint costs is allocated to product A using the physical quantities method (pounds)?
A)$360,000
B)$240,000
C)$80,000
D)$60,000
E)None of the answer choices is correct.
Q2) Refer to Exhibit 7-4.If allocated fixed costs are based on sales revenue for each product line as a proportion of total sales revenue,what is the amount of allocated fixed costs for Color?
A)$18,000
B)$22,500
C)$15,000
D)$31,000
E)None of the answer choices is correct.
Q3) One of the factors to consider when evaluating special orders is the impact that special pricing will have on long-run pricing with existing customers.
A)True
B)False
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Chapter 8: How Is Capital Budgeting Used to Make Decisions
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Sample Questions
Q1) Managers often rank investment opportunities by internal rate of return.
A)True
B)False
Q2) Capital budgeting decisions focus on cash flows for projects requiring more than one year to complete.
A)True
B)False
Q3) If a project has an internal rate of return of 25% and a negative net present value,which of the following statements is true regarding the discount rate used for the net present value computation?
A)The required rate of return must have been 0%.
B)The required rate of return must have been equal to 25%.
C)The required rate of return must have been less than 25%.
D)The required rate of return must have been greater than 25%
E)None of the answer choices is correct.
Q4) Most managers use spreadsheets to calculate the internal rate of return for an investment proposal.
A)True
B)False
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Chapter 9: How Are Operating Budgets Created
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Sample Questions
Q1) According to the Business in Action "Moving from Spreadsheets to Intranet Budgeting," which of the following is not an advantage of Intranet budgeting?
A)Intranet budgeting minimizes or eliminates the uploading of Excel spreadsheets.
B)Intranet budgeting saves input time.
C)Intranet budgeting provides real-time reports.
D)Intranet budgeting eliminates technology support.
E)None of the answer choices is correct.
Q2) The first line that appears on the direct materials purchases budget is: A)units to be produced.
B)projected sales in units.
C)quantity of direct materials to be purchased.
D)quantity of beginning direct materials ending inventory.
E)None of the answer choices is correct.
Q3) For most nonprofit organizations,the approved budget serves as the legal authority for expenditures.
A)True
B)False
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Chapter 10: How Do Managers Evaluate Performance Using Cost Variance Analysis
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Sample Questions
Q1) Jake's Cheese Company produces gourmet cheese for resale at local grocery stores.The master budget indicates that the company expects to use 3.0 pounds of direct materials for each unit produced at a cost of $8.00 per pound (one unit = one batch of cheese).Each unit produced will require 0.50 direct labor hours at a cost of $10.00 per hour.Variable manufacturing overhead is applied based on direct labor hours at a rate of $5.00 per hour.Last year's sales were expected to total 50,000 units.Jake just received last year's actual results showing sales of 45,000 units.
(1)Calculate the standard cost per unit for direct materials,direct labor,and variable manufacturing overhead.
(2)Prepare a flexible budget based on actual sales for direct materials,direct labor,and variable manufacturing overhead.
Q2) When ideal standards are used,which of the following is most likely true?
A)The standards are not likely to be achieved.
B)The standards allow for occasional downtime for equipment.
C)The standards reflect what really happens in the factory.
D)The standards motivate employees to achieve perfection.
E)None of the answer choices is correct.
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Page 12
Chapter 11: How Do Managers Evaluate Performance in
Decentralized Organizations
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Q1) Residual income is the portion of income produced by the division that is not related to its daily activities.
A)True
B)False
Q2) A cost center is an organizational segment in which the manager is responsible for costs and revenues,but not investments in assets.
A)True
B)False
Q3) When using the net book value to calculate return on investment (ROI),division managers controlling newer assets with little accumulated depreciation have an advantage over division managers controlling older assets with more accumulated depreciation.
A)True
B)False
Q4) Operating assets would include office buildings leased to other companies.
A)True
B)False
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Chapter 12: How Is the Statement of Cash Flows Prepared and Used
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Q1) Which of the following is not an advantage of using the indirect method to prepare the statement of cash flows?
A)The indirect method provides a link between net income and cash flows from operating activities by reconciling the two amounts.
B)The indirect method typically takes less time to prepare than the direct method..
C)Accounting systems are better suited to generate information needed for the indirect method.
D)The indirect method is more accurate than the direct method.
E)None of the answer choices is correct.
Q2) When using the indirect method for the statement of cash flows,depreciation expense is added to net income to obtain cash provided by operating activities.
A)True
B)False
Q3) Most companies prefer to use the indirect method when preparing a statement of cash flows.
A)True
B)False
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Chapter 13: How Do Managers Use Financial and
Nonfinancial Performance Measures
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Sample Questions
Q1) A common-size analysis converts each line of financial statement data to an easily comparable amount measured in percent form.
A)True
B)False
Q2) A trend percentage is calculated as the current year divided by the base year.
A)True
B)False
Q3) Which of the following types of measures focuses primarily on income statement information?
A)long-term solvency measures.
B)short-term liquidity measures.
C)market valuation measures.
D)profitability measures.
E)None of the answer choices is correct.
Q4) Refer to Exhibit 13-1.What is the market capitalization at the end of 2017?
A)$654,000
B)$324,000
C)$18,000
D)$930,000
E)None of the answer choices is correct.
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