Introduction to Management Accounting Test Preparation
Course Introduction
Introduction to Management Accounting provides students with a foundational understanding of how accounting information is used by managers to make informed business decisions. The course covers key concepts such as cost behavior, budgeting, performance evaluation, and decision-making processes related to planning and controlling organizational activities. Students will learn how to analyze financial and non-financial data, apply various costing methods, and utilize relevant accounting tools to support managerial functions. Through real-world examples and practical exercises, the course prepares students to contribute effectively to organizational strategy and operational success.
Recommended Textbook
Managerial Accounting 3rd Canadian Edition by Karen W. Braun
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12 Chapters
3096 Verified Questions
3096 Flashcards
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Page 2
Chapter 1: Introduction to Managerial Accounting
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) E-commerce refers to the
A) conduct of business on the internet.
B) exchange of information with customers and suppliers.
C) production of superior goods and services.
D) quick delivery of goods and services.
Answer: A
Q2) An example of a prevention cost is the cost of redesigning the product to reduce its complexity.
A)True
B)False
Answer: True
Q3) Budgets are the quantitative expression of management's plans.
A)True
B)False
Answer: True
Q4) Directing means setting goals and objectives for the company and determining how to achieve them.
A)True
B)False
Answer: False
Page 3
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Chapter 2: Building Blocks of Managerial Accounting
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265 Verified Questions
265 Flashcards
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Sample Questions
Q1) Manufacturing overhead for Rustic Living Furniture Company totaled
A) $171,500.
B) $174,500.
C) $198,000.
D) $206,000.
Answer: A
Q2) Which of the following describes the way fixed costs per unit behave?
A) They will remain the same as production levels change.
B) They will decrease as production decreases.
C) They will increase as production increases.
D) They will increase as production decreases.
Answer: D
Q3) What is the amount of the manufacturing overhead incurred at Ontario Industries Inc.?
A) $41,000
B) $35,000
C) $23,000
D) $29,000
Answer: D
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Page 4
Chapter 3: Cost Behaviour
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374 Verified Questions
374 Flashcards
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Sample Questions
Q1) If a contribution margin income statement is prepared for the year, what is the contribution margin at Jeans's Fitness Club?
A) $72,500
B) $352,500
C) $280,000
D) $207,500
Answer: D
Q2) Using the high low method, what is the total maintenance costs at Red Dot Manufacturing if 18,000 machine hours were used?
A) $15,660
B) $7,875
C) $9,950
D) $10,175
Answer: D
Q3) The high-low method uses only two of the historical data points for estimating a cost equation.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Cost-Volume-Profit Analysis
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272 Verified Questions
272 Flashcards
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Sample Questions
Q1) Which of the following statements is TRUE if the variable cost per unit decreases while the sales price per unit and total fixed costs remain constant?
A) The contribution margin increases and the break-even point decreases.
B) The contribution margin decreases and the break-even point decreases.
C) The contribution margin increases and the break-even point increases.
D) The contribution margin decreases and the break-even point increases.
Q2) Management at the Trapper Company currently sells its products for $200 per unit and is contemplating a 50% increase in the selling price for the next year. Variable costs are currently 25% of sales revenue and are not expected to change in dollar amount on a per unit basis next year (the company will still pay the same variable cost per unit). Fixed expenses are $120,000 per year. If fixed costs were to decrease 10% during the current year and the new selling price goes into effect, how many units will need to be sold to break even?
A) 377 units
B) 880 units
C) 432 units
D) 132,000 units
Q3) What is meant by the term break-even point? Why should a manager be concerned about the break-even point?
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Page 6
Chapter 5: Job Costing
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353 Verified Questions
353 Flashcards
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Sample Questions
Q1) How much manufacturing overhead was allocated in total during the year at Cabaret Corporation?
A) $28,500
B) $26,500
C) $27,500
D) $1,000
Q2) Job costing is most likely used in which of the following industries?
A) Chemicals
B) Food and beverage
C) Pharmaceuticals
D) Commercial building construction
Q3) Lawrence Corporation had actual manufacturing overhead costs of $29,500 for the past year. Direct labour cost is $17.50 per hour. Manufacturing overhead is allocated at a rate of $2.50 per direct labour hour. Manufacturing overhead was overallocated for the year by $1,500.
Calculate:
A) Allocated manufacturing overhead costs for year
B) Actual number of direct labour hours worked in year
Q4) Briefly explain the difference between job order and process costing and give examples of each.
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Chapter 6: Process Costing
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288 Flashcards
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Sample Questions
Q1) Both process and job costing assign costs to units as they proceed through the process.
A)True
B)False
Q2) Unique or custom-made goods use a job costing system.
A)True
B)False
Q3) Green Paints has 4,000 gallons of paint in WIP inventory, with all materials already added. The paint is 80% through the process. Assuming all conversion costs are added evenly throughout the process, what are the equivalent units for conversion costs?
A) 800
B) 0
C) 3,200
D) 4,000
Q4) At Adametz Company, what are the equivalent units for conversion costs?
A) 3,750
B) 3,300
C) 5,400
D) 2,100
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Chapter 7: Activity Based Costing
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184 Flashcards
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Sample Questions
Q1) Signs that a product cost system is not working properly include
A) managers don't understand costs and profits.
B) the cost system was installed five years ago.
C) the cost system has multiple allocation bases.
D) the cost system is fully depreciated.
Q2) Which of the following statements does NOT describe an ABC system?
A) ABC systems can create more accurate product costs.
B) ABC systems may only be used by service companies.
C) ABC systems are more complex and costly than traditional costing systems.
D) ABC systems are used in both manufacturing and non manufacturing companies.
Q3) If a company's plantwide overhead rate is allocated based on direct labour hours, then each job will be allocated manufacturing overhead based on the total direct labour hours incurred on the job, regardless of the manufacturing department in which those hours were incurred.
A)True
B)False
Q4) Traditional single-allocation-base cost systems tend to over-cost high-volume products and under-cost low-volume products.
A)True
B)False
Page 9
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Chapter 8: Short-Term Business Decisions
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271 Verified Questions
271 Flashcards
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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) If Andrew Corporation buys the part, what is the most Andrew Corporation can spend per unit so that their operating income remains the same as it is currently?
A) $5.70
B) $1.50
C) $1.65
D) $4.10
Q3) A constraint is a factor that restricts production or sale of a product.
A)True
B)False
Q4) What the reasons a firm would adopt target costing?
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Chapter 9: The Master Budget and Responsibility Accounting
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228 Verified Questions
228 Flashcards
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Sample Questions
Q1) When developing the budgets each year, most companies use A) a top-down approach.
B) zero-based budgets.
C) participative budgeting.
D) slack-based budgets.
Q2) Which of the following statements regarding the budgeting process is TRUE?
A) The budget should be designed from the bottom up, with input from employees at all levels.
B) The budget should be approved by the company's external auditors.
C) The budget should always be designed by top corporate management.
D) All of the listed statements are true regarding the budgeting process.
Q3) Biker Billy is a motorcycle dealership. Management expected to sell 1,000 bikes at an average sale price of $30,000. Variable expenses were budgeted to be 80% of sales revenue, and the total fixed expense was budgeted to be $2,500,000. The actual results for the year showed 800 bikes sold at an average price of $32,000. The actual variable expenses percentage was 75% of sales revenue and the total fixed expenses were $2,500,000.
Management has asked you to prepare a performance report for the year.
Q4) List and describe three reasons why a company and its managers could benefit from the use of budgeting.
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Chapter 10: Flexible Budgets and Standard Costs
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260 Verified Questions
260 Flashcards
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Sample Questions
Q1) What is the Outdoor Creations' budgeted operating income at a level of 1,300 heaters per month?
A) $42,000
B) $104,000
C) $328,000
D) $64,000
Q2) During the week, Hoster's potato chip manufacturing facility purchased 30,000 kilograms of potatoes at a price of $1.25 per kilogram. The standard price per kilogram is $1.40. During the week, 26,000 kg of potatoes were used. The standard quantity of potatoes that should have been used for the actual volume of output was 26,500 kg. Record the following transactions using a standard cost accounting system:
1. The purchase of potatoes
2. The use of potatoes
3. Are the variances favourable or unfavourable? Explain
Q3) The sales volume variance of operating income is a measure of efficiency.
A)True
B)False
Q4) Identify five benefits of standard costs.
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Page 12
Chapter 11: Performance Evaluation and the Balanced Scorecard
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Sample Questions
Q1) Management by exception saves management time by dictating that managers pay attention to only unfavourable variances.
A)True
B)False
Q2) Which of the following aspects of a performance evaluation system best describes when the company's actual results are compared to industry standards?
A) Benchmarking
B) Motivating unit managers
C) Promoting goal congruence
D) Providing feedback
Q3) Measures of the balanced scorecard's internal business process perspective include all of the following EXCEPT
A) operating capabilities.
B) employee turnover rates.
C) defect rates.
D) production cycle time.
Q4) Companies evaluate investment centres the way they evaluate profit centres.
A)True
B)False
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Chapter 12: Capital Investment Decisions and the Time
Value of Money
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205 Flashcards
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Sample Questions
Q1) The accounting rate of return for the Kentucky proposal is closest to A) 10.83%.
B) 11.17%.
C) 12.50%.
D) 20.83%.
Q2) Suppose Barnes & Noble Booksellers is considering investing in warehouse-management software that costs $500,000, has $50,000 residual value and should lead to cash cost savings of $120,000 per year for its five-year life. In calculating the ARR, which of the following figures should be used as the equation's denominator?
A) $225,000
B) $500,000
C) $250,000
D) $275,000
Q3) Your best friend just received a gift of $10,000 from his favourite aunt. He wants to save the money to open his own business after school. He can (1) invest it risk-free at 3%, (2) take on moderate risk at 6%, or (3) take on high risk at 18%. Help your friend project the investment's worth at the end of five years under each investment strategy and explain the results to him.
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