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Introduction to Management Accounting Exam Preparation Guide
Course Introduction
Introduction to Management Accounting provides students with foundational knowledge of the principles and techniques used to generate, interpret, and analyze financial and non-financial information for internal decision-making within organizations. The course covers essential topics such as cost classification, cost behavior and analysis, budgeting, standard costing, variance analysis, and performance measurement. Emphasizing the role of management accounting in strategic planning and control, this course equips students to support managerial decision processes by applying relevant data and analytical tools, fostering a deeper understanding of how accounting information drives business efficiency and organizational success.
Recommended Textbook Cornerstones of Managerial Accounting 5th Edition by Maryanne M. Mowen
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16 Chapters
2824 Verified Questions
2824 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) The managerial accounting system produces information for __________ users. Answer: internal
Q2) The process of choosing among competing alternatives is decision making.
A)True
B)False Answer: True
Q3) Virtually all managerial accounting practices were developed to assist managers in maximizing profits.
A)True
B)False Answer: True
Q4) List the different types of certifications that can be obtained by an accountant. Answer: Certified Management Accountant (CMA)
Certified Public Accountant (CPA)
Certified Internal Auditor (CIA)
Q5) The process of choosing among competing alternatives is called ________________________.
Answer: decision making
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Chapter 2: Basic Managerial Accounting Concepts
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247 Flashcards
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Sample Questions
Q1) Cost is a dollar measure of the resources used to achieve a given benefit.
A)True
B)False
Answer: True
Q2) Refer to Figure 2-5. What was the cost of goods sold for July?
A) $70,200
B) $69,600
C) $71,300
D) $71,100
Answer: A
Q3) (direct labor + overhead)/units produced
A)per-unit prime cost
B)per-unit conversion cost
C)per-unit cost of goods manufactured
Answer: B
Q4) Product costs are carried in inventory until the goods are finished.
A)True
B)False
Answer: False
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Chapter 3: Cost Behavior
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237 Flashcards
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Sample Questions
Q1) rental cost of warehouse
A)variable
B)fixed Answer: B
Q2) total cost = total fixed cost + total variable cost A)variable
B)fixed C)mixed
D)step
Answer: C
Q3) remains the same in total within the relevant range
A)variable
B)fixed C)mixed D)step
Answer: B
Q4) _______________________ are costs that have both a fixed and a variable component.
Answer: Mixed costs
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Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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179 Flashcards
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Sample Questions
Q1) If variable costs per unit decrease, sales volume at the break-even point will A) decrease.
B) stay constant.
C) double.
D) increase.
Q2) A profit-volume graph visually portrays the relationship between
A) total sales and fixed cost.
B) profits and units sold.
C) total sales and margin of safety.
D) total sales and variable costs.
E) profits and degree of operating leverage.
Q3) ____ can be measured for a given level of sales by taking the ratio of contribution margin to operating income.
A) Contribution margin ratio
B) Degree of operating leverage
C) Break-even point
D) Sensitivity analysis
E) Contribution margin
Q4) How can a multi-product firm determine its break-even point?
6
Q5) Explain why cost-volume-profit analysis can be useful to managers.
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Chapter 5: Job-Order Costing
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Sample Questions
Q1) Costs associated with selling and general administrative activities are not
A) period costs.
B) nonmanufacturing costs.
C) manufacturing costs.
D) period costs and nonmanufacturing costs.
E) any of these.
Q2) If actual overhead is greater than applied overhead, the variance is called underapplied overhead.
A)True
B)False
Q3) Departmental overheads cannot be added together to get plantwide overhead.
A)True
B)False
Q4) Refer to Figure 5-2. What is the overhead variance?
A) $600 underapplied
B) $600 overapplied
C) $200 underapplied
D) $400 overapplied
E) $800 underapplied
Q5) In a _______________________________ costs are accumulated by job.
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Chapter 6: Process Costing
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Sample Questions
Q1) Describe the differences between process costing and job-order costing.
Q2) cost reconciliation
A)step 1 in preparing a Production Report
B)step 2 in preparing a Production Report
C)step 3 in preparing a Production Report
D)step 4 in preparing a Production Report
E)step 5 in preparing a Production Report
Q3) Under the FIFO method, for the beginning work-in-process units, the total associated manufacturing costs are the sum of the prior-period costs plus the costs incurred in the current period to finish the units.
A)True
B)False
Q4) The processing pattern in which partially completed units can be worked on simultaneously in different processes and then brought together in a final process for completion is known as ____________________.
Q5) ___________________ requires that units pass through one process before they can be worked on in the next process.
Q6) Firms that have adopted a __________ approach try to reduce WIP inventories to very low levels.
Page 8
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Chapter 7: Activity-Based Costing and Management
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178 Flashcards
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Sample Questions
Q1) When products consume overhead activities in systematically different proportion due to such things as product size, product complexity, setup time and size of batches this is known as _________________.
Q2) One of the questions answered by activity analysis should be "What activities are done?"
A)True
B)False
Q3) Packaging inspection and process acceptance are examples of ____.
A) external failure costs
B) prevention costs
C) internal failure costs
D) value costs
E) appraisal costs
Q4) Refer to Figure 7-4. Calculate the overhead cost per unit for each Beaker Computer, using overhead rates based on machine hours and setup hours.
A) $6.10 per unit
B) $4.50 per unit
C) $5.75 per unit
D) $3.88 per unit
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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Sample Questions
Q1) Which of the following statements is true?
A) Absorption costing income exceeds variable costing income when units produced and sold are equal.
B) Variable costing income exceeds absorption costing income when units produced exceed units sold.
C) Absorption costing income exceeds variable costing income when units produced are less than units sold.
D) Absorption costing income exceeds variable costing income when units produced are greater than units sold.
Q2) A disadvantage of absorption costing is
A) that it is not a useful format for decision making.
B) that it assigns only manufacturing costs to the product.
C) All of these.
D) None of these.
Q3) Only fixed factory overhead for units sold
A)Variable costing income statement
B)Absorption costing income statement
C)Both types of income statements
Q4) The ___________________ income statement groups expenses according to function.
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Chapter 9: Profit Planning
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Sample Questions
Q1) Budgets are
A) key components of planning.
B) financial plans for the future.
C) an identifier of objectives and the actions needed to achieve them.
D) used for communication and coordination.
E) all of these.
Q2) A production budget is most important for which of the following?
A) retail stores
B) manufacturing firms
C) not-for-profit agencies
D) local government agencies
E) all of these
Q3) Refer to Figure 9-11. What is Pallen's budgeted operating income?
A) $281,000
B) $39,000
C) $198,000
D) $83,000
E) $440,000
Q4) The __________________ shows the expected cost of all production costs other than direct materials and direct labor.
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) Total Materials Variance
A)Actual Quantity * Actual Price
B)(Actual Hours * Actual Rate) - (Standard Hours * Standard Rate)
C)(Actual Quantity * Actual Price) - (Standard Quantity * Standard Price)
D)(Actual Hours - Standard Hours) * Standard Rate
E)(Actual Price - Standard Price) * Actual Quantity
F)Standard Quantity* Standard Price
G)(Actual Rate - Standard Rate) * Actual Hours
H)(Actual Quantity - Standard Quantity) * Standard Price
Q2) The ____________________ is the difference between the actual cost of the input and its planned cost.
Q3) Kaizen costing provides fixed standards which reflect continuous improvement efforts.
A)True
B)False
Q4) Refer to Figure 10-5. What is Seaside's labor rate variance?
A) $180,000 F
B) $180,000 U
C) $225,000 U
D) $217,500 F
Page 12
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) A difference between the actual amount and the flexible budget amount is known as the ____________________.
Q2) Refer to Figure 11-3. Calculate the variance for maintenance using an after-the-fact flexible budget.
A) $13,000 U
B) $13,100 F
C) $11,000 U
D) $1,000 F
E) None of these.
Q3) An activity-budgetary system has the following benefit(s):
A) it supports continuous improvement.
B) it supports process management.
C) it emphasizes cost reduction through elimination of wasteful activities.
D) it helps improve the efficiency of necessary activities.
E) all of these.
Q4) Activity flexible budgeting is the prediction of what activity costs will be as production output changes.
A)True
B)False
Q5) A _____________________ compares actual costs with budgeted costs.
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) The number of units of output that can be produced in a given period of time is called
A) cycle time.
B) unit process time.
C) responsiveness.
D) cell conversion time.
E) velocity.
Q2) In negotiated transfer pricing, the selling division sets the ceiling (maximum possible transfer price) for the bargaining range.
A)True
B)False
Q3) Economic Value Added is residual income with the cost of capital equal to the firm's A) budgeted cost of capital.
B) average cost of capital.
C) standard cost of capital.
D) actual cost of capital.
Q4) Decentralization is usually achieved by creating units called divisions.
A)True B)False
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) The difference between the summed costs of two alternatives in a decision is known as the __________________.
Q2) Many companies start with cost to determine price since revenue must cover cost for the firm to make a profit.
A)True
B)False
Q3) A decision in which a manager needs to determine whether a product line (or segment) should continue or be eliminated is what kind of decision?
A) relevant
B) make-or-buy
C) sell-or-process-further
D) special-order
E) keep-or-drop
Q4) The decision on whether to produce a product internally or purchase it from a supplier is an example of a _______________.
Q5) A cost that cannot be affected by any future action is called a(n)
Q6) Most short-run decisions require extensive consideration of ___________.
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) The internal rate of return model does not consistently result in choices that maximize firm wealth.
A)True
B)False
Q2) A key element in the capital investment process is called a postaudit.
A)True
B)False
Q3) The process of planning, setting goals and priorities, arranging financing, and using certain criteria to select long-term assets is called capital investment decisions.
A)True
B)False
Q4) Refer to Figure 14-1. What is the payback period for Project I?
A) 1 year
B) 3 years
C) 2.5 years
D) 3.5 years
E) 5 years
Q5) What is a postaudit? What are the advantages and disadvantages of the postaudit?
Q6) Which model of capital investment decision making is most widely used? Why?
Page 16
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Chapter 15: Statement of Cash Flows
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Sample Questions
Q1) The activity from the balance sheet to be presented in the financing activities section of the statement of cash flows is based on an analysis of stockholders' equity only.
A)True
B)False
Q2) If accounts receivable have increased during the period,
A) revenues on an accrual basis are less than revenues on a cash basis.
B) revenues on an accrual basis are greater than revenues on a cash basis.
C) revenues on an accrual basis are the same as revenues on a cash basis.
D) expenses on an accrual basis are greater than expenses on a cash basis.
Q3) Refer to Figure 15-1. The net cash flows from financing activities last year was
A) $80,000.
B) $(80,000).
C) $20,000.
D) $(20,000).
Q4) Cash flow activities that include the cash effect of transactions that create revenues and expenses and thus enter into the determination of net income are classified as operating activities on the statement of cash flows.
A)True
B)False
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Chapter 16: Financial Statement Analysis
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Sample Questions
Q1) The ratios that allow investors, creditors, and managers to evaluate the extent to which invested funds are being used efficiently are called ____________.
Q2) A measure that compares only the most liquid assets to current liabilities
A)Dividend yield ratio
B)Current ratio
C)Debt ratio
D)Return on common stockholders' equity ratio
E)Times-interest-earned ratio
F)Quick ratio
G)Debt-to-equity ratio
H)Dividend payout ratio
I)Price-earnings ratio
Q3) Debt-to-equity ratio
A)Liquidity Ratio
B)Leverage Ratio
C)Profitability Ratio
Q4) _________________ measure the ability of a company to meet its current obligations.
Q5) Why is liquidity important for businesses?
Q6) For meaningful analysis, ratios should be compared with a ____________.
Page 18
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