Introduction to Management Accounting Exam
Answer Key
Course Introduction
Introduction to Management Accounting provides students with a foundational understanding of how accounting information is used by managers to plan, control, and make decisions within organizations. The course covers key topics such as cost behavior, cost-volume-profit analysis, budgeting, standard costing, and performance evaluation. Students will learn how to analyze financial data, assess internal business operations, and communicate insights that support effective strategic and operational decision-making. Emphasis is placed on practical applications, ethical considerations, and the role of management accounting in achieving organizational goals.
Recommended Textbook
Managerial Accounting 2nd Canadian Edition by Karen W. Braun
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12 Chapters
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) In most companies,managerial accountants no longer perform routine mechanical accounting tasks.
A)True
B)False
Answer: True
Q2) Your company sends you to a conference to update your skills.You decide to skip the afternoon session and go sightseeing.This violates the professional competency and integrity standards.
A)True
B)False
Answer: True
Q3) The cost of maintaining testing equipment would be classified as a(n)
A)prevention cost.
B)appraisal cost.
C)internal failure cost.
D)external failure cost.
Answer: A
Q4) Determining how to achieve company goals. Answer: C
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Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) Which of the following costs would appear on the income statements for both a merchandiser and manufacturer?
A)Cost of goods manufactured
B)Direct labour incurred
C)Direct materials used
D)Operating expenses
Answer: D
Q2) Certain materials used in a manufacturing plant cannot be traced to a specific unit.These materials are called ________ materials.
A)general
B)direct
C)finished
D)indirect
Answer: D
Q3) Indirect costs cannot be traced to the cost objects,so they are allocated.
A)True
B)False
Answer: True
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4
Chapter 3: Job Costing
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Sample Questions
Q1) The key to allocating indirect manufacturing costs to jobs is to identify an appropriate allocation base.
A)True
B)False
Answer: True
Q2) Senator Technology's work in process inventory on July 1 has a balance of $49,000 representing Job No.96.During July,$135,000 of direct materials were requisitioned for Job No.96 and $8,600 of direct labour cost was incurred on Job No.96.Manufacturing overhead is allocated at a rate of $15.00 per direct labour hour.Actual manufacturing overhead costs incurred in July amounted to $40,000.There were 1,200 actual direct labour hours worked in July.No new jobs were started during July.Job No.96 is completed on July 28.
A)Determine the total cost assigned to Job No.96.
B)Is manufacturing overhead over allocated or under allocated for the month of July? By how much?
Answer:
11ea83bb_49d8_0c04_9bfb_4f1c8b9e7920_TB1765_00_TB1765_00_TB1765_00_TB1765_ 00_TB1765_00_TB1765_00
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Page 5
Chapter 4: Activity Based Costing
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Sample Questions
Q1) Facility-level activities and costs are incurred no matter how many units,batches,or products are produced in the plant.
A)True
B)False
Q2) Merchandising and service companies,as well as governmental agencies,can use refined cost allocation systems to provide their managers with better cost information.
A)True B)False
Q3) If a company's plant-wide 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) The storage of raw materials is considered a non-value-added activity. A)True B)False
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6
Chapter 5: Process Costing
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Sample Questions
Q1) ABC produces ping-pong balls using a three-step process that includes molding,colouring and finishing.Which of the following accounts is credited when manufacturing overhead is applied?
A)Accumulated amortization,office equipment
B)WIP inventory-finishing
C)Indirect salaries payable
D)Manufacturing Overhead
Q2) At the end of the year,what are the equivalent units for conversion costs for Dart Manufacturing if all manufacturing costs are added during the process?
A)3,000
B)3,800
C)2,000
D)1,800
Q3) When the units are sold,Cost of Goods Sold is debited.
A)True
B)False
Q4) When the units are sold,Finished Goods Inventory is credited.
A)True
B)False
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Chapter 6: Cost Behaviour
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Sample Questions
Q1) Which of the following statements is TRUE with respect to total fixed costs?
A)They will increase as production decreases within the relevant range.
B)They will remain the same as production levels change within the relevant range.
C)They will decrease as production increases within the relevant range.
D)They will decrease as production decreases within the relevant range.
Q2) At Raines Company the variable cost per unit at 200,000 units is
A)$1.43.
B)$2.00.
C)$3.43.
D)$1.40.
Q3) Cute Wheels Cars produces custom wheels.The company's average cost per wheel is $160.00 when it produces 2,000 wheels per month.
Required:
1.What is the total cost of producing 2,000 wheels?
2.If $100,000 of the total cost is fixed,what is the variable cost of producing each wheel?
3.What is Cute Wheels cost equation?
4.What is the expected total cost of producing 3,000 wheels in a month?
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Page 8
Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Mist Company sells two products,blue bowls and green cups.Mist predicts that it will sell 2,500 blue bowls and 1,500 green cups in the next period.The unit contribution margins for blue bowls and green cups are $3.60 and $4.80,respectively.What is the weighted-average unit contribution margin?
A)$1.80
B)$16.20
C)$0.45
D)$4.05
Q2) The weighted average contribution margin will always be the same as the contribution margin of the highest-volume product.
A)True
B)False
Q3) Which of the following is TRUE when using the income statement approach to finding break-even?
A)Sales revenue - variable expenses - fixed expenses = operating income
B)(Variable expenses × number of units)- fixed expenses = operating income
C)Fixed expenses + variable expenses + sales revenue = operating income
D)Fixed expenses + variable expenses - sales revenue = operating income
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Chapter 8: Short-Term Business Decisions
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Sample Questions
Q1) Which of the following is the format of the income statement most useful in decision-making?
A)Absorption costing format
B)Traditional format
C)Single-step format
D)Contribution margin format
Q2) Which of the following describes the target total cost?
A)Revenue at market price minus desired profit
B)Revenue at market price plus desired profit
C)Total cost plus desired profit
D)Total cost minus actual cost
Q3) Opportunity costs should never be factored in to outsourcing decisions.
A)True
B)False
Q4) Fixed costs that do not differ between two alternatives are
A)relevant to the decision.
B)considered opportunity costs.
C)irrelevant to the decision.
D)important only if they represent a material dollar amount.
Q5) The internal financial statements of Pierce
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Chapter 9: The Master Budget and Responsibility Accounting
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Sample Questions
Q1) Which description listed below best defines "capital expenditures budget"?
A)Details as to how the company expects to go from the beginning cash balance to the desired ending cash balance
B)A system for evaluating the performance of each responsibility center and its manager
C)A budget that projects cash inflows and outflows and the end of period budgeted balance sheet
D)A company's plan for purchases of property,plant and equipment,and other long-term assets
Q2) Information technology has made many tasks easier,but not all tasks.Which of the following tasks performed by managers requires more critical thinking skills than the others because it is not as dependent upon information technology?
A)Sensitivity analysis
B)Rolling up individual units' budgets into the company wide budget
C)Removing slack from the budget
D)Preparing responsibility center performance reports that identify variances between actual and budgeted revenues and costs
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11
Chapter 10: Flexible Budgets and Standard Costs
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Sample Questions
Q1) Rockwell Corporation manufactures and sells computer keyboards.The keyboard sells for $55 per unit and its variable costs per unit are $42.Fixed costs are $80,000 per month for sales volumes up to 40,000 keyboards.If more than 40,000 keyboards are sold,the fixed costs will be $110,000.The flexible budget would reflect what monthly operating income for a sales volume of 52,000 keyboards?
A)$566,000
B)$676,000
C)$596,000
D)$2,860,000
Q2) An efficiency (quantity)variance for direct materials and direct labour measures how well a company keeps unit prices of material and labour inputs within standards.
A)True
B)False
Q3) How much is the direct materials price variance at Grayson Industries?
A)$38,000 favourable
B)$38,000 unfavourable
C)$4,000 favourable
D)$4,000 unfavourable
Q4) 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 ultimate purpose of the balanced scorecard is to give management a balanced view of the company's performance.
A)True
B)False
Q2) The performance evaluation of cost centres is typically based on which of the following?
A)Sales volume variance
B)ROI
C)Flexible budget variance
D)Static budget variance
Q3) Providing subunit managers with performance results and comparing targets to actual results would be an example of
A)promoting goal congruence and coordination.
B)motivating managers.
C)providing feedback.
D)benchmarking.
Q4) Describe the limitations of financial performance measurement.
Q5) List and describe five reasons why a company might choose to decentralize.
Q6) List and describe the goals of performance evaluation systems.
Q7) Discuss two potential problems associated with decentralization. Page 13
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Page 14
Chapter 12: Capital Investment Decisions and the Time
Value of Money
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Sample Questions
Q1) The net present value method incorporates the time value of money.
A)True
B)False
Q2) You win the lottery and must decide how to take the payout.Use an 8% discount rate. What is the present value of $10,000 a year received at the end of each of the next six years?
A)$6,300
B)$46,230
C)$49,928
D)$60,000
Q3) Which term below is best described as a "formal means of analyzing long-range investment alternatives"?
A)Time value of money
B)Capital budgeting
C)Payback period
D)Annuity
Q4) Self-scan check-out machines are an example of capital assets.
A)True
B)False
15
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