Introduction to Management Accounting Exam
Questions
Course Introduction
Introduction to Management Accounting offers a comprehensive overview of the role of accounting in internal business decision-making. This course explores key concepts such as cost classification, cost behavior, budgeting, variance analysis, and performance measurement. Students will learn how management accounting information supports planning, controlling, and strategic decision processes within organizations. Emphasis is placed on applying analytical techniques to evaluate operational efficiency and financial performance, preparing students to contribute effectively to managerial decision-making and organizational success.
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Managerial Accounting 5th Edition by Karen W. Braun
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) The design of a management accounting system should consider how reports affect employees' behavior.
A)True
B)False
Answer: True
Q2) The primary purpose of managerial accounting information is to help external users make investing and lending decisions.
A)True
B)False
Answer: False
Q3) Which of the following positions is responsible for the oversight, strategy formulation, and guidance at a large corporation?
A)CEO
B)Company president
C)Stockholders
D)Board of Directors
Answer: D
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Page 3
Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) How do fixed costs per unit behave?
A)They remain the same throughout production levels within the relevant range.
B)They decrease as production decreases.
C)They increase as production decreases.
D)They increase as production increases.
Answer: C
Q2) In addition to cost of goods manufactured, which of the following is needed to compute the cost of goods sold for a manufacturer?
A)Beginning work in process inventory less ending work in process inventory
B)Ending work in process inventory less beginning work in process inventory
C)Ending finished goods
D)Beginning finished goods inventory less ending finished goods inventory
Answer: D
Q3) An example of a fixed cost would be A)rent.
B)direct materials.
C)hourly wages.
D)sales commission.
Answer: A
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Page 4
Chapter 3: Job Costing
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Sample
Questions
Q1) Denver Company uses a job costing system. The work in process inventory on December 31 consisted of Job No. 173 with a balance of $66,900. Job No. 173 has been charged with manufacturing overhead costs of $20,500. Denver allocates manufacturing overhead costs at a rate of 50% of direct labor cost. What was the amount of direct materials charged to Job No. 173?
A)$10,250
B)$12,950
C)$5400
D)$7550
Answer: C
Q2) To record direct labor costs incurred, which of the following accounts would be debited?
A)Finished Goods Inventory account
B)Manufacturing Overhead Account
C)Work-in-Process Inventory Account
D)Wages Payable account
Answer: C
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Page 5
Chapter 4: Activity-Based Costing, Lean Operations, and the Costs of Quality
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Q1) Which of the following cost of quality categories represent the cost incurred to seek and find a new supplier that can provide quality raw materials compared to the low-quality raw materials received from a current supplier?
A)Prevention costs
B)Appraisal costs
C)Internal failure costs
D)External failure costs
Q2) As a result of cost distortion, some products will be overcosted while other products will be undercosted.
A)True
B)False
Q3) Refined costing systems can be used to allocate any indirect costs to any cost objects.
A)True
B)False
Q4) ABC tends to increase the unit cost of low-volume products and decrease the unit cost of high-volume products.
A)True
B)False
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Chapter 5: Process Costing
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Sample Questions
Q1) The journal entry to record the ultimate completion of the units would include a credit to Finished Goods Inventory.
A)True
B)False
Q2) The journal entry to record the use of direct materials in Processing Department #1 would include a credit to WIP-Processing Department #1.
A)True
B)False
Q3) The document many process costing companies use to summarize the entire five-step process on one schedule is called the
A)conversion report.
B)income costing statement.
C)bill of materials.
D)production cost report.
Q4) Process costing is most likely used in which of the following industries?
A)Chemicals
B)Aircraft
C)Construction
D)Printing
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Chapter 6: Cost Behavior
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Sample Questions
Q1) Fixed costs per unit decrease as production levels increase.
A)True
B)False
Q2) In a regression output, the "intercept coefficient" represents the fixed cost component of a mixed cost equation.
A)True
B)False
Q3) Under absorption costing, all nonmanufacturing costs are treated as period costs.
A)True
B)False
Q4) Which of the following represents the equation for total variable costs?
A)y = vx + f
B)y = vx
C)y = vx - f
D)y = v
Q5) A scatterplot will help managers identify potential outliers.
A)True
B)False
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Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Matthew's Fish Fry has a monthly target operating income of $8300. Variable expenses are 80% of sales and monthly fixed expenses are $800. What is the monthly margin of safety as a percentage of target sales in dollars?
A)10.88%
B)20.00%
C)91.21%
D)8)21%
Q2) Grosheim Incorporated has fixed expenses of $213,000 per year. Right now, Grosheim Incorporated is selling its products for $250 per unit. Management is contemplating a 40% increase in the selling price for the next year. Variable costs are currently 20% of sales revenue and are not expected to change in dollar amount on a per unit basis next year (the company will pay the same amount for variable costs next 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)586 units
B)852 units
C)234,300 units
D)781 units
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Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) Label each item below as relevant or irrelevant in making a decision.
a)Cost of roof repair made on rental property last year
b)The cost of insurance on a new vehicle when deciding to buy a new vehicle
c)Cost of new equipment under evaluation to replace used equipment
d)Original cost of old equipment that is being evaluated for replacement
e)Cost of previous year's insurance policy on old equipment being evaluated for replacement
f)Accumulated depreciation on old equipment being evaluated for replacement
Q2) In deciding whether to accept a special sales order, any fixed costs that would remain unchanged are considered relevant data.
A)True
B)False
Q3) One cost that is irrelevant in decision making is a sunk cost. A)True
B)False
Q4) Qualitative factors play an important part in make or buy decisions.
A)True
B)False
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Chapter 9: The Master Budget
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Sample Questions
Q1) Cave Hardware's forecasted sales for April, May, June, and July are $190,000, $210,000, $180,000, and $230,000, respectively. Sales are 70% cash and 30% credit with all accounts receivables collected in the month following the sale. Cost of goods sold is 80% of sales and ending inventory is maintained at $35,000 plus 20% of the following month's cost of goods sold. All inventory purchases are paid 22% in the month of purchase and 78% in the following month. What are the budgeted cash payments in June to account for the inventory purchases at Cave Hardware?
A)$377,600
B)$315,200
C)$160,736
D)$154,464
Q2) Hewitt Company expects cash sales for July of $11,000, and a 19% monthly increase during August and September. Credit sales of $14,000 in July should be followed by 28% increases during August and September. What are budgeted cash sales and budgeted credit sales for September respectively?
A)$14,080 and $16,660
B)$9244 and $10,938
C)$15,577 and $22,938
D)$13,090 and $17,920
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Chapter 10: Performance Evalulation
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Sample Questions
Q1) There are two types of responsibility centers.
A)True
B)False
Q2) The ________ of the balanced scorecard focuses on continuing to improve and create value.
A)internal business perspective
B)learning and growth perspective
C)customer perspective
D)financial perspective
Q3) The Pasta Division of Whole Grain Corporation had sales of $5,500,000 and operating income of $1,375,000 last year. The total assets of the Pasta Division were $2,750,000, while current liabilities were $280,000. Whole Grain Corporation's target rate of return is 15%, while its weighted average cost of capital is 7%. The effective tax rate for the company is 20%. What is the Pasta Division's Residual Income (RI)?
A)$962,500
B)$1,100,000
C)$1,182,500
D)$412,500
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Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) Keegan Inc. budgeted 10,500 pounds of direct materials costing $18.00 per pound to make 4900 units of product. The company actually purchased 10,600 pounds of direct materials costing $27.50 per pound to make the 4900 units. What is the direct materials price variance?
A)$100,700 favorable
B)$100,700 unfavorable
C)$99,750 unfavorable
D)$99,750 favorable
Q2) Perfection standards do not allow for poor-quality raw materials, waste in the production process, machine-breakdown, or other inefficiencies.
A)True
B)False
Q3) If the purchasing manager purchased a greater quantity of raw materials than budgeted, but paid the Standard Price (SP), which variance may be affected?
A)Materials price variance
B)Materials quantity variance
C)Both of the variances may be affected
D)Neither of the variances may be affected
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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 areas does not make significant use of time value of money concepts?
A)Capital investment analysis
B)Lending and borrowing
C)Personal finance planning
D)Marketing research
Q2) The accounting rate of return method of analyzing capital budgeting decisions measures the average annual rate of return from using the asset over its entire life.
A)True
B)False
Q3) The profitability index equals the present value of net cash inflows from the investment divided by the cost of the investment.
A)True
B)False
Q4) Post-audits of capital investments compare actual net cash inflows to projected net cash inflows.
A)True
B)False
Page 14
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Cash received from selling merchandise would be considered a
A)cash inflow from investing activities.
B)cash inflow from financing activities.
C)cash inflow from operating activities.
D)cash outflow from operating activities.
Q2) For purposes of the statement of cash flows, "cash" includes cash on hand, cash in the bank and cash equivalents.
A)True
B)False
Q3) Which of the following is reported as an operating activity on a cash flow statement prepared using the indirect method?
A)Cash received from the sale of land
B)Proceeds from the sales of investments
C)Dividends paid to stockholders
D)Increases in Accounts Payable
Q4) Cash equivalents include investments that cannot be readily converted into cash.
A)True
B)False
Q5) Identify and describe the three sections of the statement of cash flows.
Q6) List three ways that owners and investors use the statement of cash flows.
Page 15
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) In a horizontal analysis, the earlier period is the base period.
A)True
B)False
Q2) The formula used in vertical analysis of the income statement is: (each income statement line item/sales revenue)= vertical %.
A)True
B)False
Q3) Sales revenue is used as the base for vertical analysis percentages on the income statement.
A)True
B)False
Q4) Common size statements allow the comparison of two or more companies with different amounts of net sales and net assets.
A)True
B)False
Q5) The formula used in vertical analysis of the balance sheet is: (each balance sheet line item/total assets)= vertical %.
A)True
B)False
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Chapter 15: Sustainability
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Sample Questions
Q1) Another name used to refer to sustainability reporting is
A)Corporate Social Responsibility report.
B)Environmental, Social, and Governance report.
C)Neither of these choices
D)Both A and B are correct
Q2) Traditional performance management systems can be adapted to include measures of environmental costs, savings, and liabilities. The amount of electricity used by an oil refinery is an example of a key performance indicator (KPI)classified under which perspective of the balanced scorecard?
A)Financial perspective
B)Customer perspective
C)Internal business perspective
D)Community perspective
Q3) Sustainability considers not only the needs of the present generation, but also the needs of future generations.
A)True
B)False
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