Introduction to Management Accounting Final Exam Questions
Course Introduction
Introduction to Management Accounting provides students with an essential understanding of how accounting information is used by managers to plan, control, and make decisions within organizations. The course covers fundamental concepts such as cost classification, cost behavior, budgeting, variance analysis, and performance evaluation. Emphasis is placed on the development of analytical skills to interpret financial data and support strategic decision-making. Through real-world examples and case studies, students learn how management accounting contributes to organizational efficiency and effectiveness, preparing them for careers in business and finance.
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Managerial Accounting 4th Edition by John Wild
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Page 2
Chapter 1: Managerial Accounting Concepts and Principles
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Sample Questions
Q1) Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called:
A)Administrative expenses
B)Nonmanufacturing costs
C)Sunk costs
D)Factory overhead
E)Preproduction costs
Answer: D
Q2) A _________________ cost does not change in proportion to changes in the volume of activity within the relevant range.
Answer: Fixed
Q3) Newly completed units are combined with beginning finished goods inventory to make up total ending goods in process inventory.
A)True
B)False
Answer: False
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Chapter 2: Job Order Costing and Analysis
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Sample Questions
Q1) Overhead is applied as a percent of direct labor costs.Estimated overhead and direct labor costs for the year were $250,000 and $125,000, respectively.During the year, actual overhead was $248,000 and actual direct labor cost was $123,000.The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:
A)A debit to Cost of Goods Sold for $2,000.
B)A debit to Factory Overhead for $2,000.
C)A credit to Finished Goods Inventory for $2,000.
D)A debit to Goods in Process Inventory for $2,000.
E)A credit to Cost of Goods Sold for $2,000.
Answer: A
Q2) A source document that an employee uses to record the number of hours at work and that is used to determine the total labor cost for each pay period is a:
A)Job cost sheet.
B)Hours-of-production sheet.
C)Time ticket.
D)Job order ticket.
E)Clock card.
Answer: E
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Page 4
Chapter 3: Process Costing and Analysis
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Sample Questions
Q1) When a process cost accounting system assigns the cost of materials to a production department, the journal entry debits the Raw Materials Inventory account and credits the Goods in Process Inventory account for that department.
A)True
B)False
Answer: False
Q2) A company's beginning work in process inventory consisted of 20,000 units that were one-fifth complete with respect to direct labor.These beginning units were completed and another 90,000 units were started during the current period.Of those started, 60,000 were finished and the remaining 30,000 were one-third complete at the end of the period.Using FIFO, the equivalent units of production were:
A)60,000
B)74,000
C)76,000
D)86,000
E)90,000
Answer: D
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Chapter 4: Activity-Based Costing and Analysis
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Sample Questions
Q1) A _______________________ overhead rate is a single overhead rate determined by using volume-related measures.
Q2) The departmental overhead rate method allows each department to have its own overhead rate and its own allocation base.
A)True
B)False
Q3) Consider the following activities that take place in a veterinary clinic.
(a)Cleaning cages.
(b)Heating and air conditioning the clinic.
(c)Sending blood work to a lab.
(d)Dispensing medicine.
Which of the following statements is true?
A)Service entities cannot use ABC for overhead allocation.
B)Cleaning cages is a facility level activity.
C)Dispensing medicine is a facility level activity.
D)Heating and air conditioning the clinic is a facility level activity.
E)Sending blood work to a lab is a facility level activity.
Q4) The ______________________ overhead rate method uses a different overhead rate for each production department.
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Chapter 5: Cost Behavior and Cost-Volume-Profit Analysis
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Q1) Wilson Co.is preparing next period's forecasts.Total fixed costs are expected to be $300,000 and the contribution margin ratio is expected to be 30%.The applicable income tax rate is 25%.
a.Calculate the company's break-even point in dollar sales.
b.If sales are $1,800,000 above the break-even point, what will income be pretax income and after-tax income?
Q2) What is operating leverage? How can the degree of operating leverage be used in analyzing changes in sales?
Q3) The Haskins Company manufactures and sells radios.Each radio sells for $23.75 and the variable cost per unit is $16.25.Haskin's total fixed costs are $25,000, and budgeted sales are 8,000 units.What is the contribution margin per unit?
A)$7.50
B)$16.25
C)$23.75
D)$60,000
E)$1.25
Q4) The ratio of the volumes of the various products sold by a company is called the
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Page 7
Chapter 6: Variable Costing and Performance Reporting
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Sample
Questions
Q1) Digby Company manufactured and sold 37,000 units of its product at a price of $93 per unit.Total variable cost per unit is $60, consisting of $58 in variable production cost and $2 in variable selling and administrative cost.Fixed costs of manufacturing are $350,000.
a.Compute the manufacturing margin for the company under variable costing.
b.Compute the contribution margin based on this data.
c.Compute the gross margin under absorption costing.
Q2) When excess capacity exists, managers should accept a special order if the special order price exceeds the ________________________.
Q3) It is not possible to convert reports prepared using variable costing to absorption costing reports.
A)True
B)False
Q4) Absorption costing is also called ________________________ costing.
Q5) Contribution margin ratio is the percent of each sales dollar used to cover variable costs.
A)True
B)False
Q6) What is the formula to compute break-even volume in units?
Page 8
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Chapter 7: Master Budgets and Performance Planning
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Sample Questions
Q1) If each unit of Kyoto's product takes two hours to produce and the labor rate is expected to be $10 per hour, what is the budgeted labor cost for the second quarter?
A)$16,400
B)$17,280
C)$9,840
D)$8,960
E)$17,560
Q2) A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a:
A)Budgeted income statement.
B)Budgeted balance sheet.
C)Master plan.
D)Rolling income statement.
E)Continuous income statement.
Q3) Describe at least five benefits of budgeting.
Q4) Merchandising companies prepare the production budget after preparing the sales budget.
A)True
B)False
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Chapter 8: Flexible Budgets and Standard Costing
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Q1) Standard material, labor, and overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants. A)True B)False
Q2) Within the same budget performance report, it is impossible to have both favorable and unfavorable variances.
A)True B)False
Q3) A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased cheap materials. A)True B)False
Q4) The difference between the flexible budget sales and the fixed budget sales is called the __________________________ variance.
Q5) Explain variance analysis.Describe how variance analysis assists managers.
Q6) Another name for a static budget is a variable budget. A)True B)False
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Chapter 9: Performance Measurement and Responsibility Accounting
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Sample Questions
Q1) The amount by which a department's revenues exceed its direct costs and expenses is the:
A)Net sales.
B)Gross profit.
C)Departmental profit.
D)Contribution margin.
E)Departmental contribution to overhead.
Q2) Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:
A)Direct expenses
B)Indirect expenses
C)Controllable expenses
D)Uncontrollable expenses
E)Fixed expenses
Q3) Grey Division's departmental income is:
A.$163,000
B.$211,000
C.$241,000
D.$52,000
E.$173,000
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Chapter 10: Relevant Costing for Managerial Decisions
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Sample Questions
Q1) To maximize profit when a constrained resource exists, management should produce the sales mix that has the highest contribution margin per unit of scarce resource.
A)True
B)False
Q2) The decision to accept an additional volume of business should be based on a comparison of the revenue from the additional business with the sunk costs of producing that revenue.
A)True
B)False
Q3) Should the company accept the special order?
A.No, because additional production would exceed capacity.
B.No, because incremental costs exceed incremental revenue.
C.Yes, because incremental revenue exceeds incremental costs.
D.Yes, because incremental costs exceed incremental revenues.
E.No, because the incremental revenue is too low.
Q4) What are the four steps of the total cost method of determining a product selling price?
Q5) __________________________ costs are amounts the company would not incur if a segment was eliminated.
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Chapter 11: Capital Budgeting and Investment Analysis
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Sample Questions
Q1) A company is considering purchasing a machine for $75,000.The machine is expected to generate a net after-tax income of $11,250 per year.Depreciation expense would be $7,500.What is the payback period for this machine?
Q2) Annual after-tax net income divided by annual average investment.
A)Net present value
B)Capital budgeting
C)Accounting rate of return
D)Net cash flow
E)Internal rate of return
F)Payback period
Q3) _____________________ is the process of analyzing alternative long-term investments and deciding which assets to acquire or sell.
Q4) Capital budgeting is the process of analyzing alternative long-term investments and deciding which assets to acquire or sell.
A)True
B)False
Q5) All capital investment evaluation methods use the time value of money concept. A)True B)False
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Chapter 12: Reporting and Analyzing Cash Flows
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Sample Questions
Q1) When preparing the operating section of the statement of cash flows using the indirect method, a decrease in accounts receivable is subtracted from net income.
A)True
B)False
Q2) Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.
Q3) A company reported assets of $13,362 million at January 1 and $13,369 million as of December 31 of the current year.The company's net cash flows from operations was $2,204 million.Calculate the cash flow on total assets ratio.
Q4) Activities that involve the production or purchase of merchandise and the sale of goods and services to customers, including expenditures related to administering the business, are classified as:
A)Financing activities
B)Investing activities
C)Operating activities
D)Direct activities
E)Indirect activities
Q5) Explain how to determine cash flows from investing and financing activities.
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Page 14
Chapter 13: Analyzing Financial Statements
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Sample Questions
Q1) What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?
A)25.20
B)23.03
C)20.99
D)24.58
E)22.17
Q2) Comparative financial statements in which each amount is expressed as a percentage of a base amount and in which the base amount is expressed as 100% are called:
A)Comparative statements.
B)Common-size comparative statements.
C)General-purpose financial statements.
D)Base line statements.
E)Index statements.
Q3) A financial statement analysis report helps to reduce uncertainty in business decisions through a rigorous and sound evaluation.
A)True
B)False
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Page 15
Chapter 14: Time Value of Money
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Sample Questions
Q1) How long will it take an investment of $25,000 at 6% compounded annually to accumulate to a total of $35,462.50?
A)4 years
B)5 years
C)6 years
D)2 years
E)10 years
Q2) Explain the concept of the present value of a single amount.
Q3) Big League Sports borrowed $883,212 and must make annual year-end payments of $120,000 each.If the applicable interest rate is 6%, how many years will it take Big League Sports to pay off the loan?
Q4) Sandra has a savings account that is now $50,000.She started with $28,225 and earned interest at 10% compounded annually.It took five years to accumulate the $50,000.
A)True
B)False
Q5) _____________ is a borrower's payment to the owner of an asset for its use.
Q6) A company has $50,000 today to invest in a fund that will earn 7%.How much will the fund contain at the end of eight years?
Page 16
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Chapter 15: Basic Accounting for Transactions
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Sample Questions
Q1) If a company is highly leveraged, this means that it has relatively low risk of not being able to repay its debt.
A)True
B)False
Q2) The debt ratio is used:
A)To measure the amount of equity relative to the expenses.
B)To reflect the risk associated with a company's debts.
C)Only by banks when a business applies for a loan.
D)To determine how much debt a firm should pay off.
E)To determine who a company owes.
Q3) The heading on each financial statement lists the three W's - Who (the name of the organization), What (the name of the statement), and Where (the organization's address)
A)True
B)False
Q4) The journal is known as the book of final entry because financial statements are prepared from it.
A)True
B)False
Q5) Explain debits and credits and their role in the accounting system.
Page 17
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Chapter 16: Accounting for Partnerships
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Q1) If partners devote their time and services to their partnership, their salaries are expenses on the income statement.
A)True
B)False
Q2) In the absence of a partnership agreement, the law says that income of a partnership will be shared equally by the partners.
A)True
B)False
Q3) Accounting procedures for all items are the same for both C corporations and S corporations in all aspects.
A)True
B)False
Q4) What are the ways a partner can withdraw from a partnership? Explain how to account for the withdrawal of a current partner from a partnership.
Q5) What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.
Q6) The life of a partnership is ____________________ in duration.
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