Introduction to Managerial Accounting Exam Questions
Course Introduction
Introduction to Managerial Accounting provides students with the foundational concepts and techniques used by managers to make informed business decisions. The course explores topics such as cost behavior, budgeting, performance evaluation, and internal financial analysis, focusing on how accounting information is utilized in planning, controlling, and decision-making within organizations. Through case studies, real-world examples, and practical exercises, students learn how to interpret accounting data and develop skills essential for effective management and strategic planning.
Recommended Textbook
Managerial Accounting 13th Edition by Carl Warren
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2
Chapter 1: Managerial Accounting Concepts and Principles
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Sample Questions
Q1) All of the following employees hold line positions in Facebook except
A)vice president of production
B)vice president of finance
C)manager of the web design
D)vice president of sales
Answer: B
Q2) Which of the following statements is false?
A)There is no overlap between financial and managerial accounting.
B)Managerial accounting sometimes relies on past information.
C)Managerial accounting does not need to conform to GAAP.
D)Financial accounting must conform to GAAP.
Answer: A
Q3) Accountant salaries
A)Product
B)Period
Answer: B
Q4) Electricity costs to run the factory
A)Product
B)Period
Answer: A
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Chapter 2: Job Order Costing
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Sample Questions
Q1) typically used by companies that make custom products
A)job order cost system
B)process cost system
C)activity-based costing
D)under applied overhead
E)over applied overhead
F)finished goods ledger
G)materials ledger
Answer: A
Q2) The Cavy Company estimates that the factory overhead for the following year will be $1,250,000.The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours.The machine hours for the month of April for all of the jobs was 4,780.If the actual factory overhead totaled $141,800, determine the over- or under applied amount for the month.
A)$7,575 under applied
B)$35,220 under applied
C)$7,575 over applied
D)$35,220 over applied
Answer: C
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4
Chapter 3: Process Cost Systems
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Sample Questions
Q1) The cost of energy consumed in producing good units in the Bottling Department of Mountain Springs Water Company was $36,850 and $39,060 for June and July, respectively.The number of equivalent units produced in June and July was 55,000 and 62,000 liters, respectively.Evaluate the change in the cost of energy between the two months.
Answer: Energy costs per liter, June: $36,850 = $0.67
55,000 liters
Energy costs per liter, July: $39,060 = $0.63
62,000 liters
The cost of energy has decreased by $0.04 $0.67 - $0.63.
Q2) Flour mill
A)Job order costing
B)Process costing
Answer: B
Q3) Both job order and process cost accounting use equivalent units of production to determine costs.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Cost Behavior and Cost-Volume-Profit Analysis
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Sample Questions
Q1) Which of the following conditions would cause the break-even point to increase?
A)total fixed costs decrease
B)unit selling price increases
C)unit variable cost decreases
D)unit variable cost increases
Q2) For the coming year, River Company estimates fixed costs at $109,000, the unit variable cost at $21, and the unit selling price at $85.Determine a the break-even point in units of sales, b the unit sales required to realize operating income of $150,000 and c the probable operating income if sales total $500,000.
Round units to the nearest whole number and percentage to one decimal place.
Q3) A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost.
A)True
B)False
Q4) Cost behavior refers to the manner in which
A)a cost changes as the related activity changes
B)a cost is allocated to products
C)a cost is used in setting selling prices
D)a cost is estimated
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Chapter 5: Variable Costing for Management Analysis
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Sample Questions
Q1) Under variable costing, which of the following costs would be included in finished goods inventory?
A)salary of salesperson
B)salary of vice-president of finance
C)wages of carpenters in a furniture factory
D)straight-line depreciation on factory equipment
Q2) If variable cost of goods sold totaled $90,000 for the year 18,000 units at $5.00 each and the planned variable cost of goods sold totaled $86,400 16,000 units at $5.40 each, the effect of the quantity factor on the change in contribution margin is:
A)$10,800 decrease
B)$10,800 increase
C)$10,000 increase
D)$10,000 decrease
Q3) The contribution margin ratio is computed as:
A)sales divided by contribution margin
B)contribution margin divided by sales
C)contribution margin divided by cost of sales
D)contribution margin divided by variable cost of sales
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Chapter 6: Budgeting
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Sample Questions
Q1) When management seeks to achieve personal departmental objectives that may work to the detriment of the entire company, the manager is experiencing
A)budgetary slack
B)padding
C)goal conflict
D)cushions
Q2) At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct materials of $165,000, and fixed factory overhead of $15,000 for 9,000 hours of production.The department actually completed 10,000 hours of production.What is the appropriate total budget for the department, assuming it uses flexible budgeting?
A)$416,000
B)$370,556
C)$368,889
D)$335,000
Q3) The budgeted volume of production is normally computed as the sum of 1 the expected sales volume and 2 the desired ending inventory.
A)True
B)False
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Page 8
Chapter 7: Performance Evaluation Using Variances From
Standard Costs
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Sample Questions
Q1) Changes in technology, machinery, or production methods may make past cost data irrelevant when setting standards.
A)True
B)False
Q2) Variances from standard costs are reported to
A)suppliers
B)stockholders
C)management
D)creditors
Q3) The direct labor time variance measures the efficiency of the direct labor force.
A)True
B)False
Q4) The labor rate variance is
A)$4,920 unfavorable
B)$4,920 favorable
C)$4,560 favorable
D)$4,560 unfavorable
Q5) Compute the direct labor rate and time variances for Taylor Company.
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Q6) Compute the direct materials price and quantity variances for Taylor Company.
Chapter 8: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) Two divisions of Oregano Company Divisions TX and OY have the same profit margins.Division TX's investment turnover is larger than that of Division OY 1.2 to 1.0.Income from operations for Division TX is $55,000, and income from operations for Division OY is $43,000.Division TX has a higher return on investment than Division OY by A)using income from operations as a performance measure
B)comparing the profit margins
C)applying a negotiated price measure
D)using its assets more efficiently in generating sales
Q2) Which of the following is a measure of a manager's performance working in a profit center?
A)a balance sheet
B)the rate of return and residual income measures
C)a budget performance report
D)the divisional income statements
Q3) What is Clydesdale Company's residual income?
A)$252,000
B)$900,000
C)$1,400,000
D)$760,000
Page 10
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Chapter 9: Differential Analysis, Product Pricing, and
Activity-Based Costing
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Sample Questions
Q1) The total cost concept includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price.
A)True
B)False
Q2) A commercial oven with a book value of $67,000 has an estimated remaining 5 year life.A proposal is offered to sell the oven for $8,500 and replace it with a new oven costing $110,000.The new machine has a 5-year life with no residual value.The new machine would reduce annual maintenance costs by $23,000.Provide a differential analysis on the proposal to replace the commercial oven.
Q3) Differential revenue is the amount of income that would result from the best available alternative proposed use of cash.
A)True
B)False
Q4) Determine the markup percentage on product cost.
A)80%
B)46.5%
C)70%
D)110%
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Chapter 10: Capital Investment Analysis
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Sample Questions
Q1) The cash payback period for this investment is
A)4 years
B)5 years
C)20 years
D)3 years
Q2) Determine the average rate of return for a project that is estimated to yield total income of $250,000 over 4 years, cost $480,000, and has a $20,000 residual value.
Q3) The length of time it will take to recover through cash inflows the dollars of a capital outlay
A)Capital rationing
B)Annuity
C)Capital investment analysis
D)Internal rate of return method
E)Payback period
F)Accounting rate of return
Q4) A 6-year project is estimated to cost $350,000 and have no residual value.If the straight-line depreciation method is used and the average rate of return is 12%, determine the estimated annual net income.
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Chapter 11: Cost Allocation and Activity-Based Costing
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Sample Questions
Q1) Everest Co.uses a plantwide factory overhead rate based on direct labor hours.Overhead costs would be overcharged to which of the following departments?
A)A labor-intensive department
B)A capital-intensive department
C)A materials-intensive department
D)All of the above
Q2) Shanghai Company sells glasses, fine china, and everyday dinnerware.They use activity-based costing to determine the cost of the shipping and handling activity.The shipping and handling activity has an activity rate of $14 per pound.A box of glasses weighs 2 lbs., the box of china weighs 4 lbs., and a box of everyday dinnerware weighs 6 lbs.a Determine the shipping and handling activity for each product and b determine the total shipping and receiving costs for the china if 3,500 boxes are shipped.
Q3) Use of a plantwide factory overhead rate does not distort product costs when products require different ratios of allocation-base usage in each production department.
A)True
B)False
Q4) Calculate the cost of services for a highlight.
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Page 13
Chapter 12: Lean Principles, Lean Accounting, and Activity Analysis
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Sample Questions
Q1) Financial accounting information is used more often for long-term operating decisions and nonfinancial information is used more often for day-to-day decisions.
A)True
B)False
Q2) Lean manufacturing focuses on reducing time, cost, and poor quality in processes.
A)True
B)False
Q3) The budgeted cell conversion cost rate includes which of the following?
A)only factory overhead
B)only direct labor and direct materials
C)direct labor, direct materials, and factory overhead
D)only direct labor and factory overhead
Q4) Which of the following is not an external failure cost?
A)warranty work
B)processing returned merchandise
C)rework
D)correcting invoice errors
Q5) From the above schedule, calculate the internal failure costs.
Page 14
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Which of the following is a noncash investing and financing activity?
A)payment of a cash dividend
B)payment of a six-month note payable
C)purchase of merchandise inventory on account
D)issuance of common stock to acquire land
Q2) Indicate the section operating activities, investing activities, financing activities, or none in which each of the following would be reported on the statement of cash flows prepared by the indirect method:
a gain on sale of fixed assets
b net income
c retirement of long-term debt
d sale of capital stock
e distribution of stock dividends
f payment of cash dividends
g purchase of fixed assets
h sale of fixed assets
i receipt of interest revenue
j Payment of interest expense
Q3) The cash flows from operating activities are reported by the direct method on the statement of cash
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Based on the above data, what is the quick ratio, rounded to one decimal point?
A)1.7
B)2.9
C)1.1
D)1.0
Q2) In computing the rate earned on total assets, interest expense is subtracted from net income before dividing by average total assets.
A)True
B)False
Q3) In a company's annual report, the section called management discussion and analysis provides critical information in interpreting the financial statements and assessing the future of the company.
A)True
B)False
Q4) The number of days' sales in inventory is one means of expressing the relationship between the cost of goods sold and inventory.
A)True
B)False
Q5) The following data are available for Martin
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