Introduction to Managerial Accounting Practice Exam
Course Introduction
Introduction to Managerial Accounting explores the principles and techniques used by managers to make informed business decisions. The course covers topics such as cost behavior, budgeting, performance evaluation, and decision-making tools, providing students with an understanding of how accounting information supports planning, controlling, and strategic analysis within organizations. Emphasis is placed on the internal use of accounting data to improve efficiency and drive business success, equipping students with practical skills to analyze financial information and contribute to effective management practices.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 11th Edition by Tracie L. Miller Nobles
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9 Chapters
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Page 2
Chapter 18: Introduction to Managerial Accounting
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210 Verified Questions
210 Flashcards
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Sample Questions
Q1) Which of the following is a period cost for a manufacturing company?
A) office rent
B) wages of factory janitor
C) insurance cost of production equipment
D) raw materials
Answer: A
Q2) How is the management of a company accountable to its employees?
A) The management must provide products that are safe and free of defects.
B) The management must provide a safe workplace.
C) The management must ensure that it earns a net positive return on its investments.
D) The management must ensure the business is environmentally responsible to its community.
Answer: B
Q3) Which of the following is true of service companies?
A) All costs of service companies are product costs.
B) Service companies modify and resell products they buy from manufacturers.
C) Revenues of service companies are only recorded on cash receipt.
D) Service companies carry no inventories of products for sale.
Answer: D
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Chapter 19: Job Order Costing
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Sample Questions
Q1) Q-dot Manufacturing uses a predetermined overhead allocation rate based on direct labor hours.It has provided the following information for the year: \[\begin{array}
{ | l | r | }
\hline \text { Manufacturing overhead costs allocated to production } & \$ 185,000 \\
\hline \text { Actual direct materials cost } & \$ 540,000 \\
\hline \text { Actual direct labor cost } & \$ 2,470,000 \\
\hline \text { Actual direct labor hours } & 9,020 \text { direct labor hours } \\
\hline \text { Estimated machine hours } & 180,000 \text { machine hours } \\ \hline \end{array}\]
Based on the above information,calculate Q-dot's predetermined overhead allocation rate.(Round your answer to two decimal places.)
A) $1.03 per machine hour
B) 7.49% of direct labor cost
C) 34.26% of direct materials cost
D) $20.51 per direct labor hour
Answer: D
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Chapter 20: Process Costing
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Sample Questions
Q1) A production cost report cannot be used for the pricing of products because it depicts only the ways to control product costs.
A)True
B)False
Answer: False
Q2) The Refining Department of Ingber Sugar,Inc.had 55,000 tons of sugar to account for in December.Of the 55,000 tons,45,000 tons were completed and transferred to the Boiling Department,and the remaining 10,000 tons were 60% complete.The materials required for production are added at the beginning of the process.Conversion costs are added equally throughout the refining process.Calculate the total equivalent units of production for conversion costs.
A) 6,000 units
B) 45,000 units
C) 51,000 units
D) 55,000 units
Answer: C
Q3) Provide the formula for (1)To account for and (2)Accounted for.
Answer: (1)To account for = Beginning balance + Amount started or added (2)Accounted for = Completed and transferred out + In process
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Page 5
Chapter 21: Cost-Volume-Profit Analysis
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Sample Questions
Q1) The breakeven point is the point where the sales revenues are equal to the total variable costs plus the total fixed costs.
A)True
B)False
Q2) Iversen Company has provided the following information: \[\begin{array} { | l | r | }
\hline \text { Price per unit } & \$ 42 \\
\hline \text { Variable cost per unit } & 15 \\
\hline \text { Fixed costs per month } & \$ 16,000 \\
\hline
\end{array}\] What are the required sales in units for Iversen to break even?
A) 381 units
B) 1,067 units
C) 281 units
D) 593 units
Q3) Which of the following will lower the breakeven point?
A) a decrease in the sales price per unit
B) an increase in total fixed costs
C) an increase in the variable costs per unit
D) an increase in the sales price per unit
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Page 6
Chapter 22: Master Budgets
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Sample Questions
Q1) A company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet.The balance of Finished Goods Inventory can be taken from the ________.
A) production budget and cost of goods sold budget
B) financial budget
C) cash budget
D) selling and administrative expenses budget
Q2) What is a common method of accessing short-term financing?
Q3) Define sensitivity analysis.Why do managers conduct sensitivity analysis during the budget process?
Q4) The production manager projects direct labor costs.
A)True
B)False
Q5) List the budgets that are affected by the budgeted number of units to be produced.
Q6) The cost accountant works directly with the corporate president to develop the selling and administrative expense budget.
A)True B)False
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Chapter 23: Flexible Budgets and Standard Cost Systems
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Sample Questions
Q1) Companies conduct time-and-motion studies and use benchmarks from other companies when developing standards.
A)True
B)False
Q2) Allen Boating Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Allen uses standard costs to prepare its flexible budget.For the first quarter of the year,direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 1 pound per unit; $11 per pound
Direct labor: 2 hours per unit; $18 per hour
Allen produced 2,000 units during the quarter.At the end of the quarter,an examination of the direct materials records showed that the company used 6,500 pounds of direct materials and actual total materials costs were $99,600. What is the direct materials efficiency variance?
A) $22,000 U
B) $49,500 U
C) $22,000 F
D) $49,500 F
Q3) List the direct labor variances and briefly describe each.
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Page 8
Chapter 24: Cost Allocation and Responsibility Accounting
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Sample Questions
Q1) Flexible budgets use budgeted (or standard)costs at the actual level of activity.
A)True
B)False
Q2) Which of the following four perspectives of the balanced scorecard enables management to answer the question,"How can we continue to improve and create value?"
A) financial
B) customer
C) internal business
D) learning and growth
Q3) If upper management uses a short time frame to calculate ROI and RI,division managers have an incentive to take actions that will lead to an immediate increase in these measures.
A)True
B)False
Q4) Return on investment measures the profitability of an investment center but not the efficiency in using its assets.
A)True
B)False
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Chapter 25: Short-Term Business Decisions
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Sample Questions
Q1) When considering whether to replace the building roof,the total amount paid for previous roof repairs is relevant to the business decision.
A)True
B)False
Q2) Murphy Productions is a price-taker.The company produces generators in a highly competitive market; thus,it uses target pricing.The current market price is $600 per unit.The company has $18,500,000 in average assets,and the desired profit is a return of 8% on assets.Assume all products produced are sold.The company provides the following information:
\[\begin{array} { | l | r | l | }
\hline \text { Sales volume } & 65,000 &\text { units per year } \\
\hline \text { Variable costs } & \$ 500 & \text { per unit } \\
\hline \text { Fixed costs } & \$ 7,500,000 & \text { per year } \\
\hline
\end{array}\] Currently the cost structure is such that the company cannot achieve its profit objective and must cut costs.If variable costs cannot be reduced,how much reduction in fixed costs will be needed to achieve the desired target? Show all computations.
Q3) Define the terms Relevant Cost and Sunk Cost.
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Page 10
Chapter 26: Capital Investment Decisions
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Sample Questions
Q1) Managers generally use payback as the sole method for deciding whether to invest in an asset.
A)True B)False
Q2) The payback method is a screening device and is rarely used as the sole method for deciding whether to invest in an asset.
A)True B)False
Q3) Lora Corporation will receive $10,000 a year at the end of each of the next five years.Using a discount rate of 14%,the present value of the receipts can be stated as ________.
A) PV = $10,000 (Ordinary Annuity FV factor, i = 14%, n = 5)
B) PV = $10,000 (PV factor, i = 14%, n = 5)
C) PV = $10,000 (Ordinary Annuity PV factor, i = 14%, n = 5)
D) PV = $10,000 (FV factor, i = 14%, n = 5)
Q4) If net cash inflows are unequal,how is the payback period (in years)of an investment is calculated?
Q5) Under what circumstances is the investment with the shortest payback the best choice? How should managers use the payback method?
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