Introduction to Managerial Accounting Pre-Test Questions
Course Introduction
Introduction to Managerial Accounting provides students with a comprehensive overview of the principles and practices used to generate and analyze financial data for internal business decision-making. The course explores fundamental topics such as cost behavior, budgeting, performance evaluation, and decision analysis, focusing on how managers use accounting information to plan, control, and evaluate business operations. Through real-world examples and problem-solving exercises, students will develop the skills necessary to interpret managerial accounting reports, assess operational efficiency, and contribute to strategic planning processes within organizations.
Recommended Textbook
Cornerstones of Managerial Accounting 2nd Canadian Edition by Maryanne Mowen
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Another name for management accounting could be internal accounting.
A)True
B)False
Answer: True
Q2) The controller is the Chief Executive Officer of a company.
A)True
B)False Answer: False
Q3) The managerial activity of monitoring a plan's implementation and taking corrective action as needed is referred to as decision making.
A)True
B)False
Answer: False
Q4) What are the establishing objectives to include social and environmental impact called?
A) triple accounting
B) triple bottom line
C) triple cost analysis
D) triple threat
Answer: B
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Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) Rizzuto Company supplied the following information for the month of January.
\(\begin{array}{lr}
\text { Cost of goods sold percentage } & 62 \% \\
\text { Selling expense percentage } & 6 \% \\
\text { Administrative expense } & 13 \%
\end{array}\) Required: Reconstruct Rizzuto's Income Statement for January assuming that the total sales revenue for the month equalled $500,000.
Answer: Rizzuto Company Income Statement
For the month of January
\(\begin{array}{l}
\text { Sales revenue } & \$ 500,000 \\
\text { Cost of goods sold }(500,000 \times 62 \%) & 310,000 \\
\text { Gross margin }(500,000 \times 38 \%) & 190,000\\
\text { Less: }\\\text { Selling expense }(500,000 \times 6 \%) & 30,000 \\
\text { Administrative expense }(500,000 \times 13 \%) & 65,000 \\
\text { Operating income } & 95,000
\end{array}\)
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Page 4
Chapter 3: Cost Behaviour
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Sample Questions
Q1) What is an example of a discretionary fixed cost?
A) insurance
B) advertising
C) factory rent
D) direct materials
Answer: B
Q2) What is the relationship between total variable costs and output?
A) Total variable costs stay the same as output changes.
B) Total variable costs increase as output decreases.
C) Total variable costs decrease as output increases.
D) Total variable costs equal variable rate × amount of output.
Answer: D
Q3) Why is managerial judgment essential to predicting cost behaviour?
Answer: Managerial judgment is important because estimated statistical results often require refinement.A manager has intimate knowledge of the various costs of his or her organization and may need to revise the statistical results by taking into consideration projected changes in cost structure or technology.
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Chapter 4: Costvolumeprofit Analysis: a Managerial Planning Tool
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Sample Questions
Q1) The following information was extracted from the accounting records of Gumbo Corporation: \(\begin{array}{lr}
\text { Selling price per unit } & \$ 60 \\
\text { Variable cost per unit } & \$ 20 \\
\text { Total fixed costs } & \$ 480,000 \end{array}\)
A. What is Gumbos break-even point in units?
B. How many units must be sold to earn operating income of $80,000?
C. What is Gumbos break-even point in units is the selling price increases by 20% and the variable costs decrease by 20%?
D. Using the information in part C, what sales level in dollars is needed to earn an operating income of $80,000?
Q2) In a normal month,the Whitewater Company generates total sales of $25,000.To do so they incur variable costs of $15,000 and fixed costs of $10,000.
Required: Determine each of the following values: A. Variable cost ratio
B. Contribution margin ratio
C. Monthly break-even dollar sales volume
D. Monthly margin of safety in doll ars
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Chapter 5: Job-Order Costing
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Sample Questions
Q1) Budgeted overhead is $40,000,budgeted direct labour hours are 2,000,actual overhead is $40,400,and direct labour hours are 3,230.Unadjusted cost of goods sold is $140,800.Calculate the following: A. Calculate the overhead variance.
B. What is adjusted cost of goods sold?
Q2) Refer to Baldwin,Inc. A. Prepare the journal entries for requisitioning all materials used during the month.
B. Prepare the journal entries for direct labour for the month. Assume the workers have not been paid yet.
Q3) Refer to the Figure.What is the cost of goods sold for the month?
A) $1,163
B) $1,733
C) $1,760
D) $2,640
Q4) Which of the following events would require two separate journal entries?
A) selling a good
B) transferring a good to finished goods
C) purchasing raw materials
D) hiring an hourly employee
Q5) What are the three steps of overhead application?
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Chapter 6: Process Costing
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Sample Questions
Q1) Which is the best description of the cost of production report?
A) The production report provides information about the manufacturing costs incurred by the department.
B) The production report provides information about the physical units processed by the department.
C) The production report summarizes the manufacturing activity that takes place in a process department for a given period of time.
D) The production report includes the costs related to a specific job.
Q2) For which process costing method is simplicity the main advantage?
A) LIFO
B) FIFO
C) weighted average
D) exact cost method
Q3) Explain the role of the departmental production report in process costing,and name the five steps for completing the departmental production report.
Q4) Costing system used by a chocolate bar manufacturer
A)Process costing
B)Job order costing
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Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) A production dictionary lists the activities in an organization along with some critical activity attributes.
A)True
B)False
Q2) Product diversity means that products consume overhead activities in systematically similar proportions.
A)True
B)False
Q3) Which of the following is NOT a category of environmental cost?
A) prevention costs
B) detection costs
C) total quality costs
D) internal failure costs
Q4) What is the term for a list of activities accompanied by information that describes each activity?
A) an activity manifesto
B) an activity journal
C) an activity dictionary
D) an activity note
Q5) What is the activity based costing hierarchy? Give an example for each.
Page 9
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Chapter 8: Absorption and Variable Costing,and Inventory Management
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Sample Questions
Q1) Economic order quantity
A)The costs of not having a product available when demanded by a customer
B)The costs of carrying inventory
C)Approach that maintains goods should be pulled through the system by present demand
D)The number of units in the order quantity that minimizes the total cost
E)The costs of placing and receiving an order
Q2) Stockout costs
A)The costs of not having a product available when demanded by a customer
B)The costs of carrying inventory
C)Approach that maintains goods should be pulled through the system by present demand
D)The number of units in the order quantity that minimizes the total cost
E)The costs of placing and receiving an order
Q3) Refer to the Figure.What is the net income for Westwood using the variable costing method?
A) $412,000
B) $480,000
C) $600,000
D) $1,200,000
Page 10
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Chapter 9: Budgeting, production, cash, and Master Budget
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Sample Questions
Q1) Rival Company purchases merchandise on account.In general,Rival pays 50% in the month of purchase and 50% in the following month.All payments in the month of purchase qualify for a 2% cash discount.First quarter budgeted purchases are: \(\begin{array}{lr}
\text { January } & \$ 90,000 \\
\text { February } & 80,000 \\
\text { March } & 96,000
\end{array}\) A. What are the total cash disbursements expected in February?
B. What are the total cash disbursements expected in March?
C. Suppose that there is NO cash discount for purchases made in the month of purchase.
Now what are the total cash disbursements expected in February? In March?
Q2) What are the advantages of budgeting?
Q3) Which of the following is the alignment of managerial and organizational goals?
A) goal congruence
B) goal participation
C) goal pseudoparticipation
D) goal feedback
Q4) Does a not-for-profit agency need to budget? Why or why not?
Q5) Describe some problems with participative budgeting.
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) These reflect the amount that should be paid for the quantity of input to be used.
A)Quantity standards
B)Ideal standards
C)Price standards
D)Standard cost sheet
E)Upper control limit
F)Currently attainable standards
G)Kaizen standards
Q2) Which formula is used to calculate the materials usage variance?
A) (standard price × actual quantity) (standard price × standard quantity)
B) (standard price × standard quality) (standard price × actual quantity)
C) (actual price × actual quantity) (standard price × actual quantity)
D) (actual price × standard quantity) (actual quantity × standard price)
Q3) The actual quantity of input at the actual price less the actual quantity of input at the standard price is the price variance.
A)True
B)False
Q4) How are standards developed?
Q5) Explain the kaizen approach to costing.
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) Refer to the Figure.What is the variable overhead efficiency variance for Hyphen?
A) $2,000 (U)
B) $4,000 (U)
C) $8,000 (U)
D) $20,000 (U)
Q2) Which of the following is the total fixed overhead variance?
A) both AFOH ApFOH and the sum of the spending and volume variances
B) AFOH - the sum of the spending and volume variances
C) ApFOH - the sum of the spending and efficiency variance
D) both AFOH ApFOH and the sum of the spending and efficiency variances
Q3) Which relationship represents fixed overhead budgeted at the beginning of the year?
A) BFOH = SFOR × AH
B) BFOH = SFOR × SH for actual production
C) BFOH = SFOR × SH for planned production
D) BFOH = SFOR / SH for actual production
Q4) Practical capacity is always used to calculate fixed overhead rates.
A)True
B)False
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) What is Strategy?
Q2) In terms of operating income for the company as a whole,the transfer price set by the buying and selling divisions nets out.
A)True
B)False
Q3) Suppose the selling division is operating at less than full capacity.Where would the floor of the bargaining range most probably be set at?
A) the market price
B) the full manufacturing cost
C) the average price of all products sold by the selling division
D) the variable cost of manufacturing
Q4) Refer to the Figure.What is the residual income for Gamma Division with the additional project?
A) $4,200
B) $6,000
C) $6,600
D) $27,600
Q5) How is EVA (economic value added)different from standard residual income calculations?
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) Refer to the Figure.What is the contribution margin per hour of machine time for Test B?
A) $10
B) $20
C) $40
D) $100
Q2) A choice between internal and external production is a make-or-buy decision. A)True B)False
Q3) Home Hardware sets prices at cost plus 90% of cost.The cost of a cordless drill kit is $45.What price is charged by Home Hardware for the cordless drill kit?
A) $27.50
B) $34.00
C) $42.00
D) $85.50
Q4) In making a short-run decision,all alternatives need to be considered,not only feasible ones.
A)True B)False
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) In general,it is best if postaudits are done by company management,since they understand the actual operating conditions.
A)True
B)False
Q2) One way to use the payback period is to set a maximum payback period for all projects and to reject any project that exceeds this level.
A)True
B)False
Q3) Name two nondiscounting capital investment models.What is meant by "nondiscounting"?
Q4) For independent projects,net present value analysis and internal rate of return analysis yield completely different decisions.
A)True
B)False
Q5) Which of the following provides an absolute dollar measure?
A) the internal rate of return
B) the net present value
C) the payback period
D) the accounting rate of return
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