Introduction to Managerial Accounting Review Questions
Course Introduction
Introduction to Managerial Accounting provides students with a comprehensive overview of the principles and practices that managers use to make informed business decisions. The course covers key topics such as cost classification, behavior, and allocation; budgeting and variance analysis; performance measurement; and the use of accounting information in planning, controlling, and evaluating operations. Emphasis is placed on the use of accounting data for internal decision-making, supporting processes such as pricing, production planning, and strategic management. Through case studies and practical exercises, students develop the analytical skills necessary to interpret financial information and contribute to effective organizational management.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 10th Edition by Tracie L. Miller Nobles
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9 Chapters
1348 Verified Questions
1348 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) In a manufacturing firm, which of the following is an example of a period cost?
A) Advertising expense
B) Depreciation on factory equipment
C) Indirect materials
D) Property taxes for the factory
Answer: A
Q2) Which of the following represents the combined sum of direct materials and direct labor?
A) Conversion costs
B) Period costs
C) Prime costs
D) Fixed costs
Answer: C
Q3) The IMA Standards of Ethical Practice include confidentiality, competence, credibility, and integrity.
A)True
B)False
Answer: True
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Chapter 2: Job Order Costing
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Which of the following correctly describes the term cost driver?
A) the inflation rate that causes costs to rise
B) the average inventory costs incurred at any point of time
C) the primary factor that causes a cost to be incurred
D) the total material, labor, and overhead cost of a completed job
Answer: C
Q2) During 2014, a company incurred $500,000 of manufacturing overhead costs and allocated $460,000 of manufacturing overhead costs. At year-end, the adjustment entry needed to clear the overhead balance to zero will include a debit to Cost of Goods Sold.
A)True
B)False
Answer: True
Q3) Manufacturing overhead costs allocated to a job amounted to $492,000. The actual manufacturing costs incurred during the year was $500,000. Overhead costs have been underallocated.
A)True
B)False
Answer: True
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4
Chapter 3: Process Costing
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) Under process costing, the costs incurred by each department are recorded in:
A) a job cost sheet.
B) the Finished Goods Inventory account.
C) the Cost of Goods Sold account.
D) a production cost report.
Answer: D
Q2) Under process costing, the total production costs incurred must be split between the units that have been completed in that process and transferred to the next process and the:
A) Finished Goods Inventory if it is the first process.
B) units not completed and remaining in Work-in-Process Inventory for that department.
C) Cost of Goods Sold when the units are sold.
D) Work-in-Process Inventory of the previous department when there are no sales. Answer: B
Q3) In a process costing system, each process or department has its own Work-in-Process Inventory account.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Cost-Volume-Profit Analysis
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) Which of the following costs remains the same irrespective of the changes in production?
A) Total mixed costs
B) Total operating costs
C) Total variable costs
D) Total fixed costs
Q2) The breakeven point represents the sales volume at which the company's net income is zero.
A)True
B)False
Q3) Which of the following costs is considered a period cost under variable costing?
A) direct labor
B) direct materials
C) fixed manufacturing overhead
D) variable manufacturing overhead
Q4) Contribution margin ratio is the ratio of contribution margin to:
A) net sales revenue.
B) cost of goods sold.
C) total variable costs.
D) total fixed costs.
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Chapter 5: Master Budgets
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) Which of the following statements is true of the operating budget?
A) It is a part of the financial budget.
B) It includes the capital expenditures budget.
C) It includes the sales revenue budget.
D) Its final component is the cash budget.
Q2) In the cash flow statement, all cash receipts and payments are categorized into: Operating activities, Financing activities and:
A) Investing activities.
B) Merchandising activities.
C) Budgeting activities.
D) Controlling activities.
Q3) Which of the following statements is true of the budgeting process?
A) It includes qualitative targets of the company, not just quantitative.
B) It is a continuous process.
C) It shows the actual performance of the business.
D) Its success is not dependent on human behavior.
Q4) The output of a cash budget is input for an operating budget.
A)True
B)False
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Chapter 6: Flexible Budgets and Standard Cost Systems
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) An unfavorable variance for an expense means more expense has been incurred than planned.
A)True
B)False
Q2) Favorable and unfavorable variances are subtracted from each other to arrive at a net favorable or unfavorable variance.
A)True B)False
Q3) The total fixed overhead variance is obtained by summing up variable overhead cost variance and fixed overhead volume variance.
A)True
B)False
Q4) Which of the following is one of the reasons why companies use standard costs?
A) to enhance customer loyalty
B) to ensure the accuracy of the financial records
C) to share best practices with other companies
D) to make budgeting easier and more efficient
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8
Chapter 7: Cost Allocation and Responsibility Accounting
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) In a balanced scorecard, which of the following is a key performance indicator of the internal business perspective?
A) hours of employee training
B) number of warranty claims
C) percentage of market share
D) return on investment
Q2) The transfer price is the transaction amount of one unit of goods when the transaction occurs between the company and its customers.
A)True
B)False
Q3) Companies calculate predetermined overhead rate at the beginning of an accounting period using the actual values of overhead costs.
A)True
B)False
Q4) RI (Residual Income) compares the division's actual operating income with the minimum operating income expected given the size of the division's average total assets.
A)True
B)False
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Chapter 8: Short-Term Business Decisions
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) Which of the following pieces of information would be irrelevant in deciding to upgrade a company's heating and air conditioning system?
A) The energy efficiency of the old equipment versus the energy efficiency of the new equipment
B) The safety of the new equipment compared to the old equipment
C) The purchase price of the old equipment compared to the purchase price of the new equipment
D) The productivity of the old equipment compared to that of the new equipment
Q2) Verdant Avionics makes aircraft instrumentation. Their basic navigation radio requires $120 in variable costs and requires $3,000 per month in fixed costs. If they process the radio further to enhance its functionality, it will require an additional $40 per unit of variable costs, and $300 per month in fixed costs. The marketing manager believes they would be able to boost their price of the radio from $260 to $280. In making this decision, the amount of additional fixed costs per month is a relevant piece of information.
A)True
B)False
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Page 10
Chapter 9: Capital Investment Decisions
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) When comparing several investments with the same initial outlay, the decision should be made on the basis of:
A) highest total cash inflows.
B) longest payback period.
C) highest NPV.
D) highest ARR.
Q2) Net cash inflows from a capital investment arise from an increase in revenues, a decrease in expenses, or both.
A)True
B)False
Q3) Under conditions of limited resources, when a company is comparing several investments with different amounts of initial outlay, the decision should be made on the basis of:
A) highest total cash inflows.
B) shortest payback period.
C) highest profitability index.
D) highest NPV.
Q4) The payback method uses discounted cash flows to make investment decisions. A)True B)False
Page 11
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