Introductory Managerial Accounting Exam Preparation Guide
Course Introduction
Introductory Managerial Accounting provides students with a foundational understanding of the principles and practices used by managers to make informed business decisions. The course covers key topics such as cost behaviors, budgeting, performance evaluation, and internal reporting systems. Students learn how to analyze and interpret accounting information to support planning, controlling, and decision-making processes in various organizational settings. By integrating real-world examples, the course emphasizes the strategic role of managerial accounting in achieving business objectives and enhancing operational efficiency.
Recommended Textbook Horngren's Accounting The Managerial Chapters 11th Edition by Tracie L. Miller Nobles
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9 Chapters
1673 Verified Questions
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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 statements is true of financial accounting?
A) It provides information to investors needed for their investment decisions.
B) It provides forward-looking information needed for managing and delegating operations.
C) It focuses on detailed reports for parts of the company rather than the whole company.
D) It focuses on planning and controlling day-to-day operations.
Answer: A
Q2) Describe the flow of product costs for a manufacturer.
Answer: The flow of product costs for a manufacturer begins with the purchase of raw materials.The manufacturer then uses direct labor and manufacturing overhead to convert these materials into Work-in-Process Inventory.When the manufacturing process is complete,the costs are transferred to Finished Goods Inventory.The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement.
Q3) Unit cost per service is calculated by dividing total costs by the total number of services provided.
A)True
B)False
Answer: True
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Chapter 19: Job Order Costing
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Sample Questions
Q1) The accounts of Delphinia Dreams,Inc.showed the following balances at the beginning of October: \[\begin{array} { | l | r | }
\hline \text { Account } & \text { Debit } \\
\hline \text { Raw Materials Inventory } & \$ 31,000 \\
\hline \text { Work-in-Process Inventory } & 42,000 \\
\hline \text { Finished Goods Inventory } & 52,000 \\
\hline \text { Manufacturing Overhead } & 20,000 \\ \hline \end{array}\]
During the month,direct materials amounting to $22,000 and indirect materials amounting to $5,000 were issued to production.What is the ending balance in the Work-in-Process Inventory account following these two transactions?
A) $42,000
B) $64,000
C) $10,000
D) $25,000
Answer: B
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Chapter 20: Process Costing
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Sample Questions
Q1) Travel Trails,Inc.manufactures railway coaches and uses the FIFO method of process costing to record costs.The Work-in-Process Inventory of the Heating Department on October 1 was 73% complete for materials and 24% complete for conversion costs.On October 31,its ending Work-in-Process Inventory was 84% complete for materials and 45% complete for conversion costs.This means that for the ending inventory,________% of the materials and ________% of the conversion costs were added during October.
A) 73; 45
B) 27; 24
C) 84; 45
D) 45; 84
Answer: C
Q2) Dakota,Inc.purchased raw materials worth $4,000 on account.The journal entry to record the purchase of raw materials on account is ________.
A) debit Cash, $4,000; credit Raw Materials Inventory, $4,000
B) debit Accounts Payable, $4,000; credit Raw Materials Inventory, $4,000
C) debit Raw Materials Inventory, $4,000; credit Accounts Payable, $4,000
D) debit Raw Materials Inventory, $4,000; credit Cash, $4,000
Answer: C
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Page 5
Chapter 21: Cost-Volume-Profit Analysis
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Sample Questions
Q1) When the total fixed costs decreases,the breakeven point ________.
A) increases
B) decreases
C) remains the same
D) increases proportionately
Q2) Fontana Pizza Company sells pizzas in two different sizes-medium and large.The number of medium pizzas sold is twice the number of large pizzas sold.The contribution margin of a medium pizza is $12 and the contribution margin of a large pizza is $18.The weighted average contribution margin is $15.
A)True
B)False
Q3) Costs that have both variable and fixed components are called ________.
A) fixed costs
B) variable costs
C) mixed costs
D) contribution costs
Q4) Contribution margin is calculated by deducting the total cost of goods sold from sales revenue.
A)True
B)False
Page 6
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Chapter 22: Master Budgets
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Sample Questions
Q1) The budget process is a loop that consists of ________.
A) planning, acting, and controlling
B) developing strategies, planning, acting, and controlling
C) developing strategies, planning, and acting
D) developing strategies, acting, and controlling
Q2) In preparing the master budget,the manufacturing overhead is the last period cost to consider.
A)True
B)False
Q3) While calculating the budgeted cash payments for selling and administrative expenses,noncash expenses like depreciation are also considered.
A)True
B)False
Q4) Which of the following describes the cash budget?
A) It aids in planning to ensure the company has adequate inventory and cash on hand.
B) It captures the variable and fixed expenses of the business.
C) It depicts the breakdown of sales based on terms of collection.
D) It helps in planning to ensure the business has adequate cash.
Q5) What is the final step in the master budget process?
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Chapter 23: Flexible Budgets and Standard Cost Systems
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Sample Questions
Q1) Because it is a volume variance,the fixed overhead volume variance explains why fixed overhead is underallocated or overallocated.
A)True
B)False
Q2) The total variable overhead variance is obtained by adding variable overhead cost variance and ________.
A) total manufacturing overhead variance
B) total direct labor variance
C) fixed overhead cost variance
D) variable overhead efficiency variance
Q3) Unfavorable variances are subtracted from each other to arrive at a favorable variance.
A)True
B)False
Q4) The sales volume variance is the difference between the expected results in the flexible budget for the actual units sold and the static budget.
A)True
B)False
Q5) List the direct materials variances,and briefly describe each.
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Chapter 24: Cost Allocation and Responsibility Accounting
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Sample Questions
Q1) When operating at capacity,a market-based transfer price should be used.
A)True
B)False
Q2) Direct material costs and direct labor costs cannot be easily traced to products.Therefore,they are allocated to products.
A)True
B)False
Q3) Summarize the four steps in an activity-based costing system: \[\begin{array} { | l | l | }
\hline \text { Step 1 } &\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \\
\hline \text { Step 2 } & \\
\hline \text { Step 3 } & \\
\hline \text { Step 4 } & \\
\hline
\end{array}\]
Q4) Why is using multiple predetermined overhead allocation rates more accurate than using a single plantwide allocation rate?
Q5) List two objectives in setting transfer prices.
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Chapter 25: Short-Term Business Decisions
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Sample Questions
Q1) Sand Corporation manufactures two styles of lamps-a Bedford Lamp and a Lowell Lamp.The following per unit data are available:
\[\begin{array} { | l | r | r | }
\hline & \text { Bedford Lamp } & \text { Lowell Lamp } \\
\hline \text { Sales price } & \$ 30 & \$ 50 \\
\hline \text { Variable costs } & \$ 20 & \$ 25 \\
\hline \text { Machine hours required for one lamp } & 1 & 5 \\
\hline
\end{array}\] Total fixed costs are $42,000,and the machine hour capacity is 34,000 hours per year.The Lowell Lamp has the highest contribution margin per unit and also has the highest contribution margin per machine hour,so the company should focus sales on the Lowell Lamp.
A)True
B)False
Q2) Explain the difference between price-takers and price-setters.
Q3) Special pricing orders increase operating income if the special price exceeds the differential costs of filling the special order.
A)True
B)False
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Page 10
Chapter 26: Capital Investment Decisions
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Sample Questions
Q1) Compound interest means that interest is calculated only on the principal amount.
A)True
B)False
Q2) Most capital budgeting methods focus on accrual-based income.
A)True
B)False
Q3) Discounted cash flow methods incorporate compound interest by assuming that companies will reinvest future cash flows when they are received.
A)True
B)False
Q4) All else being equal,investments with longer payback periods are preferable.
A)True
B)False
Q5) When using the accounting rate of return,what is the basis for making the decision to make the investment?
Q6) What are the strengths of the net present value capital budgeting method?
Q7) Under what circumstances is the investment with the shortest payback the best choice? How should managers use the payback method?
Page 11
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