Management Accounting and Control
Chapter Exam Questions
Course Introduction
Management Accounting and Control explores the principles, tools, and techniques used in identifying, measuring, analyzing, and interpreting financial information for internal decision-making. This course examines how management accounting supports business planning, performance evaluation, and operational control, covering topics such as budgeting, standard costing, variance analysis, responsibility accounting, and balanced scorecards. Students will learn how to utilize accounting information to guide strategic and operational decisions, optimize resource allocation, and achieve organizational objectives, while also considering ethical issues and the impact of technology on management control systems.
Recommended Textbook Cornerstones of Managerial Accounting 3rd Canadian Edition by Maryanne Mowen
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Chapter 1: Introduction to Managerial Accounting
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Q1) CMA,CGA and CA organizations have recently have been brought together under a new professional body called CPA Canada.
A)True
B)False
Answer: True
Q2) Positions that have direct responsibility for the basic objectives of an organization are referred to as staff positions.
A)True
B)False
Answer: False
Q3) What is the primary objective of management accounting?
A)to provide stockholders and potential investors with useful information for decision making
B)to provide banks and other creditors with information useful in making credit decisions
C)to provide management with information useful for planning and control of operations
D)to provide the Canada Revenue Agency with information about taxable income
Answer: C
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Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) Cost is a dollar measure of the resources used to achieve a given benefit.
A)True
B)False
Answer: True
Q2) A benefit given up when one alternative is chosen over another
A)Period cost
B)Direct cost
C)Opportunity cost
D)Variable cost
E)Indirect cost
F)Fixed cost
G)Product cost
Answer: C
Q3) What is the behaviour pattern of a variable cost?
A)It increases in total as output increases.
B)It remains constant in total at all levels of output.
C)It increases per unit as output increases.
D)It decreases per unit as output increases.
Answer: A
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Page 4
Chapter 3: Cost Behaviour
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Sample Questions
Q1) Refer to the Figure.What is the fixed cost of electricity when using the high-low method?
A)$6,400
B)$10,860
C)$13,740
D)$24,000
Answer: C
Q2) Internet advertising
A)Discretionary
B)Committed
Answer: A
Q3) Total cost = fixed cost + variable cost
A)Variable
B)Fixed
C)Mixed
D)Step
Answer: C
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Page 5
Chapter 4: Costvolumeprofit Analysis: a Managerial Planning Tool
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Sample Questions
Q1) What formula is used to calculate contribution margin ratio?
A)fixed costs/contribution margin per unit
B)1 + variable cost ratio
C)contribution margin per unit/variable costs per unit
D)unit contribution margin/total revenues
Q2) Break-even point
A)horizontal-axis of CVP graph
B)vertical-axis of CVP graph
C)slope of revenue line
D)slope of cost line
E)point where the total revenue line and the total cost line intersect
Q3) TriTech Company sells a product for $12.Variable costs are $6 per unit,and total fixed costs are $6,000.How many units must Melody sell to earn an operating profit of $240? A)62
B)1,040
C)1,260
D)1,480
Q4) How can a multi-product firm determine its break-even point?
Q5) What are the assumptions underlying cost-volume-profit analysis?
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Chapter 5: Job-Order Costing
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Sample Questions
Q1) Refer to the Figure.Suppose the beginning balance of finished goods was $0.What is the ending balance of finished goods?
A)$2,785.00
B)$3,457.00
C)$5,531.20
D)$8,206.40
Q2) At the beginning of the year,Healthworks Company estimated the following for the coming year: Healthworks used normal costing and applies overhead on the basis of direct labour hours.For the month of May,direct labour hours equalled 10,300 and actual overhead equalled $56,750. What is the overhead applied to production in May? \(\begin{array}{lr}
\text { Overhead } & \$ 420,000 \\ \text { Direct labour hours } & 70,000 \end{array}\)
A)$30,000
B)$46,750
C)$51,600
D)$61,800
Q3) What are the three steps of overhead application?
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Chapter 6: Process Costing
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Q1) Refer to the Figure.What would be LuLu's cost of goods transferred to the moulding department during May?
A)$210,000
B)$261,050
C)$281,500
D)$294,000
Q2) Costing system used by a cruise ship builder
A)Process costing
B)Job order costing
Q3) Units must pass through one process before they can be worked on in later processes.
A)Parallel processing
B)Sequential processing
C)Process costing
D)Weighted average costing method
Q4) Since FIFO excludes prior-period work and costs,it is necessary to create three categories of completed units.
A)True
B)False
Q5) List the five steps in preparing a production report.
Page 8
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Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) Refer to the Figure.What is the cost of counting?
A)$50,500
B)$52,000
C)$54,000
D)$56,000
Q2) Activities that are performed each time a unit is produced
A)Activity drivers
B)Activity-based costing system
C)Consumption ratio
D)Unit-level activities
E)Activity attributes
F)Resource drivers
Q3) One of the three major dimensions of measuring activity performance is quality.
A)True
B)False
Q4) Environmental costs are costs that are incurred because poor environmental quality exists.
A)True
B)False
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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Q1) Refer to the Figure.What is the May ending inventory for Theele Corporation when using the absorption costing method?
A)$39,000
B)$45,000
C)$148,500
D)$300,000
Q2) What is the relationship between absorption costing net income and variable costing net income?
A)Absorption costing net income exceeds variable costing net income when units produced and sold are equal.
B)Variable costing net income exceeds absorption costing net income when units produced exceed units sold.
C)Absorption costing net income exceeds variable costing net income when units produced are less than units sold.
D)Absorption costing net income exceeds variable costing net income when units produced are greater than units sold.
Q3) What is the difference between absorption-costing income and variable-costing income?
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Chapter
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Q1) Refer to the Figure.What is Wallen's budgeted marketing expense?
A)$39,000
B)$65,000
C)$84,000
D)$133,360
Q2) Improves communication and coordination
A)Advantage
B)Disadvantage
Q3) Provides standard for performance evaluation
A)Advantage
B)Disadvantage
Q4) Refer to the Figure.What cash is budgeted to be collected on account in August?
A)$45,000
B)$54,600
C)$132,000
D)$132,600
Q5) Beginning inventory of materials
A)Production budget
B)Direct materials purchases budget
C)Sales budget
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Chapter 10: Standard Costing: a Managerial Control Tool
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Q1) Which formula is used to compute standard hours allowed?
A)unit labour standard × actual output
B)unit labour standard × standard output
C)unit labour standard × actual input
D)unit labour standard × standard input
Q2) What is target cost?
A)Expected sales per unit - desired profit per unit
B)Expected costs per unit - desired profit per unit
C)Desired profit per unit - expected costs per unit
D)Desired costs per unit - expected costs per unit
Q3) Actual price of inputs is less than the standard price.
A)Favourable variance
B)Unfavourable variance
Q4) Historical experience may provide an initial guideline for setting standards,but it should be used with caution.
A)True
B)False
Q5) How are standards developed?
Q6) Explain the kaizen approach to costing.
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Chapter 11: Flexible Budgets and Overhead Analysis
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Q1) During the year,Plasticine produced 10,000 units,used 21,000 direct labour hours,and incurred variable overhead of $100,000.Budgeted variable overhead for the year was $88,000.The hours allowed per unit are 2.1.The standard variable overhead rate is $4.10 per direct labour hour.What was the variable overhead spending variance?
A)$2,000 U
B)$2,900 F
C)$4,100 U
D)$13,900 U
Q2) Refer to the Figure.Suppose the company expects 25 setups in June.What would be the total budgeted costs of the setup activity?
A)$135,000
B)$240,000
C)$375,000
D)$397,500
Q3) Activity flexible budgeting predicts what activity costs will be as direct labour hours change.
A)True
B)False
Q4) What is a performance report?
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Chapter 12: Performance Evaluation and Decentralization
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Q1) Decentralization is usually achieved by creating units called divisions.
A)True
B)False
Q2) What is the variable set by top management when calculating residual income?
A)the average operating assets
B)the operating income
C)the hurdle rate
D)the actual operating assets
Q3) Refer to the Figure.What is the residual income for Gamma Division without the additional investment?
A)$4,200
B)$6,000
C)$6,600
D)$24,000
Q4) In a decentralized company,central management is able to focus on the day-to-day operations of the company.
A)True
B)False
Q5) Describe the four perspectives of the Balanced Scorecard.
Q6) What are the advantages and disadvantages of return on investment (ROI)?
Page 14
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Q1) Sherpa Company manufactures tents and sleeping bags.Tents are priced at $80,have variable costs of $55,and have direct fixed costs of $120,000.Sleeping bags are priced at $60,have variable costs of $35,and have direct fixed costs of $66,000.Common fixed costs equal $200,000.Last year,the division sold 5,000 tents and 10,000 sleeping bags.
A. What was the segment margin for tents last year?
B. What was the segment margin for sleeping bags last year?
C. What was Sherpa's operating income last year?
D. If Sherpa stopped making tents, what would operating income be?
Q2) Refer to the Figure.Assume Victor's Detailing uses markup to set the price on each job.The company requires an 80% markup on each job.What price should Victor's Detailing quote to a new customer?
A)$24
B)$30
C)$54
D)$84
Q3) What are the six steps of the decision-making model?
Q4) Target costing involves much more up-front work than cost-based pricing.
A)True
B)False
Page 15
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Chapter 14: Capital Investment Decisions
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Q1) Evan Cram is considering an investment in a solar-powered irrigation system manufacturer.The initial investment is $200,000.He expects to receive cash income of $100,000 a year.What is the payback period?
A)1 year
B)1.5 years
C)2 years
D)2.5 years
Q2) Is the best method discounting model to use for mutually exclusive competing projects
A)Payback period
B)Accounting rate of return
C)Net present value
D)Internal rate of return
E)Discount rate
F)Annuity
G)Postaudit
H)Compounding of interest
I)CCA Tax Shield
J)Future Value
K)Discounted cash flows
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