Management Accounting and Control Systems
Test Bank
Course Introduction
Management Accounting and Control Systems explores the use of accounting information to support internal decision-making, planning, and organizational control. The course covers fundamental concepts in management accounting such as cost behavior, budgeting, variance analysis, and performance measurement, emphasizing the design and application of control systems that align with organizational objectives.
Students learn how to analyze financial and non-financial information, implement control mechanisms, and use management accounting tools to enhance operational efficiency, promote strategic goals, and support managerial decision-making in dynamic business environments.
Recommended Textbook
Managerial Accounting 13th Edition by Carl Warren
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14 Chapters
2568 Verified Questions
2568 Flashcards
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Page 2
Chapter 1: Managerial Accounting Concepts and Principles
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Sample Questions
Q1) Controlling is the process of monitoring operating results and comparing actual results with the expected results.
A)True
B)False
Answer: True
Q2) Baker's wages
A)Direct materials
B)Direct labor
C)Factory overhead
D)Non-manufacturing cost
Answer: B
Q3) Direct costs can be specifically traced to a cost object.
A)True
B)False
Answer: True
Q4) The costs of materials and labor that do not enter directly into the finished product are classified as factory overhead.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Job Order Costing
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Sample Questions
Q1) Period costs are
A)found on the balance sheet
B)not involved in the production process
C)classified as direct labor, direct material, or factory overhead
D)found on the job order cost sheets
Answer: B
Q2) The debit to factory overhead for the cost of indirect materials is obtained from the summary of the materials requisitions.
A)True
B)False
Answer: True
Q3) In the job order costing system, the finished goods account is the controlling account for the factory overhead ledger.
A)True
B)False
Answer: False
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Chapter 3: Process Cost Systems
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Sample Questions
Q1) The closer a company moves towards just-in-time processing, the differences in unit costs between average costing and FIFO will be reduced.
A)True
B)False
Answer: True
Q2) focuses on reducing time, cost, and poor quality within the process
A)cost of production report
B)equivalent units of production
C)manufacturing cells
D)yield
E)just-in-time processing
Answer: E
Q3) Using the FIFO method, the number of equivalent units of conversion costs was
A)14,400
B)14,380
C)14,550
D)15,850
Answer: B
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Chapter 4: Cost Behavior and Cost-Volume-Profit Analysis
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Sample Questions
Q1) Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in units?
A)40,000 units
B)12,000 units
C)35,000 units
D)28,000 units
Q2) The three most common cost behavior classifications are
A)variable costs, product costs, and sunk costs
B)fixed costs, variable costs, and mixed costs
C)variable costs, period costs, and differential costs
D)variable costs, sunk costs, and opportunity costs
Q3) If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, what is the contribution margin ratio?
A)45%
B)55%
C)62%
D)32%
Q4) The Grant Company has sales of $300,000, and the break-even point in sales dollars if $225,000.Determine the company's margin of safety percentage.
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Chapter 5: Variable Costing for Management Analysis
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160 Flashcards
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Sample Questions
Q1) On the variable costing income statement, deduction of the variable cost of goods sold from sales yields gross profit.
A)True
B)False
Q2) Contribution margin reporting and analysis is appropriate only for manufacturing firms, not for service firms.
A)True
B)False
Q3) For a period during which the quantity of inventory at the end was larger than that at the beginning, income from operations reported under variable costing will be smaller than income from operations reported under absorption costing.
A)True
B)False
Q4) Variable costing is also known as direct costing.
A)True
B)False
Q5) The contribution margin and the manufacturing margin are usually equal.
A)True
B)False
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Chapter 6: Budgeting
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Sample Questions
Q1) The process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as
A)flexible budgeting
B)continuous budgeting
C)zero-based budgeting
D)master budgeting
Q2) Part of the cash budget is based on information drawn from the capital expenditures budget.
A)True
B)False
Q3) If the expected sales volume for the current period is 9,000 units, the desired ending inventory is 200 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is
A)9,000
B)8,900
C)8,700
D)9,100
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Chapter 7: Performance Evaluation Using Variances From
Standard Costs
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Sample Questions
Q1) Compute the direct materials price and quantity variances for Taylor Company.
Q2) The following information relates to manufacturing overhead for the Chapman Company:
Standards:
Total fixed factory overhead - $450,000
Estimated production - 25,000 units 100% of normal capacity
Overhead rates are based on machine hours
Standard hours allowed per unit produced - 2
Fixed overhead rate - $9.00 per machine hour
Variable overhead rate - $3.50 per hour
Actual:
Fixed factory overhead - $450,000
Production - 24,000 units
Variable overhead - $170,000
Compute a the fixed factory overhead volume variance, b the variable factory overhead controllable variance, and c the total factory overhead cost variance.
Q3) Standards are performance goals used to evaluate and control operations.
A)True B)False
Page 9
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Chapter 8: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) Income from operations divided by invested assets
A)Controllable revenues
B)Profit margin
C)Investment turnover
D)Rate of return on investments
E)Residual income
Q2) The ratio of sales to invested assets is termed the investment turnover component of the rate of return on investment.
A)True
B)False
Q3) Operational issues are made by managers closest to the operations
A)Advantage of decentralization
B)Disadvantage of decentralization
C)Neither an advantage or disadvantage
Q4) The investment turnover is the ratio of
A)income from operations to sales
B)income from operations to invested assets
C)assets to liabilities
D)sales to invested assets
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Chapter 9: Differential Analysis, Product Pricing, and
Activity-Based Costing
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Sample Questions
Q1) What is the desired profit per unit?
A)$6
B)$8
C)$5
D)$4
Q2) What is the contribution per machine hour for Wales?
A)$35
B)$28
C)$17
D)$7
Q3) The markup percentage on product cost for the company's product is
A)23.4%
B)10.98%
C)26.1%
D)18%
Q4) The lowest contribution margin per scarce resource is the most profitable.
A)True
B)False
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Chapter 10: Capital Investment Analysis
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Sample Questions
Q1) Net present value and the payback period are examples of discounted cash flow methods used in capital budgeting decisions.
A)True
B)False
Q2) Jimmy Co.is considering a 12-year project that is estimated to cost $1,050,000 and has no residual value.Jimmy Co.seeks to earn an average rate of return of 18% on all capital projects.Determine the necessary average annual income using straight-line depreciation that must be achieved on this project for it to be acceptable to Jimmy Co.
Q3) Using the tables above, if an investment is made now for $23,500 that will generate a cash inflow of $8,000 a year for the next 4 years, what would be the net present value of the investment, assuming an earnings rate of 10%?
A)$23,500
B)$16,050
C)$25,360
D)$1,860
Q4) What is capital investment analysis? Why are capital investment analysis decisions often difficult and risky?
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Chapter 11: Cost Allocation and Activity-Based Costing
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Sample Questions
Q1) The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours.What is the overhead cost per unit for Blinks?
A)$78.00
B)$19.50
C)$37.45
D)$56.00
Q2) Multiple production department factory overhead rates are more accurate than are plantwide factory overhead rates.
A)True
B)False
Q3) Service companies can effectively use activity-based costing to compute product service costs.
A)True
B)False
Q4) Determine the activity rate for materials handling per move.
A)$58.82
B)$50.00
C)$20.83
D)$80.65
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Chapter 12: Lean Principles, Lean Accounting, and Activity Analysis
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Sample Questions
Q1) Connally Company's payroll department required that every time card be checked twice to ensure pay accuracy.The company has 1,000 employees and has determined that the checks cost the company $8,000 per year.They have decided to change this policy and only check those names which appear on the exceptions report and a random check on the entire payroll.Currently only 15% of the payroll is evaluated each payroll.Determine the inspection activity cost per employee on the 1,000 employees both before and after the improvement.
Q2) From the above schedule, calculate the a prevention and b appraisal costs.
Q3) Under a lean environment, employees have the responsibility and authority to
A)purchase inventory.
B)determine output amounts.
C)make decisions about operations, rather than waiting for management.
D)make engineering changes.
Q4) From the foregoing information, determine the production costs transferred to Finished Goods during August.
A)$369,840
B)$408,480
C)$428,800
D)$473,600
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Q5) From the above schedule, compute the percentage of non-value-added activities.
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Cash flows from investing activities, as part of the statement of cash flows, would include any payments for the purchase of treasury stock.
A)True
B)False
Q2) To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in accrued expenses is added to operating expenses payable other than depreciation.
A)True
B)False
Q3) There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: 1 the direct method and 2 the indirect method.
A)True
B)False
Q4) Which of the following would not be classified as an operating activity?
A)interest expense
B)income taxes
C)payment of dividends
D)selling expenses
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Interpreting financial analysis should be considered in light of conditions peculiar to the industry and the general economic conditions.
A)True
B)False
Q2) The purpose of an audit is to
A)determine whether or not a company is a good investment
B)render an opinion on the fairness of the statements
C)determine whether or not a company complies with corporate social responsibility
D)determine whether or not a company is a good credit risk
Q3) Percentage analyses, ratios, turnovers, and other measures of financial position and operating results are
A)a substitute for sound judgment
B)useful analytical measures
C)enough information for analysis; industry information is not needed
D)unnecessary for analysis, but reaction is better
Q4) Define solvency and profitability.How are they alike?
Q5) What is a major advantage of using percentages rather than dollar changes in doing horizontal and vertical analysis?
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