Management Accounting Exam Bank
Course Introduction
Management Accounting is a course designed to introduce students to the processes, tools, and techniques that managers use to measure and interpret financial information for internal decision-making purposes. The course covers essential topics such as cost classification, budgeting, variance analysis, performance measurement, and the role of management accountants in strategic planning and control. Students will learn how to analyze and use accounting data to support managerial decisions, optimize resource allocation, and drive organizational performance, with an emphasis on real-world applications and ethical considerations in management accounting.
Recommended Textbook
Managerial Accounting 2nd Edition by Charles E. Davis
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2470 Verified Questions
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Page 2
Chapter 1: Accounting As a Tool for Management
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Sample Questions
Q1) Ethical business behavior
A)Is not mere compliance with the law.
B)Suggests that the spirit of the law is more important than the letter of the law.
C)Suggest that moral values and codes are more important than rules and policies.
D)All of these ans choices are correct.
Answer: D
Q2) Managerial accounting reports historical information often with the purpose of
A)Comparing actual results to budgeted results
B)Helping managers to make decisions that will affect the company's future by projecting the results of certain decisions.
C)Both comparing actual results to budgeted results and helping managers to make decisions that will affect the company's future by projecting the results of certain decisions.
D)Neither comparing actual results to budgeted results nor helping managers to make decisions that will affect the company's future by projecting the results of certain decisions.
Answer: C
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3
Chapter 2: Cost Behavior and Cost Estimation Summary of
Questions by Objectives and Blooms Taxonomy
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Sample Questions
Q1) Assume you are planning a spring break ski trip to Colorado.You are preparing a budget of your costs.You are staying at a lodge that has a special where the lodge charges you $80 per week for the ski lift regardless of how many times you ride.You believe you will ride the ski lift 40 times during the week.The ski lift charge is an example of a
A)Fixed cost.
B)Variable cost.
C)Mixed cost.
D)Step cost.
Answer: A
Q2) Some costs have both a fixed and a variable component.These costs are referred to as
A)Discretionary costs.
B)Committed costs.
C)Mixed costs.
D)Step costs.
Answer: C
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) One assumption made when using CVP as a decision tool is that all costs can be easily and accurately separated into fixed and variable categories.
A)True
B)False
Answer: True
Q2) Companies that carry a high level of fixed costs relative to variable costs are considered to have greater risk than companies with a high level of variable costs relative to fixed costs.
A)True
B)False
Answer: True
Q3) As volume changes,which of the following items also change?
A)Total sales revenue
B)Total variable costs,Total contribution margin
C)Total sales revenue,variable costs and contribution margin
Answer: C
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Page 5
Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) Which of the following items is \(\textbf{ not }\) classified as indirect materials for a furniture manufacturing company?
A)Sanded and finished wood used to make bed frames
B)Decorative brads used on the arms of chairs
C)Glue used to strengthen joints
D)All of these ans choices are classified as indirect materials.
Q2) Classify the following costs incurred by a Ranger Boat Company manufacturing plant as product or period costs by placing an "X" in the appropriate column.
\[\begin{array} { | l | c | c | }
\hline & \textbf{Product Cost} & \textbf{Period Cost} \\
\hline \text{Cost of boat seats} & & \\
\hline \text{Cost of bolts to secure electric motor} & & \\
\hline \text{Cost of commission paid to salespeople} & & \\
\hline \text{Salary of CEO} & & \\
\hline \text{Salary of worker who installs seats into boats} & & \\
\hline \end{array}\]
Q3) Why must manufacturing overhead be allocated,what is the predetermined overhead rate and how is it calculated?
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Page 6
Chapter 5: Planning and Forecasting
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Sample Questions
Q1) Since the purchasing agent is responsible for ordering raw materials,he or she would be the one to negotiate a volume discount.
A)True
B)False
Q2) The standard price of direct labor includes all of the following except A)Payroll taxes.
B)Health insurance.
C)Retirement contributions.
D)Reimbursement of travel expense.
Q3) In the manufacturing of swim suits,in addition to the price of fabric,the standard materials price also includes A)Cost of shipping.
B)Volume discounts.
C)Taxes.
D)All of these ans choices are correct.
Q4) The first component of the master budget is the A)Cash budget.
B)Overhead budget.
C)Pro-forma budget.
D)None of these ans choices are correct.
Page 7
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) The flexible budget variance is influenced most heavily by actions of
A)The budget committee.
B)The operations personnel.
C)The sales personnel.
D)The executives of the company.
Q2) While the sales manager may be ecstatic to learn he has beaten his sales goal,the production manager may not share that enthusiasm because having more sales than anticipated required overtime for workers and additional maintenance on some machinery.Managers use budgeting to control and evaluate their operations.Two types of budgets that are discussed in chapter 6 are the static budget and the flexible budget.How do the two budgets differ and explain how the flexible budget is used in evaluating performance.
Q3) If the actual price of direct materials purchased is $200 per unit while the standard price for direct materials is $180 per unit and the total direct material used is 1,000 units while the standard direct materials allowed for actual production is 1,200 units,
A)The direct materials quantity variance will be favorable
B)The direct materials quantity variance will be unfavorable
C)The direct materials price variance will be favorable
D)The direct materials price variance will be unfavorable
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Page 8
Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) Activity-based costing did \(\textbf{ not }\) gain widespread popularity until A)1887.
B)1907.
C)1957.
D)1987.
Q2) The easiest part of calculating the total product cost is
A)Separating direct material and indirect material.
B)Allocating costs to products.
C)Adding the direct materials and direct labor costs to overhead.
D)None of these ans choices are correct.
Q3) Since a batch-level activity is based on the existence of the batch,a batch consumes resources
A)Proportionately with the number of units in the batch.
B)Inversely with the number of units in the batch
C)The same amount of resources whether it contains 20 units or 2,000 units.
D)None of these ans choices are correct..
Q4) What is an activity cost pool and how are activity cost pool rates calculated?
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) According to the theory of constraints,which of the following is not a step required to maximize and improve the performance of a value chain?
A)Identify the constraint.
B)Decide how to exploit the constraint.
C)Subordinate and synchronize everything else to the first two decisions.
D)Determine customer demand.
Q2) If a special order results in a positive contribution margin of $8 when the contribution margin for regular orders is $15,which of the following decisions is the most likely to be chosen?
A)Accept the order
B)Reject the order
C)Accept the order,but only if the customer agrees to an increase in the selling price to match the $15 regular contribution margin.
D)Accept the order,but only if the customer agrees to an increase of $7 in the selling price.
Q3) Offshoring means moving a company's business processes to a foreign country.
A)True B)False
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Chapter 9: Capital Budgeting
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Sample
Questions
Q1) Mauldin Welding Shop is considering the purchase of new high-tech welding equipment.If the equipment is purchased,Mauldin can avoid the cost of updating the old equipment estimated to be $3,000.In determining the cash flows associated with the new equipment,the cost of updating the old equipment will be
A)A cash outflow
B)A cash inflow
C)A sunk cost
D)Not relevant
Q2) Any return a company receives over and above the original investment in a capital asset is called return on investment.
A)True
B)False
Q3) To determine the present value of any future amount,you need to know
A)The opportunity cost
B)The stated maximum rate of return
C)The future amount to be received
D)All of these ans choices are correct
Q4) If you wish to have $25,000 in five years,how much must you deposit today if you will earn 12% compounded annually on your investment?
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Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) Diablo Corporation's Western region operates as an investment center.John Mosby,the division's director,is considering investing in manufacturing equipment with a cost of $120,000.The equipment is expected to generate $35,000 in additional operating income.If the weighted average cost of capital is 18%,what is the equipment's EVA?
A) $35,000
B) $21,600
C) $13,400
D) None of these ans choices are correct
Q2) In calculating EVA,invested capital is the company's total assets minus its total liabilities.
A)True
B)False
Q3) As long as EVA is positive,the firm's managers have used the invested capital to create additional value for shareholders.
A)True
B)False
Q4) What is the minimum acceptable transfer price for a division that has excess operating capacity?
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) The balanced scorecard includes one or two measures in each of six perspectives.
A)True
B)False
Q2) What length of time does the Balanced Scorecard Institute estimate it takes to create a corporate-level scorecard?
A)Two to three weeks
B)Two to three months
C)Two to three years
D)More than five years
Q3) Identifying whether a measure is a leading or lagging indicator can be difficult,because a lagging indicator of one event can be a leading indicator of another.
A)True
B)False
Q4) When customers consider making purchases,which of the following is not an expectation they have?
A)Price
B)Delivery speed
C)High profit margin for supplier
D)Quality
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) A form of horizontal analysis in which each year's account balance is expressed as a percentage of the base year' is called
A)Trend analysis.
B)Percentage analysis.
C)Common size analysis.
D)Quick analysis.
Q2) The formula for the return on assets is a. \(\frac{\text{Net Income + Interest Expense × 1- tax rate}}{\text{ Average Total Assets }}\)
b. \(\frac{\text { Operating income × 1-tax rate }}{\text { Average Total Assets }}\)
c. \(\frac{\text { Net Income + Interest Expense × 1 - tax rate }}{\text { Long-term Assets }}\)
d. \(\frac{\text {Operating income × 1-tax rate }}{\text { Long-term Assets }}\)
Q3) Three measures of liquidity are working capital,current ratio,and acid-test ratio.What do each of these measure,and how are they each calculated?
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) The following items were gathered from Rankin Corporation's general ledger: \(\begin{array}{lr}
\text {Net income} & \$26,000 \\
\text {Gain on sale of marketable securities} & 3,000 \\
\text {Beginning cash balance} & 18,000 \\
\text {Purchase of new factory equipment} & 75,000 \\
\text {Proceeds from sale of marketable securities} & 25,000 \\
\text {Depreciation} & 8,000 \\
\text {Payment of cash dividends} & 23,000 \\
\text {Decrease in accounts receivable} & 6,000 \\
\text {Proceeds from issuance of common stock} & 32,000 \\
\text {Increase in inventory} & 12,000 \\
\text {Increase in accounts payable} & 4,000 \\
\text {Decrease in accrued liabilities} & 2,000 \\ \end{array}\)
Required:
Using the indirect method, construct Rankins statement of cash flows.
Q2) What is the basic form of the statement of cash flows?
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Page 15
Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) In process costing,direct materials may be added at different points of a department's production process.
A)True
B)False
Q2) When using a process costing system, explain the steps you use in assigning costs to units completed and transferred out of a department and to ending work in process.
Q3) Costs incurred in a process costing system include direct material,direct labor and overhead.
A)True
B)False
Q4) In a process costing system,labor and overhead costs are typically combined and referred to as equivalent costs.
A)True
B)False
Q5) In a process costing system,labor and overhead costs are typically combined and referred to as conversion costs.
A)True B)False
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Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) The underlying principle that absorption costing satisfies is the
A)Matching principle
B)Relevance principle
C)Historical cost principle
D)Understandability principle
Q2) Walkers Manufacturing began its operations on January 1 of the current year. Walker produced 10,000 units during the year, sold 8,000 units at an average cost of $22 per unit, and had 2,000 units in ending inventory. Variable production cost were $14 per unit, variable selling expenses were $2 per unit, fixed overhead totaled $12,000, and fixed selling and administrative expenses totaled $30,000. Under variable costing, what was Walkers operating income?
A) $26,000
B) $6,000
C) $8,400
D) $10,000
Q3) Absorption costing is also referred to as full costing.
A)True
B)False
Q4) Describe the format for a variable costing income statement.
Q5) What managerial behavior does variable costing render ineffective?
Page 17
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Chapter 16: Topic Focus Standard Costing Systems
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Q1) When using a standard costing system,which of the following should be recorded when fixed overhead is applied during the period?
A)Debit manufacturing overhead for the actual overhead costs and credit work in process inventory using a predetermined fixed overhead rate
B)Debit work in process inventory for the actual overhead costs and credit manufacturing overhead using a predetermined fixed overhead rate
C)Credit work in process inventory for the actual overhead and debit manufacturing overhead using a predetermined fixed overhead rate
D)Credit manufacturing overhead and debit work in process inventory for the standard quantity of the application base allowed using a predetermined fixed overhead rate
Q2) The standard cost of labor consists of two components: standard quantity of direct labor hours allowed for actual production and standard direct labor rate per hour.
A)True
B)False
Q3) What is the difference between a normal costing system and a standard costing system?
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Chapter 17: Topic Focus Customer Profitability
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Sample Questions
Q1) The formula for the customer profit margin is
A)Customer net profit divided by customer revenue
B)Customer revenue divided by customer cost of goods sold
C)Customer revenue less cost of goods sold less allocated selling expenses
D)Customer profit margin less allocated selling and administrative expenses
Q2) If the sales revenue a customer generates exceeds the cost of goods sold,the customer is considered
A)Profitable
B)Not profitable
C)A "best customer"
D)Cannot determine from the information given
Q3) One way for managers to get an estimate of customer profitability is to allocate expenses to customers through activity-based costing.
A)True
B)False
Q4) Which of the following would \(\textbf{ not }\) be a selling expense?
A)Rent on warehouse space
B)Advertising on local TV station
C)Indirect labor
D)Depreciation on delivery truck
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