Management Accounting Exam Practice Tests
Course Introduction
Management Accounting is a course designed to equip students with the skills and knowledge needed to support effective managerial decision-making within organizations. The course focuses on the use of accounting information for planning, control, and performance evaluation, exploring key concepts such as budgeting, cost analysis, variance analysis, and incremental decision-making. Students will learn how management accounting information differs from financial accounting and how it is utilized to analyze costs, set strategic goals, optimize operations, and improve overall business performance. Through practical case studies and problem-solving exercises, students will develop the ability to interpret financial data, create budgets, and provide actionable insights to managers, preparing them for roles in management, consulting, and finance.
Recommended Textbook
Management Accounting 6th Canadian Edition by Charles T. Horngren
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14 Chapters
1457 Verified Questions
1457 Flashcards
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Chapter 1: Management Accounting and Management Decisions
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90 Verified Questions
90 Flashcards
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Sample Questions
Q1) Financial accounting is constrained by GAAP. Management accounting is constrained by
A) GAAS.
B) the cost-benefit balance.
C) Revenue Canada.
D) the controller.
Answer: B
Q2) Systems that use CAD and CAM together with robots and computer-controlled machines are called
A) JIT.
B) CMA.
C) CIM.
D) none of the above.
Answer: C
Q3) Authority to advise but not to command. It may be exerted downward, laterally, or upward.
Answer: Staff authority
Q4) Deviations from plans.
Answer: Variances
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Chapter 2: Cost Behaviour and Cost-Volume Relationships
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96 Verified Questions
96 Flashcards
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Sample Questions
Q1) The contribution margin ratio equals
A) revenue minus variable costs.
B) variable costs divided by revenue.
C) contribution margin divided by revenue.
D) variable costs divided by contribution margin.
Answer: C
Q2) The volume of sales at which revenue equals expenses, and net income is zero is known as the break-even point.
A)True
B)False
Answer: True
Q3) If management has a targeted net income of $21,000 (ignore income taxes), then the number of units which must be sold is
A) 2,036.
B) 2,336.
C) 6,540.
D) 5,700.
Answer: C
Q4) The manner in which the activities of an organization affect its costs.
Answer: Cost behaviour
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Chapter 3: Measurement of Cost Behaviour
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97 Flashcards
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Sample Questions
Q1) The total fixed cost is
A) $16,650.
B) $15,711.
C) $ 6,652.
D) $ 3,726.
Answer: A
Q2) Explain the difference between committed fixed costs and discretionary fixed costs and give an example of each.
Answer: Committed fixed costs usually arise from the possession of facilities, equipment, and a basic organization. These are large, indivisible chunks of cost that the organization is obligated to incur or usually would not consider avoiding. Discretionary fixed costs are determined by management as part of the periodic planning process in order to meet the organization's goals. Unlike committed fixed costs, managers can alter discretionary fixed costs easily, up or down, even within a budget period. One example of a committed fixed cost is property taxes. (insurance, mortgage payments, interest payments on long-term debt) One example of a discretionary cost is advertising. (research and development, employment training, management salaries)
Q3) Costs that contain elements of both fixed and variable cost behaviour.
Answer: Mixed costs
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Page 5
Chapter 4: Cost Management Systems
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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) The cost of producing one unit of product using absorption costing would be
A) $32.
B) $26.
C) $45.
D) $40.
Q2) The operating income (loss) under absorption costing would be
A) $ 33,200.
B) $ 16,400.
C) $( 6,000).
D) $(20,000).
Q3) The ending inventory under absorption costing would be
A) $54,000.
B) $48,000.
C) $31,200.
D) $38,400.
Q4) An activity for which a separate measurement of costs is desired is called a A) cost objective.
B) period cost.
C) product cost.
D) cost accumulation system.
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Chapter 5: Cost Allocation and Activity-Based Costing Systems
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128 Verified Questions
128 Flashcards
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Sample Questions
Q1) If the step-down method is used to allocate costs, and the Maintenance Department renders the greatest service, then the total amount of overhead that would be allocated from Personnel to Finishing is
A) $6,107.
B) $4,500.
C) $8,143.
D) $6,750.
Q2) In activity-based costing, costs are classified as either direct or indirect.
A)True
B)False
Q3) How much of the correspondence cost will be assigned to Department B?
A) $5,000
B) $8,000
C) $25,000
D) None of the above
Q4) A unit within an organization that provides essential support services for producing departments.
Q5) A method that simultaneously allocates service costs to all user departments. It gives full consideration to interactions among support departments.
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Chapter 6: Job-Costing Systems
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88 Flashcards
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Sample Questions
Q1) The proration method of disposing of overhead variances prorates the variance among three accounts including Direct-Materials Inventory, WIP Inventory and Finished Goods Inventory.
A)True
B)False
Q2) The ending inventory of finished goods is
A) $58,000.
B) $36,000.
C) $94,000.
D) $292,000.
Q3) Most firms use actual costing because it provides product cost information on a timely basis.
A)True
B)False
Q4) The budgeted factory-overhead rate using machine hours as the cost driver is A) $8.00.
B) $8.01.
C) $8.54.
D) $7.50.
Q5) A difference between actual overhead and applied overhead.
Page 8
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Chapter 7: Process-Costing Systems
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82 Flashcards
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Sample Questions
Q1) The equivalent units of production for conversion is
A) 112,000.
B) 118,000.
C) 122,800.
D) 130,000.
Q2) A unit-costing method that excludes prior-period work and costs in computing current-period unit work and costs.
Q3) Backflush costing has only two categories of costs: materials and conversion costs.
A)True
B)False
Q4) The unique feature of backflush costing is an absence of a cost of goods sold account.
A)True
B)False
Q5) The equivalent units for materials are
A) 164,000.
B) 194,000.
C) 200,000.
D) 206,000.
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Chapter 8: Relevant Information and Decision Making: Marketing Decisions
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) The average target profit percentage for setting prices as a percentage of total costs would be
A) 328 percent.
B) 36 percent.
C) 228 percent.
D) 18 percent.
Q2) If Beem Corporation could produce and sell either 3,000 units of X or 2,000 units of Y at full capacity, it should produce and sell
A) 2,000 units of Y and none of X.
B) 1,000 units of Y and 1,500 units of X.
C) 3,000 units of X and none of Y.
D) either X or Y, there is no difference.
Q3) A method of determining the cost of a product or service based on the price that customers are willing to pay.
Q4) In analyzing costs to decide whether to accept a special order, total fixed costs should be investigated to see how much fixed manufacturing costs per unit will be changed by the special order.
A)True
B)False
Page 10
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Chapter 9: Relevant Information and Decision Making: Production
Decisions
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) The salary foregone by a person who quits a job to start a business is an example of a(n)
A) sunk cost.
B) opportunity cost.
C) amortizable cost.
D) outlay cost.
Q2) Obsolete inventory costs are not relevant, because they are not an expected future cost but a past cost.
A)True
B)False
Q3) Which of the data provided in the table is a sunk cost?
A) The annual cash operating costs of the old equipment
B) The annual cash operating costs of the replacement equipment
C) The disposal value of the old equipment
D) The original cost of the old equipment
Q4) Unit costs not computed on the same volume basis should not be compared. A)True
B)False
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Q5) A relevant costing analysis that focuses on whether a component should be made internally or purchased externally.
Chapter 10: Capital Budgeting Decisions
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116 Verified Questions
116 Flashcards
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Sample Questions
Q1) Assume straight-line amortization in all computations, and ignore income taxes. The internal rate of return in case Y is approximately
A) 10 percent.
B) 12 percent.
C) 14 percent.
D) 16 percent.
Q2) Assume straight-line amortization in all computations, and ignore income taxes. The internal rate of return in case A is approximately
A) 8 percent.
B) 10 percent.
C) 12 percent.
D) 14 percent.
Q3) What is the total net present value of the investment?
A) $69,941
B) $24,941
C) $42,000
D) $(33,545)
Q4) The value that will accumulate by the end of an investment's life if the investment earns a specified compounded return.
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Chapter 11: The Master Budget
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112 Flashcards
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Sample Questions
Q1) The accuracy of estimated purchases budgets, production schedules, and costs depends on the detail and accuracy of the budgeted operating expenses.
A)True
B)False
Q2) The budgeted total direct labour cost would be
A) $320,000.
B) $442,000.
C) $480,000.
D) $496,000.
Q3) Budgeted purchases are equal to the cost of goods sold plus any beginning inventory.
A)True
B)False
Q4) Budgets associated with the income-producing activities of an organization.
Q5) The total cash disbursements for expenses in January should be
A) $75,000.
B) $75,100.
C) $82,600.
D) $70,500.
Q6) Producing forecasted financial statements for five- or ten-year periods.
Page 13
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Chapter 12: Flexible Budgets and Variance Analysis
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Sample Questions
Q1) The total flexible-budget variance can be broken down into a price variance and a usage variance.
A)True
B)False
Q2) For Product Y, the total standard material cost for producing the 300 units was
A) $9,000.
B) $9,900.
C) $13,200.
D) $12,000.
Q3) A cost system that applies actual direct materials and actual direct-labour costs to products or services but uses standards for applying overhead is known as a standard costing system.
A)True
B)False
Q4) The usage variance for direct material is
A) $10,000 unfavourable.
B) $9,000 unfavourable.
C) $9,000 favourable.
D) $10,000 favourable.
Q5) The cost most likely to be attained.
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Chapter 13: Management Control Systems, the Balanced
Scorecard, and Responsibility Accounting
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94 Verified Questions
94 Flashcards
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Sample Questions
Q1) What is Conway's 20X3 productivity measure in terms of revenues per employee?
A) $1,015.00
B) $700.00
C) $714.29
D) $870.00
Q2) A well-designed management control system ignores nonfinancial objectives and focuses on financial objectives to develop and report measures of performance.
A)True
B)False
Q3) It is common in Canadian companies to ensure that an internal control system is in place to prevent errors and irregularities and promote operating efficiency.
A)True
B)False
Q4) Any cost that is influenced by a manager's decisions and actions.
Q5) An investment centre's success is measured only by its income.
A)True
B)False
Q6) Exists when individuals and groups aim at the same organizational goals.
15
Q7) A responsibility centre for which costs are accumulated.
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Chapter 14: Management Control in Decentralized Organizations
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) What is the income percentage of revenue?
A) 10.00 percent
B) 6.25 percent
C) 1.00 percent
D) None of the above.
Q2) The income percentage of revenue is determined by multiplying return on investment by the capital turnover.
A)True
B)False
Q3) One way to determine ROI is to multiply income percentage of revenue by A) income percentage of revenue.
B) capital turnover.
C) residual income.
D) cost of capital.
Q4) Residual income for the Toro division is
A) $50,000.
B) $70,000.
C) $150,000.
D) $170,000.
Q5) Net income less "imputed" interest.
Page 16
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