Management Accounting Exam Practice Tests
Course Introduction
Management Accounting is a course designed to introduce students to the concepts and techniques used by managers for decision-making, planning, and control within organizations. The course covers topics such as cost behavior, budgeting, performance evaluation, and variance analysis, as well as the use of accounting information in operational and strategic decision contexts. Emphasis is placed on the interpretation and application of accounting data to facilitate effective resource allocation, improve operational efficiency, and support overall organizational objectives. Through case studies and practical examples, students learn how management accounting contributes to the achievement of business goals.
Recommended Textbook Managerial Accounting 3rd Edition by
Charles E. Davis
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Page 2
Chapter 1: Accounting As a Tool for Management
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Sample Questions
Q1) Under the Sarbanes-Oxley Act,which of the following is a requirement of the corporate code of ethics?
A)Cannot be published in the annual report or on the corporate website,or provided at no charge upon request
B)Must disclose few,specific instances in which these codes have been waived for a particular individual
C)Must disclose some changes to the code
D)Must disclose all changes to the code
Answer: D
Q2) The goal of an ERP system is to integrate all data from the company's many business processes into a single information system.
A)True
B)False Answer: True
Q3) A divest strategy is appropriate when a company desires to enter a particular market.
A)True
B)False Answer: False
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Chapter 2: Cost Behavior and Cost Estimation
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Sample Questions
Q1) Operating income = Sales revenue - Variable cost per
A)True
B)False
Answer: True
Q2) In contrast to a variable cost
A)the total amount of a fixed cost does not change with activity level.
B)the total amount of a fixed cost increases as activity increases.
C)the per unit amount of a fixed cost does not change with activity level.
D)the per
Answer: A
Q3) Children's World Toy Shop is an on-line toy store specializing in hand made stuffed animals.Children's World sold 4,000 Donny the Dragon stuffed toys during April and 6,000 during May.Shipping costs for the two months were $12,000 and $16,800 respectively.Using these two months' data,the shipping cost function is best estimated as
A)$2 x number of toys sold + $70,000
B)$2.40 x number of toys sold + $2,400
C)$3 x number of toys sold + $2,880
D)$0.50 x number of toys sold + $10,000
Answer: B
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) All other things equal,an increase in the number of
A)Increase unit variable cost.
B)Increase fixed cost per unit.
C)Increase total contribution margin.
D)Decrease the
Answer: C
Q2) At the breakeven point,which of the following is not true?
A)Sales revenue is equal to total costs.
B)Contribution margin is equal to total variable costs.
C)Contribution margin is equal to total fixed costs.
D)Operating income equals zero.
Answer: B
Q3) Blond Co.is using the target cost approach on a new product.Information gathered so far reveals: Expected annual sales 400,000
A)$0.42
B)$0.70
C)$0.35
D)$0.77
Answer: D
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Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) When products are completed,which of the following accounts is decreased?
A)Raw Materials Inventory
B)Work in Process Inventory
C)Finished Goods Inventory
D)Cost of Goods Sold
Q2) Total manufacturing cost is also referred to as cost of goods manufactured.
A)True
B)False
Q3) Describe the three major categories of product cost and explain why some raw materials costs and some labor costs are treated as manufacturing overhead.
Q4) The following information relates to the 2014 operations of Adler's Company:
Finished goods inventory,beginning $ 90,000
Finished goods inventory,ending $ 83,000
Cost of goods available for sale $230,000
Required:
a.What is Adler's cost of goods manufactured for the period?
b.What is Adler's cost of goods sold for the period?
Q5) Why must manufacturing overhead be allocated,what is the predetermined overhead rate and how is it calculated?
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Chapter 5: Planning and Forecasting
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Sample Questions
Q1) Which of the following budgets uses information from the selling and administrative expense budget?
A)Pro-forma budget
B)Budgeted income statement
C)Direct materials purchases budget.
D)None of these answer choices are correct.
Q2) Ideal standards represent a level of performance that can be attained with reasonable effort.
A)True
B)False
Q3) The predetermined overhead rate is calculated as Budgeted Total Manufacturing Overhead divided by Budgeted Activity Level of Application Base.
A)True
B)False
Q4) A budget is an operating plan that may be expressed in either financial or non-financial terms.
A)True
B)False
Q5) Berry Products Company manufactures and sells a single product.Each
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) Which of the following is not a reason variable overhead costs might differ from the flexible budget costs?
A)Executives' salaries may increase or decrease.
B)The prices paid to acquire variable overhead items can increase or decrease.
C)Variable overhead items can be used more or less efficiently than planned.
D)Since variable overhead varies with production activity,if the company is less efficient with respect to that production activity,then variable overhead will be used more or less efficiently.
Q2) When the budget being used is a static budget,the difference between actual results and budgeted results is referred to as a
A)static swing.
B)variable discrepancy.
C)static budget variance.
D)static budget fluctuation.
Q3) Adler Industries uses a standard cost system.Adler has established the following standards for one
Q4) Amos,Inc.uses a standard cost system in which direct material is carried at standard cost.Standards for one
Q5) Luckett Company's standards call for two feet of direct material for each
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Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) Even when direct materials and direct labor comprise the majority of product costs,manufacturing overhead allocation is still a major issue.
A)True
B)False
Q2) Which of the following would be the most appropriate cost driver for the purchasing department?
A)Number of orders placed
B)Direct labor hours
C)Machine hours
D)Direct labor cost
Q3) The second step in the preparation of activity-based costing data is to
A)calculate activity cost pool rates.
B)develop activity cost pools.
C)allocate costs to products.
D)calculate the
Q4) Which of the following would be a likely activity driver for product design?
A)Number of product lines
B)Number of direct labor hours
C)Number of machine hours
D)Number of batches
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) Calculations which show the additional impact of one alternative over another are referred to as
A)relevant analysis.
B)avoidable analysis.
C)incremental analysis.
D)opport
Q2) Which of the following terms indicate that costs are not directly caused by the cost object?
A)Allocated
B)Assigned
C)Common
D)Variable
Q3) Throughput contribution equals oo.sales revenue less fixed costs.
A)sales revenue less product costs.
B)sales revenue less direct materials costs.
C)sales revenues less manufacturing overhead.
Q4) Paris Manufacturing Company Inc.uses 400
Q5) Accepting special orders may produce additional revenues,but may also result in some negative consequences.Discuss the quantitative and qualitative factors that impact the decision to accept a special order.
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Chapter 9: Capital Budgeting
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Sample Questions
Q1) Friendly Freddie's Furniture Store uses an 8-year old van to deliver furniture to customers within a 50-mile radius of the store.The van has an original cost of $22,000.It costs $1,000 each month to operate the van.Unfortunately,the van was in an accident last week and it will cost $5,000 for repairs.Freddie has found a new van that will cost $35,000.Freddie expects to get 10 years use from the new van and estimates that the operating costs will be $800 each month.Freddie can sell his old van as is for $2,500.
Required:
Identify the amount and timing of the cash flows relevant to Friendly Freddie's decision to replace the van.
Q2) Marilyn's parents have agreed to help her purchase a new car upon graduation in four years.They have given her two choices.The first choice is that they will give her $4,000 each year for the next four years for her to invest herself.The second choice is that they will wait four years and give her $18,000.Marilyn can invest the money at a 4% rate.
Required:
a.Which option should Marilyn choose? Why?
b.If Marilyn can invest the money at 8%,which options should she choose? Why? Unit 9-2,
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Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) A segment margin income statement excludes all ________ costs in the calculation of the segment margin.
A)Selling
B)Traceable
C)Fixed
D)Allocated
Q2) A cost center manager should be evaluated by
A)Examination of actual costs against budgeted costs.
B)A review of both revenues and expenses,with a focus on operating income.
C)How well assets have been used to generate income.
D)None of these answer choices are correct.
Q3) Net income after interest and taxes is a common income measurement choice used to calculate ROI for an entire organization,because all expenses are under the CEO's control at the corporate level.
A)True
B)False
Q4) What is the minimum acceptable transfer price for a division that has excess operating capacity?
Q5) What is EVA and how is it calculated?
Q6) What is a transfer price? List the four ways of determining a transfer price.
Page 12
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) Measures that can be determined only after something is finished are called lagging indicators.
A)True
B)False
Q2) Countless measures could be captured and reported to managers.The best measures relate to corporate strategy and are SMART.
Required:
Explain the five components of SMART and give an example of each component.
Q3) Measures that help predict a future result are referred to as
A)lagging indicators.
B)earnings per share.
C)leading indicators.
D)EVA.
Q4) Which of the following is not a measure that relates to the financial perspective?
A)Residual income
B)Earnings per share
C)Revenue growth
D)Training dollars spent on employee training
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) On a common-size balance sheet,notes receivable is shown as a percentage of
A)Total liabilities.
B)Current liabilities.
C)Total stockholders' equity.
D)Total assets.
Q2) Rather than looking only at the balances reported on the financial statements,it is helpful to look at the changes in the account balances over time.This is called
A)Common analysis.
B)Vertical analysis.
C)Horizontal analysis.
D)Benchmarking
Q3) Another term for vertical analysis is
A)Common-size analysis.
B)Liquidity analysis.
C)Horizontal analysis.
D)Leverage analysis.
Q4) Two measures of liquidity are the accounts receivable turnover and the inventory turnover.What do each of these measures,and how are they each calculated?
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Which of the following cash flows results from a financing activity?
A)Borrowing money from the bank
B)Receiving a cash dividend of $3 per share
C)Paying income taxes at end of year
D)All of these answer choices result from financing activities
Q2) A company's salaries payable account decreased by $1,000 during the year.Which of the following would appear on the statement of cash flows prepared using the indirect method?
A)An addition under investing activities
B)A deduction under investing activities
C)An addition under operating activities
D)A deduction under operating activities
Q3) When a company repurchases its own stock,which of the following is the correct reporting on the statement of cash flows?
A)A source of cash in the financing section
B)A use of cash in the financing section
C)A source of cash in the investing section
D)A use of cash in the investing section
Q4) What is the basic form of the statement of cash flows?
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Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) The journal entries used to record cost flows in a process costing system differ from those used to record cost flows in a job order costing system.
A)True
B)False
Q2) Which of the following is not a step in calculating the
A)Calculate the equivalent units of production
B)Allocate the equivalent unit costs of production
C)Divide the total equivalent costs by the total units
D)Reconcile the costs of production
Q3) The costs incurred in a process costing system,direct material,direct labor and manufacturing overhead,are the same as the costs incurred in a job order costing system.
A)True
B)False
Q4) The mixing department of the Glasson Company started the month with 20,000
A)280,000
B)300,000
C)318,000
D)329,000
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Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) Variable costing is acceptable for which of the following purposes?
A)GAAP reporting
B)Internal reporting
C)Reporting to the IRS
D)SEC reporting
Q2) The difference between absorption and variable costing is the timing difference in the expensing of variable overhead costs.
A)True
B)False
Q3) When using variable costing,fixed manufacturing overhead is treated as which of the following types of costs?
A)Product
B)Mixed
C)Period
D)Variable
Q4) Variable costing is also referred to as
A)absorption costing.
B)normal costing.
C)direct costing.
D)full costing.
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 to transfer
A)Debit finished goods for actual cost and credit work in process for actual cost
B)Debit finished goods for standard cost and credit work in process for standard cost
C)Debit finished goods for standard cost and credit work in process for actual cost
D)Debit finished goods for actual cost and credit work in process for standard cost
Q2) When using a standard costing system,direct material and direct labor are recorded at actual cost while manufacturing over is applied at a standard rate.
A)True
B)False
Q3) Suggest one reason for each of the following variances.
a.Unfavorable direct material quantity variance
b.Favorable direct labor rate variance
c.Favorable variable overhead spending variance
d.Unfavorable fixed overhead volume variance
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Chapter 17: Topic Focus Customer Profitability
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Sample Questions
Q1) In their book Killer Customers,Larry Selden and Geoffrey Colvin estimate that the bottom 5% of a company's customers lose as much as 100% of the company's profits.
A)True
B)False
Q2) The customer profit margin divides
A)Customer net profit by customer revenue.
B)Customer net profit by customer profit margin.
C)Customer revenue by customer net profit.
D)Customer profit margin by customer revenue.
Q3) Two calculations can be made to measure customer profitability: customer net profit and customer profit margin.
Required:
a.What is the formula for customer net profit?
b.What is the formula for customer profit margin?
Q4) Which of the following would 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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