Management Accounting Exam Questions
Course Introduction
Management Accounting is a course that explores the principles and techniques used to provide financial and non-financial information to managers for the purpose of planning, controlling, and decision-making within organizations. The course covers topics such as cost behavior, budgeting, variance analysis, performance measurement, and internal reporting systems. Students will learn how management accounting supports strategic objectives, facilitates resource allocation, and drives organizational efficiency by analyzing and interpreting cost data to inform operational and strategic decisions.
Recommended Textbook
Managerial Accounting 9th Edition by Ronald W. Hilton
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1509 Verified Questions
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Chapter 1: The Changing Role of Managerial Accounting in a Dynamic Business Environment
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Q1) Managerial accounting has changed in recent years because of:
A)the growth of e-business.
B)increased global competition.
C)the emergence of new industries.
D)an increased focus on the customer.
E)All of these factors.
Answer: E
Q2) Employee empowerment involves encouraging and authorizing workers to take initiatives to:
A)improve operations.
B)reduce costs.
C)improve product quality.
D)improve customer service.
E)All of thesE.
Answer: E
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Page 3
Chapter 2: Basic Cost Management Concepts and Accounting for Mass Customization Operations
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Q1) Which of the following employees of a commercial printer/publisher would be classified as direct labor?
A)Book binder.
B)Plant security guard.
C)Sales representative.
D)Plant supervisor.
E)Payroll supervisor.
Answer: A
Q2) Lake Appliance produces washers and dryers in an assembly-line process.Labor costs incurred during a recent period were: corporate executives,$500,000;assembly-line workers,$180,000;security guards,$45,000;and plant supervisor,$110,000.The total of Lake's direct labor cost was:
A)$110,000.
B)$180,000.
C)$155,000.
D)$235,000.
E)$735,000.
Answer: B
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Chapter 3: Product Costing and Cost Accumulation in a Batch Production Environment
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Sample Questions
Q1) The final step in recognizing the completion of production requires a company to:
A)debit Finished-Goods Inventory and credit Work-in-Process Inventory.
B)debit Work-in-Process Inventory and credit Finished-Goods Inventory.
C)add direct labor to Work-in-Process Inventory.
D)add direct materials,direct labor,and manufacturing overhead to Work-in-Process Inventory.
E)add direct materials to Finished-Goods Inventory.
Answer: A
Q2) Discuss the reason for (1)allocating overhead to the cost of production jobs,and (2)applying overhead using a predetermined rate instead of an actual overhead rate.
Answer: (1)Overhead costs usually bear no direct relationship to individual jobs or products,but must be incurred for the production process to take place.Therefore,it is crucial that overhead be allocated to products in order to have a complete picture of manufacturing costs.
(2)Actual overhead is not known until after the end of the accounting period.The cost of jobs would not be available in a timely fashion if actual overhead costs were used.
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Page 5
Chapter 4: Process Costing and Hybrid Product-Costing Systems
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Sample Questions
Q1) Operation costing is a popular type of accounting system,one that combines selected features of job-order and process-cost accounting.
Required:
A.Briefly discuss the basic features that are associated with an operation-costing system.
A.Operation costing is used by firms that produce different models of similar products.The products go through essentially the same manufacturing process,so conversion costs can be assigned in a manner similar to that used in process-costing systems.Materials,on the other hand,are unique to the individual goods being produced and,accordingly,the cost is assigned by batch (or in a manner similar to that used in job costing).
B.A sweater manufacturer produces multiple versions of its single product: sweaters.The garments likely incur roughly the same labor and overhead cost,with the major difference among models being in the areas of fabric,color,and patterns (i.e. ,materials).Thus,the material cost will often differ and the manufacturer should take these differences into account,not spread costs equally over all units produced as would be done in a process-cost-type of procedure.
B.Explain why a sweater manufacturer may have a need for an operation-costing system.
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Chapter 5: Activity-Based Costing and Management
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Sample Questions
Q1) Drake Manufacturing sells a number of goods whose selling price is heavily influenced by cost.A recent study of product no.520 revealed a traditionally-derived total cost of $1,623 and a selling price of $1,850 based on that figure.A newly computed activity-based total cost is $1,215.Which of the following statements is true?
A)All other things being equal,Drake should consider increasing its sales price.
B)Drake should increase the product's selling price to maintain the same markup percentage.
C)Product no.520 could be labeled as being overcosted by Drake's traditional costing procedures.
D)If product no.520 is undercosted by traditional accounting procedures,then all of Drake's other products must be undercosted as well.
E)Generally speaking,the activity-based cost figure is "less accurate" than the traditionally-derived cost figurE.
Q2) Consumption ratios are useful in determining the existence of product-line diversity. A)True
B)False
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Chapter 6: Activity Analysis,cost Behavior,and Cost
Estimation
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Sample Questions
Q1) Which of the following techniques is not used to analyze cost behavior?
A)Least-squares regression.
B)High-low method.
C)Visual-fit method.
D)Linear programming.
E)Multiple regression.
Q2) Property taxes are an example of a(n):
A)committed fixed cost.
B)committed variable cost.
C)discretionary fixed cost.
D)discretionary variable cost.
E)engineered cost.
Q3) On the basis of this information,the variable cost per machine hour was:
A)$8.40.
B)$22.00.
C)$25.00.
D)$30.40.
E)$33.40.
Q4) Define the term "relevant range" and explain its importance in understanding cost behavior.
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Sample Questions
Q1) Which of the following bodies oversees audits and auditors,and sanctions firms and individuals for violations of laws and regulations?
A)American Institute of Certified Public Accountants (AICPA).
B)American Accounting Association (AAA).
C)Public Company Accounting Oversight Board (PCAOB).
D)Financial Accounting Standards Board (FASB).
E)Accounting Principles Board (APB).
Q2) The Sarbanes-Oxley Act:
A)arose because of several accounting scandals that rocked the public's confidence in published financial statements.
B)was enacted,in part,to bring about reform in companies' financial reporting processes.
C)has distinct guidelines for reporting on an organization's internal control practices.
D)contains provisions whereby the chief executive officer (CEO)and chief financial officer (CFO)can be held criminally responsible if their firm's financial statements are found to be fraudulent in nature.
E)touches on all of these areas.
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Chapter 7: Cost-Volume-Profit Analysis
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Sample
Questions
Q1) Which of the following does not typically appear on an income statement prepared by using a traditional format?
A)Cost of goods sold.
B)Contribution margin.
C)Gross margin.
D)Selling expenses.
E)Administrative expenses.
Q2) Refer to the figure above.Assume that the company whose cost structure is depicted in the figure expects to produce a loss for the upcoming period.The loss would be shown on the graph:
A)by the area immediately above the break-even point.
B)by the area immediately below the total cost line.
C)by the area diagonally to the right of the break-even point.
D)by the area diagonally to the left of the break-even point.
E)in some other area not mentioned abovE.
Q3) Cost-volume-profit analysis is based on certain general assumptions.One of these assumptions is that product prices will remain constant as volume varies within the relevant range.
A)True
B)False
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Chapter 8: Absorption and Variable Costing
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Sample Questions
Q1) The gross margin that the company would disclose on an absorption-costing income statement is:
A)$97,500.
B)$147,000.
C)$166,500.
D)$370,000.
E)some other amount.
Q2) Ortego's management recently committed to incurring direct labor and all manufacturing overhead charges regardless of the number of units produced.Under throughput costing,the company's cost of goods sold would include charges for:
A)selling and administrative costs.
B)direct materials.
C)direct labor and manufacturing overhead.
D)direct materials,direct labor,and manufacturing overheaD.
E)direct materials,direct labor,manufacturing overhead,and selling and administrative costs.
Q3) Fixed manufacturing overhead is not inventoried under absorption costing.
A)True
B)False
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Chapter 9: Profit Planning and Activity-Based Budgeting
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Sample Questions
Q1) The budgeted income statement,budgeted balance sheet,and budgeted statement of cash flows comprise:
A)the final portion of the master budget.
B)the depiction of an organization's overall actual financial results.
C)the first step of the master budget.
D)the portion of the master budget prepared after the sales forecast and before the remainder of the operational budgets.
E)the second step of the master budget.
Q2) Quattro began operations in April of this year.It makes all sales on account,subject to the following collection pattern: 30% are collected in the month of sale;60% are collected in the first month after sale;and 10% are collected in the second month after sale.If sales for April,May,and June were $60,000,$80,000,and $70,000,respectively,what were the firm's budgeted collections for the quarter?
A)$121,000.
B)$140,000.
C)$153,000.
D)$175,000.
E)Some other amount.
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Page 12
Chapter 10: Standard Costing,Operational Performance
Measures,and the Balanced Scorecard
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Q1) Consider the following information:
Direct material purchased and used,80,000 gallons
Standard quantity of direct material allowed for May production,76,000 gallons
Actual cost of direct materials purchased and used,$176,000
Unfavorable direct-material quantity variance,$9,400
The direct-material price variance is:
A)$11,400F.
B)$11,400U.
C)$12,000F.
D)$12,000U.
E)None of thesE.
Q2) In the calculation of manufacturing cycle efficiency,which of the following activities results in value-added time?
A)Moving.
B)Processing.
C)Inspection.
D)Waiting.
E)All of thesE.
Q3) Upstart,Inc.manufactures a product that has the following standard costs:
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Chapter 11: Flexible Budgeting and the Management of
Overhead and Support Activity Costs
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Q1) What will cause the variable-overhead efficiency variance?
A)Efficient or inefficient use of a specific component of variable overhead (e.g. ,electricity).
B)Full or partial utilization of major equipment resources.
C)Production of units in excess of the number of units sold.
D)Efficient or inefficient use of the cost driver (e.g. ,machine hours)for variable overheaD.
E)Changes in the salary cost of manufacturing supervisors.
Q2) The amount of variable overhead that Draco applied to production is:
A)$158,400.
B)$160,000.
C)$163,200.
D)$167,750.
E)not listed abovE.
Q3) Draco's variable-overhead spending variance is:
A)$550 favorable.
B)$4,550 unfavorable.
C)$4,800 favorable.
D)$9,350 unfavorable.
E)not listed abovE.
Page 14
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Chapter 12: Responsibility Accounting, Quality Control, and Environmental Cost Management
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Q1) Bluegrass,Inc. ,which is headquartered in Atlanta,operates a chain of 225 clothing stores throughout the United States.Consider the costs that appear in the following table,many of which pertain to the company's sole operation in Jacksonville,Florida:
Q2) For a company that uses responsibility accounting,which of the following costs is least likely to appear on a performance report of an assembly-line supervisor?
A)Direct materials used.
B)Departmental supplies.
C)Assembly-line labor.
D)Repairs and maintenance.
E)Assembly-line facilities depreciation.
Q3) An investment center manager:
A)does not have the ability to produce revenue.
B)may be involved with the sale of new marketing programs to clients.
C)would normally be held accountable for producing an adequate return on invested capital.
D)often oversees divisional operations.
E)may be the manager who oversees the operations of a retail storE.
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Page 15
Chapter 13: Investment Centers and Transfer Pricing
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Sample Questions
Q1) The Fitzhugh Division of General Enterprises has a negative residual income of $540,000.Fitzhugh's management is contemplating an investment opportunity that will reduce this negative amount to $400,000.The investment:
A)should be pursued because it is attractive from both the divisional and corporate perspectives.
B)should be pursued because it is attractive from the divisional perspective although not from the corporate perspective.
C)should be pursued because it is attractive from the corporate perspective although not from the divisional perspective.
D)should not be pursued because it is unattractive from both the divisional and corporate perspectives.
E)should not be pursued because it is unattractive from the divisional perspective although it is attractive from the corporate perspectivE.
Q2) Although the general rule for transfer prices is the outlay cost plus opportunity cost,many companies instead use negotiated prices to price their goods and services.When are negotiated transfer prices used? Are such prices consistent or inconsistent with responsibility accounting? Explain.
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Chapter 14: Decision Making: Relevant Costs and Benefits
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Q1) Which of the following characteristics would best explain the use of probabilities and expected values in a decision analysis?
A)Limited resources.
B)Uncertainty.
C)Inflation.
D)Multiple products and services.
E)Production bottlenecks.
Q2) The term "outsourcing" is most closely associated with:
A)special-order decisions.
B)make-or-buy decisions.
C)equipment replacement decisions.
D)decisions to process joint products beyond the split-off point.
E)decisions that involve limited resources.
Q3) Factors in a decision problem that cannot be expressed in numerical terms are:
A)qualitative in nature.
B)quantitative in nature.
C)predictive in nature.
D)sensitive in nature.
E)uncertain in naturE.
Q4) The following costs relate to a variety of decision settings:
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Chapter 15: Target Costing and Cost Analysis for Pricing Decisions
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Q1) Which of the following management tools is a key component of target costing?
A)Management simulation.
B)Linear programming.
C)Value engineering.
D)Goal programming.
E)Performance reporting systems.
Q2) If a company uses a cost-plus approach to pricing,it will find that there are several different definitions of cost and the higher the cost,the higher the markup percentage.
A)True
B)False
Q3) Assuming there is no profit markup on material cost,the amount to be added to each dollar of material cost to obtain the total material charge is:
A)$0.06.
B)$0.08.
C)$0.10.
D)$0.13.
E)some other amount.
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Page 18
Chapter 16: Capital Expenditure Decisions
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Q1) Of the five expenses that follow,which one is most likely treated differently than the others when income taxes are considered in a discounted-cash-flow analysis?
A)Salaries expense.
B)Advertising expense.
C)Depreciation expense.
D)Utilities expense.
E)Office expensE.
Q2) The systematic follow-up on a capital project to see how the project actually turns out is commonly known as:
A)capital budgeting assessment (CBA).
B)a postaudit.
C)control of capital expenditures (CCE).
D)overall cost performance.
E)the cost evaluation phasE.
Q3) A company's hurdle rate is generally influenced by whether management uses the net-present-value method or the internal-rate-of-return method.
A)True
B)False
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Chapter 17: Allocation of Support Activity Costs and Joint Costs
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Sample Questions
Q1) Eastside Hospital has two service departments (Patient Records and Accounting)and two "production" departments (Internal Medicine and Surgery).Which of the following allocations would likely take place under the reciprocal-services method of cost allocation?
A)Allocation of Accounting cost to Patient Records.
B)Allocation of Patient Records cost to Internal Medicine.
C)Allocation of Surgery cost to Accounting.
D)Allocation of Internal Medicine cost to Surgery.
E)Allocations "A" and "B" abovE.
Q2) Using the step-down method and assuming the Human Resources Department is allocated first,the amount of Janitorial cost allocated to Sales Department no.2 is:
A)$8,571.
B)$9,000.
C)$9,857.
D)$10,247.
E)$10,350.
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Chapter 19: compound Interest and the Concept of Present
Value
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Sample Questions
Q1) You estimate that it will take five years to complete your college education.Your parents want to invest enough money today at an interest rate of 8% compounded annually to allow you to withdraw $10,000 at the end of each year for the next five years,with nothing left at the end.The amount of money to invest today is:
A)$14,690.
B)$34,050.
C)$39,930.
D)$50,000.
E)none of thesE.
Q2) The procedure used to compute the present value of a series of cash flows is known as:
A)compounding.
B)the annuity method.
C)discounting.
D)the present-cost approach.
E)indexing.
Q3) The time value of money and present value are important business concepts.
Required:
Briefly explain these concepts to someone with a limited business background.
Page 21
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Chapter 20: Inventory Management
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Sample Questions
Q1) At the economic order quantity:
A)total annual inventory costs,holding costs,and ordering costs are all minimized.
B)total annual inventory costs and holding costs are minimized.
C)total annual inventory costs are minimized,and holding costs equal ordering costs.
D)total annual inventory costs are minimized,and holding costs exceed ordering costs.
E)total annual inventory costs are minimized,and ordering costs exceed holding costs.
Q2) Inventory holding costs typically include:
A)clerical costs of purchase-order preparation.
B)costs of deterioration,theft,or spoilage.
C)costs associated with lost sales to customers.
D)forgone interest on money tied up in inventory.
E)items "B" And "D" abovE.
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