Management Accounting Exam Review
Course Introduction
Management Accounting focuses on the processes, techniques, and tools used by managers to make informed business decisions and achieve organizational objectives. The course covers topics such as cost behavior and allocation, budgeting, performance evaluation, and variance analysis. Students will learn how to interpret financial information, design effective control systems, and use both qualitative and quantitative data to guide strategic planning. By the end of the course, students will understand how management accounting supports decision-making, operational efficiency, and the overall financial health of organizations.
Recommended Textbook
Cornerstones of Managerial Accounting 2nd Canadian Edition by Maryanne Mowen
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14 Chapters
2059 Verified Questions
2059 Flashcards
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Page 2
Chapter 1: Introduction to Managerial Accounting
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45 Verified Questions
45 Flashcards
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Sample Questions
Q1) The process of choosing among competing alternatives is decision making.
A)True
B)False
Answer: True
Q2) Positions that have direct responsibility for the basic objectives of an organization are referred to as staff positions.
A)True
B)False
Answer: False
Q3) Which of the following are included in the standards of ethical conduct for management accountants?
A) competence,performance,respect for others,and observance
B) integrity,respect for others,performance,and confidence
C) confidence,confidentiality,objectivity,and observance
D) competence,confidentiality,integrity,and objectivity
Answer: D
Q4) Service organizations have no need for management accounting.
A)True
B)False
Answer: False
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Chapter 2: Basic Managerial Accounting Concepts
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) Any costs associated with storing,selling,and delivering a product are classified as period costs.
A)True
B)False
Answer: True
Q2) During the month of May,Blackburn Inc.had cost of goods manufactured of $120,000,direct materials cost of $60,000,direct labour cost of $37,000,and overhead cost of $26,000.The work-in-process balance at May 31 equalled $10,000.What was the work-in-process balance on May 1?
A) $7,000
B) $10,000
C) $13,000
D) $115,000
Answer: A
Q3) How is prime cost calculated?
A) indirect materials cost plus indirect labour cost
B) direct materials cost plus direct labour cost
C) period costs plus overhead cost
D) selling cost plus administrative cost
Answer: B
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Chapter 3: Cost Behaviour
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186 Flashcards
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Sample Questions
Q1) What is an example of a discretionary cost?
A) executive travel costs
B) the cost of leasing machinery
C) licence fees for fleet of vehicles
D) depreciation on a factory building
Answer: A
Q2) Depreciation on equipment
A)Discretionary
B)Committed
Answer: B
Q3) Cost of leasing
A)Discretionary
B)Committed
Answer: B
Q4) Refer to the Figure.Which element is the slope?
A) variable rate
B) output
C) fixed cost
D) total cost
Answer: A
Page 5
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Chapter 4: Costvolumeprofit Analysis: a Managerial Planning Tool
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) Follett Company expects to produce and sell 1,000 units next month.Data on costs follows: \(\begin{array}{l}
\text { Per unit costs: }\\
\text { Selling price } & \$ 10 \\
\text { Variable manufacturing costs } & \$ 1.50 \\
\text { Variable selling costs } & \$ 0.50\\\\
\text { Total costs: }\\
\text { Fixed manufacturing costs }&\$ 3,000 \\
\text { Fixed selling costs }&\$ 150 \end{array}\) A. What is the variable cost per unit?
B. What is contribution margin per unit?
C. What is the variable cost ratio?
D. What is the contribution margin ratio?
Q2) If variable expenses decrease and the price increases,the break-even point decreases.
A)True
B)False
Q3) What are the assumptions underlying cost-volume-profit analysis?
Q4) What are two concepts useful to management when assessing risk?
Q5) Explain why cost-volume-profit analysis can be useful to managers.
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Chapter 5: Job-Order Costing
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) What formula is used to calculate the predetermined overhead rate?
A) estimated annual overhead / estimated annual activity level
B) actual annual overhead / estimated annual activity level
C) estimated annual overhead / actual annual activity level
D) actual annual overhead / actual annual activity level
Q2) Actual overhead is reconciled with applied overhead at the end of the period.
A)True
B)False
Q3) Direct materials,direct labour and applied overhead are totalled to yield manufacturing cost of job
A)Completion of job
B)End of each accounting period
C)Materials are removed from storage into production
D)Product is sold
E)End of year
Q4) Which of the following events would require two separate journal entries?
A) selling a good
B) transferring a good to finished goods
C) purchasing raw materials
D) hiring an hourly employee
Page 7
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Chapter 6: Process Costing
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157 Flashcards
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Sample Questions
Q1) Refer to the Figure.What were the equivalent units of production for conversion costs?
A) 103,000
B) 108,000
C) 110,000
D) 150,000
Q2) Refer to Process Department A. A. What is the cost of goods transferred out?
B. What is the cost of ending work-in-process inventory?
Q3) Since FIFO excludes prior-period work and costs,it is necessary to create three categories of completed units.
A)True
B)False
Q4) It works well whenever relatively homogeneous products pass through a series of processes and receive similar amounts of manufacturing costs.
A)Parallel processing
B)Sequential processing
C)Process costing
D)Weighted average costing method
Q5) List the five steps in preparing a production report.
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Chapter 7: Activity-Based Costing and Management
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155 Flashcards
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Sample Questions
Q1) A company has developed a list of quality-related costs as follows:
\(\begin{array}{lrr}& \text { Year 1 } & \text { Year 2 } \\
\text { Supplier evaluation } & \$ 0 & \$ 70,000 \\
\text { Quality training } & 10,000 & 50,000 \\
\text { Inspection of finished product } & 75,000 & 60,000 \\
\text { Rework } & 50,000 & 40,000 \\
\text { Warranty work } & 120,000 & 80,000 \\
\text { Sales } & \$ 2,000,000 & \$ 2,000,000
\end{array}\) The company's controller is pleased with the Year 2 results and commented that the company is now on its way toward total quality.Is the controller right? Explain.
Q2) System that emphasizes direct tracing and driver tracing
A)Activity drivers
B)Activity-based costing system
C)Consumption ratio
D)Unit-level activities
E)Activity attributes
F)Resource drivers
Q3) What is the activity based costing hierarchy? Give an example for each.
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Page 9
Chapter 8: Absorption and Variable Costing,and Inventory Management
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Sample Questions
Q1) Darker Company produced 30,000 units and sold 28,000 units in the current year.Beginning inventory was zero.During the period,the following costs were incurred:
\[\begin{array} { l r }
\text { Indirect labour } & \$ 60,000 \\
\text { Indirect materials } & 30,000 \\
\text { Other } & 90,000 \\
\text { Fixed manufacturing overhead } & 180,000 \\
\text { Fixed administrative expenses } & 150,000 \\
\text { Fixed selling expenses } & 120,000 \\
\text { Variable selling expenses, per unit } & 40 \\
\text { Direct labour, per unit } & 80 \\
\text { Direct materials, per unit } & 20
\end{array}\] Required: Compute the dollar amount of ending inventory using: A. Absorption costing
B. Variable costing
Q2) Refer to the Figure.What is the segment margin for Division South?
A) $140,000
B) $210,000
C) $240,000
D) $310,000
Page 10
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Chapter 9: Budgeting, production, cash, and Master Budget
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Sample Questions
Q1) Hoovern Company provided the following data for May: \[\begin{array} { l l }
\text { Direct materials } & \$ 60,000 \\
\text { Direct labour } & \$ 30,000 \\
\text { Overhead } & \$ 80,000 \\
\text { Beginning finished goods } & \$ 15,000 \\
\text { Ending finished goods } & \$ 34,000 \\
\text { Production in units } & 10,000
\end{array}\] What is the cost of goods sold?
A) $75,000
B) $151,000
C) $165,000
D) $184,000
Q2) Adjustments to the sales budget need to be made for which of the following items when going from the sales budget to the production budget?
A) finished goods inventories
B) cash receipts
C) factory overhead costs
D) selling expenses
Q3) Does a not-for-profit agency need to budget? Why or why not?
Q4) What are the advantages of budgeting?
Page 11
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Chapter 10: Standard Costing: a Managerial Control Tool
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174 Flashcards
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Sample Questions
Q1) Refer to the Figure.What are the materials price variance and the materials usage variance,respectively?
A) $9,000 U and $1,200 F
B) $9,000 F and $1,200 U
C) $9,300 U and $1,500 F
D) $9,300 F and $1,500 U
Q2) Suppose the actual labour rate exceeds the standard labour rate,and the actual labour hours exceed the number of hours allowed.What would be the labour rate variance and labour efficiency variance? Labour Rate Labour Efficiency Variance Variance
A) favourable favourable
B) favourable unfavourable
C) unfavourable favourable
D) unfavourable unfavourable
Q3) How are standards developed?
Q4) Actual usage of inputs is greater than the standard usage.
A)Favourable variance
B)Unfavourable variance
Q5) Explain the kaizen approach to costing.
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) Why does activity flexible budgeting provide a more accurate prediction of costs than a traditional flexible budgeting approach?
A) Costs often vary with more than one driver,and direct labour hours are not correct.
B) Unit-level drivers are often not highly correlated with direct labour hours.
C) Direct labour hours are often not measured correctly.
D) Costs often vary with more than one driver,and non-unit-level drivers are often not highly correlated with direct labour hours.
Q2) In an activity flexible budget,what does the variable cost component typically correspond to?
A) those resources that vary with direct labour hours
B) resources acquired as needed
C) resources acquired in advance of usage
D) resources that do not change as the activity output changes
Q3) Refer to the Figure.What is the fixed overhead spending variance?
A) $0
B) $28,000 U
C) $28,000 F
D) $32,000 U
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13
Chapter 12: Performance Evaluation and Decentralization
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145 Flashcards
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Sample Questions
Q1) Which responsibility centre designation would be used for a production manager?
A) an investment centre
B) a revenue centre
C) a profit centre
D) a cost centre
Q2) A(n)___________ is a responsibility centre in which a manager is responsible only for sales.
A)Centralization
B)Revenue centre
C)Profit centre
D)Cost centre
E)Investment centre
F)Decentralization
Q3) A key feature of economic value added (EVA)is that it emphasizes after-tax operating income and the actual cost of capital.
A)True
B)False
Q4) Decreasing inventories leads to a reduction in return on investment (ROI).
A)True
B)False
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Chapter 13: Short-Run Decision Making: Relevant Costing
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149 Flashcards
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Sample Questions
Q1) Short-run decision making only involves short-run decisions that have nothing to do with the firm's overall strategy.
A)True
B)False
Q2) Roberts Company produces two types of gears,Gear A and Gear B,with unit contribution margins of $6 and $8,respectively.Each gear must spend time on a special machine.The firm owns five machines that together provide 12,000 hours of machine time per year.Gear A requires 12 minutes of machine time; Gear B requires 24 minutes of machine time. A. What is the contribution margin per hour of machine time for Gear \(\mathrm { A }\) ? And for Gear \(\mathrm { B }\) ? If Roberts faces only the production constraint ( 12,000 hours of machine time), how B. many units of Gear A should be produced? And how many units of Gear \(B\) ? What is the total contribution margin from this product mix? Now suppose that Robert cannot sell more than 45,000 units of each type of gear. How C. many units of Gear \(A\) should be produced? And how many units of Gear \(B\) ? What is the total contribution margin from this product mix?
Q3) Why does a special-order decision frequently ignore fixed factory overhead?
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Chapter 14: Capital Investment Decisions
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153 Flashcards
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Sample Questions
Q1) Future cash flows expressed in present-value terms.
A)Payback period
B)Accounting rate of return
C)Net present value
D)Internal rate of return
E)Discount rate
F)Annuity
G)Postaudit
H)Compounding of interest
I)CCA Tax Shield
J)Future Value
K)Discounted cash flows
Q2) Refer to the Figure.What is the payback period for Project I?
A) 1 year
B) 2 years
C) 2.5 years
D) 3 years
Q3) What is a postaudit? What are the advantages and disadvantages of the postaudit?
Q4) What are the limitations of Accounting Rate of Return?
Q5) Which model of capital investment decision making is most widely used? Why?
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