Managerial Accounting Chapter Exam Questions
Course Introduction
Managerial Accounting focuses on the internal use of accounting information by managers for decision-making, planning, and control purposes within organizations. The course covers fundamental topics such as cost classification and behavior, budgeting, performance evaluation, variance analysis, and relevant costing for short-term decisions. Students learn how to analyze financial data to support strategic goals, improve operational efficiency, and allocate resources effectively. Through real-world case studies and practical exercises, the course emphasizes developing critical thinking skills and applying analytical techniques to solve managerial problems and drive business success.
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Managerial Accounting 2nd Edition by Ronald Hilton Available Study Resources on
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Chapter 1: The Changing Role of Managerial Accounting
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Q1) A controller is normally involved with:
A)preparing financial statements.
B)managing investments.
C)raising capital.
D)safeguarding assets.
E)managing the firm's credit policy.
Answer: A
Q2) Managerial accounting has not changed in recent years because of:
A)the growth of e-business.
B)increased global competition.
C)the increased speed of communication technology.
D)the adoption of Just-in-Time Inventory Management systems.
E)Management Accountants serving in the role of CEO.
Answer: E
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Chapter 2: Basic Cost Management Concepts
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Q1) Product costs are:
A)expensed when incurred.
B)inventoried.
C)treated in the same manner as period costs.
D)treated in the same manner as advertising costs.
E)subtracted from cost of goods sold.
Answer: B
Q2) Which of the following is an example of a fixed cost?
A)Paper used in the manufacture of textbooks.
B)Surgical supplies used in a hospital's operating room
C)The wages of part-time workers who are paid $8 per hour.
D)Gasoline consumed by salespersons' cars.
E)Property taxes paid by a firm to the City of Hamilton.
Answer: E
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Chapter 3: Product Costing and Cost Accumulation
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Q1) Cheetah Manufacturing Company incurred $300,000 of direct labour and $10,000 of indirect labour. The proper journal entry to record these events would include a debit to Work in Process for:
A)$0 because Work in Process should be credited.
B)$0 because Work in Process is not affected.
C)$10,000.
D)$300,000.
E)$310,000.
Answer: D
Q2) As production takes place, all manufacturing costs are added to:
A)the Raw Materials inventory account
B)the Work-in-Process Inventory account
C)the Manufacturing Overhead account
D)the Cost of Goods Sold account
E)the Finished Goods Inventory account
Answer: B
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Chapter 4: Process Costing and Hybrid Product-Costing Systems
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Q1) Focus Company, which uses a weighted-average process-costing system, had 7,000 units in production at the end of the current period that were 60% complete. Material A is introduced at the beginning of the process; material B is introduced at the end of the process; and conversion cost is incurred evenly throughout manufacturing. Equivalent-unit production costs follow. Material A: $12.50
Material B: $2.00
Conversion cost: $6.60
The cost of the company's ending work-in-process inventory is:
A)$88,620.
B)$115,220.
C)C.$129,220.
D)D.$123,620.
E)E.$147,700.
Q2) Which of the following is a key document in a typical process-costing system?
A)Departmental production report.
B)Master schedule.
C)Production budget.
D)Sequential product report.
E)Materials requirement report.
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Chapter 5: Activity-Based Costing and Management
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Q1) The following tasks are associated with an activity-based costing system:
1-Calculation of pool rates
2-Identification of cost drivers
3-Assignment of cost to products
4-Identification of cost pools
Which of the following choices correctly expresses the proper order of the preceding tasks?
A)1, 2, 3, 4.
B)2, 4, 1, 3.
C)3, 4, 2, 1.
D)4, 2, 1, 3.
E)4, 2, 3, 1.
Q2) The division of activities into unit-level, batch-level, product-sustaining level, and facility-level categories is commonly known as a cost:
A)object.
B)application method.
C)hierarchy.
D)estimation method.
E)classification scheme that is useful in traditional, volume-based systems.
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Chapter 6: Activity Analysis, Cost Behaviour, and Cost Estimation
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Q1) In regression analysis, the variable -cost component that is being predicted is known as the:
A)independent variable.
B)dependent variable.
C)explanatory variable.
D)interdependent variable.
E)functional variable.
Q2) Costs that result from a company's ownership or use of facilities and its basic organizational structure are termed as:
A)discretionary costs.
B)committed fixed costs.
C)discretionary variable costs.
D)curvilinear costs.
E)engineered costs.
Q3) Distinguish between least-squares regression and multiple regression as cost estimation methods.
Q4) Both the visual-fit and high-low methods of cost estimation have inherent limitations. Briefly identify the major deficiency associated with each method.
Page 8
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Chapter 7: Cost-Volume-Profit Analysis, Absorption and Variable Costing
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Q1) Pickering Company produced and sold 45,000 units of a single product last year, with the following results: \(\begin{array} { | c | r | }
\hline \text { Sales revenue } & \$ 1.350,000 \\
\hline \text { Manufacturing costs: } & \\
\hline \text { Variable } & 585.000 \\
\hline \text { Fixcd } & 270.000 \\
\hline \text { Sclling costs: } & \\
\hline \text { Variable } & 40.500 \\
\hline \text { Fixcd } & 54,000 \\
\hline \text { Administrative cosis: } & \\
\hline \text { Variable } & 184.500 \\
\hline \text { Fixed } & 108.000 \\
\hline
\end{array}\) Pickering's operating leverage factor was:
A)4.
B)5.
C)6.
D)7.
E)8.
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Chapter 8: Profit Planning and Activity-Based Budgeting
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Q1) Which of the following would have no effect, either direct or indirect, on an organization's cash budget?
A)Sales revenues.
B)Outlays for professional labour.
C)Advertising expenditures.
D)Raw material purchases.
E)Depreciation expense.
Q2) Which of the following statements about financial planning models (FPMs) is false?
A)FPMs express a company's financial and operating relationships in mathematical terms.
B)FPMs allow a user to explore the impact of changes in variables.
C)FPMs are commonly known as "what-if" models.
D)FPMs have become less popular in recent years because of computers and spreadsheets.
E)FPMs are used by management to cope with uncertainty.
Q3) Sushi House has budgeted sales revenues for 2012 as follows:
Q4) List several factors that an organization might consider when developing a sales forecast.
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Chapter 9: Standard Costing and Flexible Budgeting
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Q1) Alex Company recently completed 10,600 units of its single product, consuming 32,000 labour hours that cost the firm $480,000. According to manufacturing specifications, each unit should have required 3 hours of labour time at $15.40 per hour. On the basis of this information, determine Alex's labour rate variance and labour efficiency variance. \(\begin{array}{|l|c|l|}
\hline & \text { Rate } & {\text { Efficiency }} \\
\hline 1 & \$ 12,720 \mathrm{~F} & \$ 3,000 \mathrm{~F} \\
\hline 2 & \$ 12.720 \mathrm{~F} & \$ 3,000 \mathrm{U} \\
\hline 3 & \$ 12,800 \mathrm{~F} & \$ 3,080 \mathrm{~F} \\
\hline 4 & \$ 12,800 \mathrm{~F} & \$ 3,080 \mathrm{U} \\
\hline 5 & \$ 12.800 \mathrm{U} & \$ 3,080 \mathrm{U} \\ \hline \end{array}\) A)1 B)2 C)3 D)4 E)5
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Chapter 10: Cost Management Tools
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Q1) A company that strives to maximize the value of its pollution-related activities would follow a(n):
A)process improvement strategy.
B)prevention strategy.
C)end-of-pipe strategy.
D)visible cost strategy.
E)matrix strategy.
Q2) Which of the following costs would be classified as an appraisal cost on a quality report?
A)Reliability engineering.
B)Materials inspection.
C)Rework.
D)Warranty repairs.
E)Out-of-court liability settlements.
Q3) Costs incurred to reduce or eliminate pollution are commonly known as:
A)monitoring costs.
B)abatement costs.
C)on-site remediation costs.
D)off-site remediation costs.
E)opportunity costs.
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Chapter 11: Responsibility Accounting, Investment Centres, and Transfer Pricing
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Q1) A general calculation method for transfer prices that achieves goal congruence begins with the additional outlay cost per unit incurred because goods are transferred and then
A)adds the opportunity cost per unit to the organization because of the transfer.
B)subtracts the opportunity cost per unit to the organization because of the transfer.
C)adds the sunk cost per unit to the organization because of the transfer.
D)subtracts the sunk cost per unit to the organization because of the transfer.
E)adds the sales revenue per unit to the organization because of the transfer.
Q2) Kattan Inc. reported a sales margin of 11%, a capital turnover of 5, and investment capital in the amount of $30,000,000. On the basis of this information, the company's sales revenue is:
A)$600,000.
B)$16,500,000.
C)$30,000,000.
D)$33,000,000.
E)$150,000,000.
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Chapter 12: Decision Making: Relevant Costs and Benefits
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Q1) The book value of equipment currently owned by a company is an example of a(n):
A)future cost.
B)differential cost.
C)comparative cost.
D)opportunity cost.
E)sunk cost.
Q2) At which step or steps in the decision-making process do qualitative considerations generally have the greatest impact?
A)Specifying the criterion and identifying the alternatives.
B)Developing a decision model.
C)Collecting the data.
D)Select an alternative.
E)Identifying the alternatives.
Q3) A trade-off in a decision situation sometimes occurs between information:
A)accuracy and relevance.
B)relevance and uniqueness.
C)accuracy and timeliness.
D)sensitivity and accuracy.
E)sensitivity and relevance.
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Chapter 13: Target Costing and Cost Analysis for Pricing Decisions
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Q1) Heathrow employs cost-plus pricing formulas to derive selling prices for its various products. If the formulas are all used correctly, which of the following cost bases will result in the highest selling price?
A)Variable manufacturing cost.
B)Absorption manufacturing cost.
C)Total variable cost.
D)Total cost.
E)They could all result in the same selling price as long as their markup percentages are different.
Q2) The Canadian Competition Act restricts certain types of pricing behaviour.
Required:
A. Define price discrimination and predatory pricing.
B. Assume that a company has been charged with price discrimination. What role can cost information play in defending the firm's pricing practices?
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Chapter 14: Capital Expenditure Decisions
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Q1) The mayor of Elizabethtown, Ontario is considering the purchase of a new computer system for the municipality's tax department. The system costs $75,000 and has an expected life of five years. The mayor estimates the following savings will result if the system is purchased: \(\begin{array} { | c | r | r | }
\hline \text { Year } && \text { Savings } \\
\hline 1 & &\$ 20.000 \\
\hline 2 & & 25.000 \\
\hline 3 & & 30.000 \\
\hline 4 & & 15.000 \\
\hline 5 & & 12.000 \\
\hline
\end{array}\) If Elizabethtown uses a 10% discount rate for capital-budgeting decisions, the net present value of the computer system would be:
A)$489.
B)$4,079.
C)$11,658.
D)$63,342.
E)$79,057.
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Chapter 15: Allocation of Support Activity Costs and Joint Costs
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Q1) Pattinson Limited has two service departments (Human Resources and Public Relations) and two production departments (Assembly and Finishing). The number of employees in each department follows. \(\begin{array} { l l }
\text { Human Resources } & 20 \\
\text { Public Relations } & 30 \\
\text { Assembly } & 120 \\
\text { Finishing } &200
\end{array}\) Pattinson uses the direct method of cost allocation and allocates cost on the basis of employees. If Public Relations cost amounts to $2,000,000, how much of the department's cost would be allocated to Assembly?
A)$750,000.
B)$1,081,081.
C)$1,200,000.
D)$1,250,000.
E)$2,000,000.
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