Managerial Accounting Exam Materials
Course Introduction
Managerial Accounting explores the principles, techniques, and tools used by managers to make informed business decisions. The course covers topics such as cost behavior analysis, budgeting, performance measurement, variance analysis, and the use of accounting information for planning, control, and decision-making. Emphasizing the internal use of financial data, students will learn how to analyze and interpret reports, allocate costs, and evaluate operational efficiency to support strategic and day-to-day management objectives within organizations.
Recommended Textbook
Managerial Accounting An Introduction to Concepts Methods and Uses 11th Edition by Michael W.
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13 Chapters
1638 Verified Questions
1638 Flashcards
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Page 2
Chapter 1: Fundamental Concepts
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114 Flashcards
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Sample Questions
Q1) Costs that donot relate directly to a cost object are its
A)marginal cost.
B)indirect cost.
C)sunk cost.
D)target cost.
Answer: B
Q2) All of the following are true regarding integrated information systems except:
A)Accounting and other databases can be integrated with numerous applications such as managing the supply chain,making general ledger entries,and reporting to top management.
B)Integrated information systems imply that accountants no longer control a particular information domain.
C)Accountants are no longer the source of accounting information because managers and staff can directly access accounting information in integrated information systems.
D)Because accountants are no longer needed in an integrated information system environment,they typically do not serve on cross-functional teams.
Answer: D
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Chapter 2: Measuring Product Costs
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Sample Questions
Q1) Actual costs and normal costs.Canyon Ridge Company uses a predetermined rate for applying overhead to production using normal costing.The rates for Year 1 follow: variable,200 percent of direct labor dollars;fixed,300 percent of direct labor dollars.Actual overhead costs incurred follow: variable,$20,000;fixed,$26,000.Actual direct materials costs were $5,000,and actual direct labor costs were $9,000.Canyon Ridge produced one job in Year 1.
Required:
a.Calculate actual costs of the job.
b.Calculate normal costs of the job using predetermined overhead rates. (Canyon Ridge Company;actual costs and normal costs. )
Answer: a.Actual Costs
11ea906f_4ca4_cdd9_aec7_8f75909e8878_TB2144_00_TB2144_00 b.Normal Costs
11ea906f_4ca4_cdda_aec7_3d73a1293f6a_TB2144_00_TB2144_00
Q2) Which of the following statements is true?
A)JIT requires workers to immediately correct a process making defective units.
B)JIT requires hiding of defective units.
C)JIT requires debiting various inventory accounts as goods are processed.
D)JIT requires crediting various inventory accounts as goods are processed.
Answer: A
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4
Chapter 3: Activity-Based Management
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Sample Questions
Q1) Which of the following statements is true concerning how companies benefit from using an activity-based accounting system?
A)They have had few changes in activities over time and few corresponding changes have been made in the accounting system.
B)They have low overhead costs.
C)They have a narrow range of products.
D)They have wide variations in the volume of individual production runs and setups are costly (i.e. ,complex production methods).
Answer: D
Q2) Activity-based management and costing cannot be applied to marketing in order to
A)identify the marketing activities needed to service each customer or order more appropriately.
B)determine the variability in marketing costs across customer types and distribution.
C)support activity-based management by encouraging the elimination of accounts with high processing costs.
D)eliminate plantwide discretionary fixed costs.
Answer: D
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5
Chapter 4: Strategic Management of Costs,quality,and Time
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Sample Questions
Q1) Which of the following statements is true?
A)As quality goes up,scrap and rework fall,raising costs.
B)As quality goes up,scrap and rework increase,reducing costs.
C)As quality goes up,scrap and rework fall,reducing costs.
D)As quality goes up,scrap and rework increase,increasing costs.
Q2) How do traditional managerial accounting systems need to be modified to support total quality management?
Q3) Which is the best stage in the Value Chain to prevent quality problems?
A)Design
B)Production
C)Marketing
D)Research & Development
Q4) Compare the traditional and the new quality-based view.
Q5) Break-even time.Weldon Company's research and development department is presenting a proposal for new-product research.The new product will require research,development,and design investments of $800,000 (discounted cash flow).Sales will begin after three years and will generate an annual discounted net cash flow of $200,000 starting in Year 3.
(Weldon Company;Breakeven time. )
Q6) Compare the costs of quality control to the costs of failing to control quality. Page 6
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Page 7
Chapter 5: Cost Drivers and Cost Behavior
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Sample Questions
Q1) Which statement is correct concerning the learning curve function?
A)This function shows how the amount of time required to perform a task goes up per unit as the number of units increases.
B)This function shows how the amount of time required to perform a task goes down per unit as the number of units increases.
C)This function shows how the amount of time required to perform a task goes up per unit as the number of units decreases.
D)This function shows how the amount of time required to perform a task goes down per unit as the number of units decreases.
Q2) The major purpose of cost estimation is to break down total cost into which of the following components?
A)short-run and long-run components.
B)fixed and variable components.
C)controllable and noncontrollable components.
D)direct and indirect components.
Q3) Explain the costs,benefits,and weaknesses of the various cost estimation methods.
Q4) Briefly explain how to use historical data to estimate costs.
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Chapter 6: Financial Modeling for Short-Term Decision
Making
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120 Flashcards
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Sample Questions
Q1) When will the contribution margin ratio increase?
A)when the break-even point increases.
B)when the break-even point decreases.
C)when the variable expenses as a percentage of sales decrease.
D)when the variable expenses as a percentage of sales increase.
Q2) Which of the following are underlying assumptions of cost-volume-profit analysis?
A)Fixed costs will not change over a wide range of activity and variable costs are strictly variable.
B)All costs can be classified either as a fixed or variable cost and behave linearly.
C)Sales prices do not change in the relevant range and the sales mix must remain constant.
D)All of the answers are correct.
Q3) Explain the effect of taxes on financial modeling.
Q4) Explain the use of financial modeling in a multiple product setting.
Q5) Identify the underlying assumptions of cost-volume-profit analysis.
Q6) Explain what is meant by the margin of safety and how it is used by managers.
Q7) Explain how to perform cost-volume-profit (CVP)analysis.
Q8) Describe the use of spreadsheets in financial modeling.
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Chapter 7: Differential Cost Analysis for Operating Decisions
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186 Flashcards
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Sample Questions
Q1) Factors underlying make-or-buy decisions include non-quantitative factors,such as
A)dependability of suppliers and the quality of purchased materials.
B)dependability of suppliers and the quantity of purchased materials.
C)dependability of employees and the quality of manufactured materials.
D)dependability of employees and the quantity of purchased materials.
Q2) What stabilizes and improves processes to decrease variation,and is well suited to removing disruptions in the process?
A)Total Quality Management
B)Total Quantity Management
C)Total Price Management
D)Total Cost Management
Q3) Predatory pricing
A)occurs when a business deliberately prices below its costs in an effort to drive out competitors.
B)occurs when a business unintentionally prices below its costs which results in driving out competitors.
C)is legal in all 50 States.
D)is generally accepted in the United States.
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Chapter 8: Capital Expenditure Decisions
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Sample Questions
Q1) Feed the Hungry Foundation
Feed the Hungry Foundation is a non-profit organization that has a cost of capital of 10 percent.The foundation is considering the replacement of a piece of equipment.The old machine has a book value of $3,000 and a remaining estimated life of 5 years with no salvage value at that time.The salvage value of the old machine is currently $1,500.The new equipment will cost $10,000.It has an estimated life of 5 years with no salvage value then.Annual cash operating costs are $4,000 for the old machine and $2,000 for the new machine.
Refer to Feed the Hungry Foundation.What is the present value of the operating cash outflows for the old machine?
Q2) What is a general type of long-term capital investment that companies make?
A)replacement and minor improvements
B)training and development of employees
C)advertising campaigns
D)all of the above
Q3) What is the reasoning behind the separation of the investing and financing aspects of making long-term decisions?
Q4) Explain why analysts will need more than cash flow analysis to justify or reject an investment.
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Chapter 9: Profit Planning and Budgeting
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Sample Questions
Q1) If a company wishes to establish a factory overhead budget system in which estimated costs can be derived directly from estimates of activity levels,which type of budget should it prepare?
A)zero-based budget.
B)flexible budget.
C)discretionary budget.
D)fixed budget.
Q2) Which of the following departments would not be a cost center?
A)advertising department
B)city police department
C)building and grounds department
D)sales department
Q3) Describe the master budget.
Q4) Which of the following describes the difference in operating profits from the flexible budget to the master budget results from the difference between budgeted sales volume and actual sales volume?
A)the margin of safety.
B)a profit-volume variance.
C)a sales volume variance.
D)a differential volume variance.
Page 12
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Chapter 10: Profit and Cost Center Performance Evaluation
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100 Flashcards
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Sample Questions
Q1) For financial reporting purposes,how are fixed manufacturing costs treated?
A)As period costs.
B)As product costs.
C)As direct materials costs.
D)None of the above.
Q2) To analyze variances,the variable cost variance model is applied to the calculation of which of the following?
A)Direct materials variances.
B)Direct labor variances.
C)Variable manufacturing overhead price and efficiency variances.
D)All of the above.
Q3) Fixed production costs variances are calculated as
A)the difference between actual and budgeted fixed costs.
B)(actual hours ´ standard inputs)- budgeted fixed costs.
C)(actual hours ´ standard outputs)- budgeted fixed costs.
D)(actual hours ´ standard outputs)- actual fixed costs.
Q4) How are fixed manufacturing costs treated for managerial and external reporting purposes?
Q5) How do you analyze variances using the variable cost variance model?
Q6) How are fixed production cost variances calculated and why do they occur?
Page 13
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Chapter 11: Investment Center Performance Evaluation
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Sample Questions
Q1) Return on Investment (ROI)is equal to the
A)(Profit Margin/Division Costs)´ (Division Costs/Division Investment).
B)(Profit Margin/Division Revenues)´ (Division Revenues/Division Investment).
C)(Sales Margin/Division Revenues)´ (Division Revenues/Division Investment).
D)(Sales Margin/Division Costs)´ (Division Costs/Division Investment).
Q2) Management uses the following as a measure for assessing efficiency in producing and selling goods and services because it indicates the portion of each dollar of revenue that is profit.
A)Profit margin percentage.
B)Return on investment
C)Investment turnover ratio.
D)Revenue realization ratio.
Q3) Which of the following describes a transfer pricing system based on either variable costs or full-absorption costs,and applies a normal markup to costs as a surrogate for market prices when intermediate market prices are not available?
A)hybrid.
B)dual.
C)cost-plus.
D)mark-to-market.
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Page 14
Chapter 12: Incentive Issues
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Sample Questions
Q1) How do decentralized companies that have many divisions doing diverse activities tend to weight the performance evaluation?
A)more on each division's performance and less on company-wide performance.
B)less on each division's performance and more on company-wide performance.
C)on the stock market performance of the company's shares,only.
D)equally between each division's performance and company-wide performance.
Q2) Effective divisional incentive compensation plans must induce individual behavior compatible with increasing which of the following?
A)firm's wealth.
B)suppliers' wealth.
C)customers' wealth.
D)employees' agency wealth.
Q3) Which of the following is a model based on four perspectives: (1)learning and growth, (2)internal business and production process efficiency, (3)customer,and (4)financial?
A)Zero-based budgeting
B)Planning programming and budgeting
C)Management by objectives
D)Balanced scorecard
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Page 15
Chapter 13: Allocating Costs to Responsibility Centers
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Sample Questions
Q1) Describe the factors that should be considered in allocating service department costs.
Q2) What is the second step in allocating service department costs to production departments?
A)Assign overhead costs that are directly attributable to a service or production department.
B)Allocate other overhead costs based on appropriate cost drivers.
C)Allocate service department costs to production departments.
D)None of the answers is correct.
Q3) Why are joint-process costs allocated?
Q4) Which of the following statements is true concerning finding a cost-allocation base for activity-based costing?
A)Finding the cost-allocation base is justified if the benefits from improved decisions exceed the costs of finding and using the base.
B)Finding the cost-allocation base is usually difficult and costly.
C)Finding the cost-allocation base may require the accumulation of extensive data in addition to the regular accounting information.
D)All of the answers are correct.
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Page 16