Managerial Accounting Exam Questions
Course Introduction
Managerial Accounting focuses on the internal use of accounting information by managers within organizations to aid in planning, controlling, and decision-making. The course covers key concepts such as budgeting, cost-volume-profit analysis, activity-based costing, standard costing, performance measurement, and relevant cost analysis for decision-making. Emphasis is placed on how financial and non-financial information is gathered, analyzed, and interpreted to support effective management strategies and operational efficiency. Students will develop critical thinking and problem-solving skills applicable to real-world business scenarios, enhancing their ability to contribute to strategic organizational objectives.
Recommended Textbook
Managerial Accounting 2nd Edition by Charles E. Davis
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2470 Verified Questions
2470 Flashcards
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Chapter 1: Accounting As a Tool for Management
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Sample Questions
Q1) Which of the following is not a characteristic of a managerial accountant?
A)Just a number cruncher
B)Analyze and interpret financial data
C)Analyze and interpret operating data
D)Active participant in the decision making process
Answer: A
Q2) Michael Porter,a management strategy expert,developed a strategic framework in which a firm has ways to develop a competitive advantage.Which of the following is one of the ways Porter suggested a firm use to develop a competitive advantage?
A)Supply chain management
B)Low-cost production
C)Just-in-time management
D)None of these ans choices are correct
Answer: B
Q3) Managerial accounting is designed to assist managers with four general activities: planning,controlling,evaluating,and decision making.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Cost Behavior and Cost Estimation Summary of
Questions by Objectives and Blooms Taxonomy
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Sample Questions
Q1) If activity level increases,what happens to the total fixed cost?
A)It decreases.
B)It increases.
C)It remains the same.
D)It depends on how much the activity level increases.
Answer: C
Q2) Unlike the scattergraph,the high-low method requires only two data points - the lowest point of activity and the highest point of activity.
A)True
B)False
Answer: True
Q3) With a fixed cost, the cost per unit varies proportionately with changes in the level of activity.
A)True
B)False
Answer: False
Q4) Step costs are fixed over only a small range of activity.
A)True
B)False
Answer: True
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) The selling price of a unit is $20 and the variable product cost per unit is $14. In addition, a sales commission of 5% is paid on each sale. If the variable cost per unit \(\textbf{ excluding }\) sales commission increases by 1%, what will be the new contribution margin?
A)$4.86
B)$5.10
C)$5.16
D)$6.00
Answer: A
Q2) Which of the following does not influence prices?
A)Competition
B)Contribution margin
C)Costs
D)Customers
Answer: B
Q3) Cost-volume-profit analysis,or CVP,helps managers assess the impact of various business decisions on company profits.
A)True
B)False
Answer: True
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Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) Oil to keep the factory machinery lubricated is an example of: \(\begin{array}{}
\underline{\text{Direct Material}} & \underline{\text{Period Cost}} \end{array}\)
A) \(\begin{array}{}\text{Yes} & \text{No}\end{array}\)
B) \(\begin{array}{}\text{Yes} & \text{Yes}\end{array}\)
C) \(\begin{array}{}\text{No} & \text{Yes}\end{array}\)
D) \(\begin{array}{}\text{No} & \text{No}\end{array}\)
Q2) Fabric used in the manufacture of baseball jerseys is an example of: \(\begin{array}{}
\underline{\text{Direct Material}} & \underline{\text{Product Cost}} \end{array}\)
A) \(\begin{array}{}\text{Yes} & \text{No}\end{array}\)
B) \(\begin{array}{}\text{Yes} & \text{Yes}\end{array}\)
C) \(\begin{array}{}\text{No} & \text{Yes}\end{array}\)
D) \(\begin{array}{}\text{No} & \text{No}\end{array}\)
Q3) The three components of product cost include:
A)Direct material,indirect material,and labor.
B)Material,direct labor,and indirect labor.
C)Direct material,direct labor,and overhead.
D)Indirect material,indirect labor,and overhead.
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Chapter 5: Planning and Forecasting
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Sample Questions
Q1) Which of the following is \(\textbf{ not }\) a component of the master budget?
A)Budgeted income statement
B)Direct material purchases budget
C)Ending inventory and cost of goods sold budget
D)All of these ans choices are components of the master budget.
Q2) Many new business fail not because they are unprofitable,but because
A)They do not have the expertise to maintain the business.
B)They run out of cash.
C)They do not have adequate inventory.
D)None of these ans choices are correct.
Q3) Brand,Inc.makes portable generators.Budgeted sales are 20,000 for July,25,000 for August,28,000 for September,and 31,000 for October.Brand maintains an ending inventory equal to 10% of the following month's sales.Ending inventory at June 30<sup>th</sup> was 2,000.
Required
Prepare a production budget for the 3<sup>rd</sup> quarter ending September 30.
Q4) The first component of the master budget is the cash budget.
A)True
B)False
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) Flexible budgets are used as a tool for A)Control.
B)Evaluation.
C)Planning.
D)All of these ans choices are correct.
Q2) Melrose Manufacturing produces gourmet blackberry preserves.Melrose based its current year budget on a production level of 540,000 jars of preserves using ½ hour direct labor time for each jar which includes hand-sorting and trimming the berries.Total budgeted variable overhead for the year was $1,242,000.During the year,Melrose used 280,000 direct labor hours to produce 550,000 jars of blackberry preserves.Actual variable overhead for the year was $1,246,000.What is Melrose's flexible budget variable overhead variance?
A) $27,000 unfavorable
B) $19,000 favorable
C) $4,000 unfavorable
D) $23,000 unfavorable
Q3) Variances have very important meanings,even before their causes are identified.
A)True
B)False
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Page 8
Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) In changing from a traditional costing system to an activity-based costing system,overhead costs tend to shift from high-volume standard products to low-volume premium products because
A)All overhead costs are indirect.
B)Premium products usually consume more activities per
C)Standard products use more total activities than premium products.
D)None of these ans choices are correct.
Q2) Which of the following is \(\textbf{ not }\) a step in implementing an activity-based costing system?
A)Developing activity cost pools
B)Identifying activities
C)Calculating pre-determined overhead rates
D)Calculate the unit product cost
Q3) You have been hired by a company that is transitioning from a traditional method of product costing to an activity-based costing method.You are assigned to a team that has the responsibility of classifying activities as value-added or non-value-added.One of the team members does not understand the purpose of classifying activities.Define valued-added and non-value added costs for your team member and give an example of each and explain how non-value added activities affect product cost
Page 9
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) Your professor is considering retirement.Which of the following will not be relevant in his decision?
A)The amount of retirement benefits he will receive if he retires
B)The amount of salary he will receive if he does not retire
C)The cost of commuting to and from school
D)All of these ans choices are relevant in making his decision.
Q2) The option of accepting a special order should always be chosen if the price exceeds the relevant costs to produce and deliver the order to the customer.
A)True
B)False
Q3) When a customer requests a special order and the supplier has capacity constraints,reducing the special order is \(\textbf{ not }\) normally an option.
A)True
B)False
Q4) When a company accepts an outsourcing offer,managers must take specific action to eliminate the internal costs.
A)True
B)False
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Chapter 9: Capital Budgeting
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Sample Questions
Q1) If the net present value of a project is greater than or equal to zero,the project has achieved the required rate of return and should be accepted.
A)True
B)False
Q2) ABC Manufacturing is evaluating two capital projects.The company's choice will be based on the profitability index.Project #1 has a present value of cash flows of $200,000 and a net initial investment of $180,000 while Project #2 has a present value of future cash flows of $820,000 and a net initial investment of $800,000.Which project will ABC choose? Why?
Q3) Braxton Manufacturing is considering the purchase of new computerized equipment.The machine costs $75,000 and would generate $22,000 in annual cost savings over its 5-year life.At the end of 5 years,the equipment would have a $5,000 salvage value.Braxton's required rate of return is 12%.The machine's net present value is
A) $695
B) $4,305
C) $7,143
D) $79,306
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Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) The return on investment measures
A)Actual costs against budgeted costs.
B)The rate of return generated by an investment in assets.
C)The dollar amount of segment margin over operating income.
D)None of these ans choices are correct.
Q2) Marshall Industries operates as an investment center.Buddy Hall,the region's division manager,has set a required minimum rate of return of 15%.Marshall's total assets are $350,000,current liabilities are $150,000,and operating income is $60,000.The company's weighted-average cost of capital is 18% and its tax rate is 28%.
Required:
Calculate Marshalls EVA. Show your work.
Q3) The market-based price is easily determined by
A)Monitoring similar trades that occur in the marketplace between unrelated parties.
B)The price that the selling division charges other customers.
C)The price that the buying division would have to pay another supplier.
D)All of these ans choices are correct.
Q4) What is a transfer price? List the four ways of determining a transfer price.
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) Benchmarking means trying to match another company's A)Matrics.
B)Performance.
C)Profits.
D)Processes
Q2) Explain the difference between a leading indicator and a lagging indicator and give one example of each relating to your performance in this class.
Q3) Measures that can be determined only after something is finished are called
A)Post-operations indicators
B)Lagging indicators
C)Input indicators
D)Objective indicator
Q4) Which of the following is \(\textbf{ not }\) an example of an internal operating nonfinancial measure?
A)Labor productivity
B)Product defects
C)Product flexibility
D)Setup efficiency
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) The quality of assets is assessed through A)Turnover ratios.
B)Working capital.
C)Current ratio.
D)Profitability ratios.
Q2) Two measures of liquidity are the accounts receivable turnover and the inventory turnover.What do each of these measure,and how are they each calculated?
Q3) Barber Industries reported net income of $32,000,earnings per share of $1.20 and paid dividends of $0.30 per share.What is the dividend payout ratio?
A) 400%
B) 25%
C) $4
D) $1.50
Q4) In a trend analysis of cost of goods sold over the last three months,all cost of goods sold accounts are shown as a percentage of the current quarter.
A)True
B)False
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) During the current year,ABC Corporation purchased a warehouse for $1,200,000.In order to pay for the warehouse,ABC sold its investment in another company's common stock costing $900,000 for $1,400,000.What amount is reported in ABC's investing section of its statement of cash flows?
A) $0
B) $1,200,000 use of cash
C) $900,000 source of cash
D) $200,000 net cash provided by investing activities
Q2) A company's unearned revenue account increased 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 financing activities
B)A deduction under financing activities
C)An addition under operating activities
D)A deduction under operating activities
Q3) In interpreting a statement of cash flows,the first thing a manager should examine is the company's ability to generate cash from operations.
A)True
B)False
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Page 15
Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) The accounting firm PriceWaterhouseCoopers is an example of a company that would use a process costing system.
A)True
B)False
Q2) At the end of January, Monroe Industries had completed 65,000 units and left 8,000 units in Work In process, 60% complete with respect to materials and 80% complete with respect to conversion. How many equivalent units will be used to determine the cost per equivalent unit for materials?
A) 66,600
B) 68,200
C) 69,800
D) 71,400
Q3) The soft drink bottler Dr.Pepper is an example of a company that would use a process costing system.
A)True
B)False
Q4) List three goods or services likely to use a process costing system and three that are likely to use a job order costing system.
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Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) 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
Q2) The cost accumulation method required by generally accepted accounting principles is referred to as
A)Full costing
B)Absorption
C)Either full costing or absorption
D)Neither full costing nor absorption
Q3) Based on the matching principle,all product cost flow through
A)Raw Material Inventory,Work in Process Inventory and Finished Goods until the goods are sold.
B)Raw Material Inventory,Work in Process Inventory and Manufacturing Overhead until the goods are sold.
C)Raw Material Inventory,Direct Materials and Conversion,and Work in Process.
D)Raw Material Inventory,Conversion,and Finished Goods until the goods are sold.
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Chapter 16: Topic Focus Standard Costing Systems
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Sample Questions
Q1) Manufacturing Overhead is a temporary account that must have a zero balance at the end of the accounting period.
A)True B)False
Q2) Wolfe Manufacturing Company has the following information related to variable overhead:
\(\begin{array}{ll}
\text { Standard hours per unit of production } & 3.5 \text { hours } \\
\text { Standard variable rate } & \$ 16 \text { per hour } \\ & \\
\text { Actual hours during period } & 5,000 \text { hours } \\
\text { Actual variable overhead cost } & \$ 96,000 \\
\text { Actual production } & 1,400 \text { units } \end{array}\)
a.Calculate the variable overhead spending variance for the period.
b.Calculate the variable overhead efficiency variance for the period.
Q3) The easiest approach to close variances accounts is to the Raw Materials Inventory account.
A)True B)False
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Chapter 17: Topic Focus Customer Profitability
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Q1) Customer profit margin divides customer net profit by customer revenues to obtain the profit percentage the customer generates for the company.
A)True
B)False
Q2) In their book Killer Customers,Larry Selden and Geoffrey Colvin estimate that the top 20% of a company's customers generate approximately 120% of the company's profits.
A)True B)False
Q3) Raising prices for unprofitable customers is a reflection of the cost of doing business with them.
A)True
B)False
Q4) If unprofitable customers \(\textbf{ cannot }\) be turned to profitable ones,the company should \(\textbf{ never }\) drop them.
A)True B)False
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