Managerial Accounting Exam Solutions
Course Introduction
Managerial Accounting provides students with an in-depth understanding of how accounting information is used by managers within organizations to plan, control, and make informed decisions. The course covers key topics such as cost behavior, budgeting, performance measurement, and variance analysis, enabling students to interpret financial data and develop strategies for improving organizational efficiency and profitability. Emphasis is placed on the application of accounting tools for internal decision-making, ethical considerations in managerial accounting, and the impact of accounting information on organizational outcomes.
Recommended Textbook
Cornerstones of Cost Accounting 1st Edition by Don R. Hansen
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20 Chapters
2433 Verified Questions
2433 Flashcards
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Page 2
Chapter 1: Introduction to Cost Management
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) Which of the following would be considered a line function?
A) production
B) maintenance
C) public relations
D) administrative services
Answer: A
Q2) Which of the following activities is NOT associated with the cost management information system?
A) preparing a cost of quality report
B) preparing a performance report that compares actual costs to budgeted costs
C) determining the cost of a customer
D) using future expected earnings to estimate the price of a share of common stock
Answer: D
Q3) Automation of the manufacturing environment is associated with increases in A) inventory.
B) productive capacity.
C) processing time.
D) none of these.
Answer: B
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Page 3
Chapter 2: Basic Cost Management Concepts
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) The direct costs of operating a university computer center would NOT include
A) rent paid for computers.
B) a fair share of university utilities.
C) paper used by the center.
D) computer consultants' salaries.
Answer: B
Q2) Which of the following is a service organization?
A) grocery store
B) department store
C) cattle ranch
D) CPA firm
Answer: D
Q3) Which of the following methods of assigning costs is based on convenience or some assumed linkage, and reduces the overall accuracy of the cost assignments?
A) direct tracing
B) driver tracing
C) allocation
D) all of these
Answer: C
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Page 4
Chapter 3: Cost Behavior
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132 Flashcards
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Sample Questions
Q1) Refer to Figure 3-5.Predict a cost for 5,000 labor hours.
A) $17,900
B) $17,700
C) $16,667
D) $30,400
Answer: A
Q2) If all the activity capacity acquired is not used, this is an example of
A) practical capacity.
B) activity capacity.
C) unused capacity.
D) ideal capacity.
Answer: C
Q3) Committed resources
A) are supplied as needed.
B) are acquired by a contract for the exact amount of their usage.
C) may exceed the demand for their usage.
D) all of these.
Answer: C
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Chapter 4: Activity-Based Costing
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) Refer to Figure 4-11.Using functional-based costing, what is the amount of overhead cost to be assigned to Product B using labor hours as the allocation base?
A) $58,000
B) $43,500
C) $11,600
D) $46,400
Q2) If activity-based costing is used, electricity usage would be an example of a A) unit-level activity.
B) batch-level activity.
C) product-level activity.
D) facility-level activity.
Q3) Refer to 4-20.How much overhead is assigned to Model Y using the 4 activity drivers?
A) $560,000
B) $2,060,000
C) $2,640,000
D) $2,820,000
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Chapter 5: Product and Service Costing: Job-Order System
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102 Verified Questions
102 Flashcards
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Sample Questions
Q1) Which of the following products would NOT use job-order costing?
A) houses
B) chemicals
C) ships
D) custom-built furniture
Q2) Which of the following is a manufactured product?
A) bungee jumping
B) beauty salon
C) restaurant
D) automobile
Q3) Refer to Figure 5-1.One-half of Job X4A was sold for $10,000.What is the total amount of costs assigned to Job X4A?
A) $9,000
B) $20,250
C) $13,500
D) $15,750
Q4) Compare and contrast perishability and intangibility in an automobile oil lubrication shop and architectural design firms.
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Chapter 6: Process Costing
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137 Flashcards
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Sample Questions
Q1) Refer to Figure 6-17.The equivalent units for those transferred in from the prior department using FIFO would be
A) 10,000 units.
B) 20,000 units.
C) 26,000 units.
D) 22,000 units.
Q2) The appropriate cost accounting system to use when inventory items are produced on an assembly line is
A) job-order costing.
B) process costing.
C) weighted average.
D) perpetual method.
Q3) _______________ determine(s) whether the costs assigned to units transferred out and to units in ending work in process are equal to the costs in beginning work in process, plus the manufacturing costs incurred in the current period.
A) Equivalent unit of output
B) Cost reconciliation
C) Batch production process
D) Transferred-in costs
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Page 8
Chapter 7: Allocating Costs of Support Departments and Joint Products
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143 Flashcards
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Sample Questions
Q1) Which of the following methods allocates joint production costs based on the pounds of product produced?
A) sales-value-at-split-off method
B) constant gross margin percentage method
C) physical units method
D) replacement cost method
Q2) Refer to Figure 7-5.Support department costs NOT allocated to the two copy centers are
A) $44,000.
B) $19,680.
C) $16,800.
D) $8,000.
Q3) Refer to Figure 7-7.What is the amount of joint costs allocated to Dulls using the physical units method?
A) $50,000
B) $160,000
C) $38,554
D) $40,000
Q4) Compare and contrast the various methods of accounting for joint product costs.
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Chapter 8: Budgeting for Planning and Control
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Sample Questions
Q1) Refer to Figure 8-8.The static budget variance for rent is
A)$100 F.
B)$100 U.
C)$-0-.
D)$50 U.
Q2) An example of a negative incentive is
A) promotion.
B) nonfinancial incentive.
C) feedback reports.
D) termination of employment.
Q3) Refer to Figure 8-3.How many units of steel are expected in the material inventory at the end of the second month?
A) 30 units
B) 45 units
C) 40 units
D) 35 units
Q4) Compare and contrast static budgets, flexible budgets, and activity-based budgets.
Q5) Discuss the features of an ideal budgetary process.
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Chapter 9: Standard Costing: a Functional-Based Control Approach
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86 Flashcards
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Sample Questions
Q1) What is Crawford's fixed overhead volume variance for 2006?
A) $60,000 (F)
B) $24,000 (F)
C) $36,000 (U)
D) $60,000 (U)
Q2) Refer to Figure 9-3.What is the variable overhead spending variance for Reynolds?
A) $86,000 (U)
B) $0
C) $4,000 (F)
D) $10,000 (F)
Q3) What is the standard quantity of direct materials per unit for Roberts Company?
A) 3.50 lbs.
B) 3.25 lbs.
C) 3.10 lbs.
D) 3.00 lbs.
Q4) Compare and contrast mix and yield variances.
Q5) How are standards developed? What is the difference between ideal and currently attainable standards?
11
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Chapter 10: Decentralization: Responsibility Accounting, Performance
Evaluation, and Transfer Pricing
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) Patterson Company had sales of $200,000, net income of $10,000, and an asset base of $300,000.Its margin is A) 66.7%.
B) 150.0%.
C) 3.3%.
D) 5.0%.
Q2) If the margin of 0.3 stayed the same and the turnover ratio of 5.0 increased by 10 percent, the ROI would A) increase by 10 percent. B) decrease by 10 percent. C) increase by 15 percent. D) remain the same.
Q3) What problems do owners face in encouraging goal congruence of managers? What is a stock option? How can stock options encourage goal congruence?
Q4) The emphasis on short-run results at the expense of the long run is A) efficient behavior. B) effective behavior. C) optimal behavior. D) myopic behavior.
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Chapter 11: Strategic Cost Management
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121 Flashcards
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Sample Questions
Q1) Which of the following is NOT a trait of a traditional manufacturing system?
A) push-through system
B) short-term supplier contracts
C) value-added focus
D) total quality control
Q2) Which of the following manufacturing costs is assigned to products in JIT environment using direct tracing?
A) material handling
B) repairs and maintenance
C) custodial services
D) all of these
Q3) ______________ is creating better customer value for the same or lower cost than competitors or creating equivalent value for lower cost than offered by competitors.
A) Strategic decision making
B) Strategic cost management
C) Competitive advantage
D) Total product
Q4) Explain the difference between acceptable quality level and total quality control.
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Chapter 12: Activity-Based Management
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116 Flashcards
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Sample Questions
Q1) The non-value-added costs for the company are
A) $80,000.
B) $40,000.
C) $20,000.
D) $-0-.
Q2) _______________ are those activities necessary to remain in business.
A) Activity inputs
B) Activity outputs
C) Activity drivers
D) Value-added activities
Q3) Which of the following is NOT an objective of activity-based management?
A) to improve decision making through better cost information
B) to increase the number of activities necessary to perform processes
C) to encourage cost reduction through continuous improvement
D) to increase profitability
Q4) For non-value-added activities that are unnecessary, the standard quantity is A) one.
B) zero.
C) actual quantity minus standard price.
D) actual quantity plus standard price.
Page 14
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Chapter 13: The Balanced Scorecard: Strategic-Based Control
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92 Flashcards
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Sample Questions
Q1) The theoretical velocity per hour is
A) 4.0 units.
B) 3.6 units.
C) 1.1 units.
D) 1.0 units.
Q2) Double-loop feedback occurs under what conditions?
A) When managers receive information about both the effectiveness of strategy implementation as well as the validity of assumptions.
B) When managers receive feedback information from two information sources.
C) When managers validate the feedback information by double checking it.
D) When managers receive information about the effectiveness of the controls and the effectiveness of the implementation.
Q3) Balanced scorecard is designed to bring about organizational change.Which of the following is NOT a means of alignment?
A) Employees must share ownership of objectives, measures, targets, and initiatives.
B) Incentives must be structured to support strategy.
C) Resources must be allocated to support strategy.
D) All of these.
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Chapter 14: Quality and Environmental Cost Management
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157 Flashcards
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Sample Questions
Q1) Refer to Figure 14-9.What is the environmental costs as a percentage of sales for 2012?
A) 100%
B) 10%
C) 80%
D) 1,000%
Q2) Which of the following is a correct meaning(s)for the term zero defects?
A) all products conform to specifications
B) there are no unusable products
C) all products are usable or can be reworked
D) all of these
Q3) What is the change in environmental costs from 2013 to 2014?
A) $66,000
B) $840,000
C) $774,000
D) $58,000
Q4) Within the robust view of strategy, describe the management strategy to reduce quality costs recommended by the American Society for Quality Control.
Q5) What does quality mean and how has improving quality increased firm value?
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Chapter 15: Lean Accounting and Productivity Measurement
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) Lean manufacturing shares many of the same methodologies as A) activity-based management.
B) JIT manufacturing.
C) process costing.
D) none of these.
Q2) Which of the following is a reason traditional costing approaches may NOT work in a lean manufacturing environment?
A) Standard costing variances encourage overproduction.
B) Distorted product costs may conceal the outcome of success of a lean system.
C) Traditional operational controls work against demand-pull systems.
D) All of these.
Q3) Refer to Figure 15-4.If the materials costs for both products are $75 per unit produced, and conversion costs are $120 per hour, what is the unit cost of Product B under the features and approach costing method?
A) $91 per unit
B) $195 per unit
C) $87 per unit
D) $81.75 per unit
Q4) Discuss the linkage between quality and productivity.
Page 17
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Chapter 16: Cost-Volume-Profit Analysis
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108 Flashcards
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Sample Questions
Q1) Refer to Figure 16-1.What is the variable cost per unit for Kringel?
A) $0.85
B) $1.25
C) $0.40
D) 200,000 units
Q2) Baker Company sells its product for $60.In addition, it has a variable cost ratio of 40 percent and total fixed costs of $9,000.What is the break-even point in sales dollars for Baker Company?
A) $3,600
B) $5,400
C) $15,000
D) $9,000
Q3) How many units need to be sold to produce a before-tax profit of $120,000 using ABC?
A) 51,000 units
B) 36,000 units
C) 21,000 units
D) 81,000 units
Q4) In the Cost-Volume-Profit analysis, what are two ways management can deal with risk and uncertainty?
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Chapter 17: Activity Resource Usage Model and Tactical Decision Making
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98 Flashcards
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Sample Questions
Q1) Assume that product F is discontinued and the space is used to produce
A) decrease by $2,070.
B) increase by $1,200.
C) decrease by $270.
D) increase by $2,640.
E) Product E's production is increased to 2,200 units per month, but E's selling price of all units of E is reduced to $10.20. Monthly profits will
Q2) How much will income change if the special order is accepted?
A) increase by $398,400
B) decrease by $180,000
C) increase by $111,600
D) no change
Q3) Which of the joint products should be processed further?
A) X
B) Y
C) Z
D) both X and Y
Q4) What are relevant costs? How do they relate to decision making?
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Chapter 18: Pricing and Profitability Analysis
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Sample Questions
Q1) Taylor Company's budgeted sales were 10,000 units at $200 per unit.Actual sales were 9,200 units at $210 per unit. Taylor's sales price variance is
A) $68,000 (U).
B) $100,000 (U).
C) $8,000 (U).
D) $92,000 (F).
Q2) Common segment costs, when contrasted with direct segment costs, are
A) costs of all segments such as direct labor.
B) costs related to more than one segment and not directly traceable to a particular segment.
C) incurred at one level for the benefit of two or more segments.
D) both b and c.
Q3) What is the primary difference between variable and absorption costing?
A) inclusion of fixed selling expenses in product costs
B) inclusion of variable factory overhead in period costs
C) inclusion of fixed selling expenses in period costs
D) inclusion of fixed factory overhead in product costs
Q4) What are some of the pricing practices regulated by law?
Q5) Compare and contrast the various pricing policies used by companies.
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Chapter 19: Capital Investment
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Sample Questions
Q1) The system will cost $9,000,000 and will last ten years.The company's cost of capital is 12 percent.
Which of the following best describes the IRR for this project?
A) between 8 and 10%
B) between 10 and 12%
C) between 12 and 14%
D) between 14 and 16%
Q2) A firm is evaluating a project that has a net present value of $0 when a discount rate of 8 percent is used.A discount rate of 6 percent will result in a
A) negative net present value.
B) positive net present value.
C) net present value of $0.
D) the question cannot be answered based upon the information provided.
Q3) If the tax rate is 40 percent and a company has $800,000 of income, a depreciation deduction of $160,000 would result in a tax savings of
A) $105,600.
B) $96,000.
C) $64,000.
D) $54,400.
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Page 21
Chapter 20: Inventory Management: Economic Order
Quantity, Jit, and the Theory of Constraints
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Sample Questions
Q1) The JIT approach to inventory management
A) allows greater flexibility as to when products can be manufactured.
B) results in higher inventory levels but reduces ordering and setup costs.
C) results in lower inventory carrying costs.
D) none of these.
Q2) Which of the following equations determines the total annual ordering costs?
A) Cost of placing an order times the order quantity.
B) Cost of placing an order times the number of orders per year.
C) Cost of placing an order times one-half of the order quantity.
D) Unit carrying costs per year times the order quantity.
Q3) A drummer is(are)
A) the inventory needed to keep the constrained resource busy for a specified time interval.
B) the major binding constraint.
C) the minor binding constraint.
D) the actions taken to tie the rate at which materials are released into the plant (at the first operation) to the production rate of the constrained resource.
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Page 22