Managerial Accounting Final Exam Questions
Course Introduction
Managerial Accounting introduces students to the fundamental concepts and techniques used to generate, analyze, and interpret accounting information for internal decision-making purposes. The course covers topics such as cost behavior, budgeting, performance evaluation, and strategic planning, emphasizing how managers use accounting data to make informed business decisions. Students will explore methods for costing products and services, managing budgets, and assessing the financial implications of operational and strategic choices, providing essential skills for effective management and organizational control.
Recommended Textbook
Cost Accounting A Managerial Emphasis 14th Edition by Charles T. Horngren
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Page 2
Chapter 1: The Accountants Role in the Organization
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Sample Questions
Q1) Strategy specifies:
A)how an organization matches its own capabilities with the opportunities in the marketplace
B)standard procedures to ensure quality products
C)incremental changes for improved performance
D)the demand created for products and services
Answer: A
Q2) If there is an ethical conflict concerning your direct supervisor, when is it appropriate to contact authorities or individuals NOT employed by the organization?
A)when there is a personal conflict
B)when your supervisor is about to receive a bonus
C)when there is a clear violation of the law
D)when you are about to be terminated
Answer: C
Q3) Companies have to follow strict guidelines when designing a management accounting system.
A)True
B)False
Answer: False
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Page 3
Chapter 2: An Introduction to Cost Terms and Purposes
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Sample Questions
Q1) Product cost for reimbursement under government contracts may include all costs
EXCEPT:
A)marketing costs
B)design costs
C)production costs
D)research and development costs
Answer: A
Q2) The distinction between direct and indirect costs is clearly set forth in Generally Accepted Accounting Principles (GAAP).
A)True
B)False
Answer: False
Q3) ________ - sector companies purchase and then sell tangible products without changing their basic form.
A)Merchandising
B)Professional
C)Service
D)Manufacturing
Answer: A
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Page 4
Chapter 3: Cost-Volume-Profit Analysis
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Sample Questions
Q1) What is the budgeted revenue for the month assuming that Dr. Hunter plans to perform this procedure 200 times?
A)$100,000
B)$200,000
C)$300,000
D)$400,000
Answer: B
Q2) If the selling price per unit of a product is $30, variable costs per unit are $20, and total fixed costs are $10,000 and a company sells 5,000 units, operating income would be $40,000.
A)True
B)False
Answer: True
Q3) The breakeven point decreases if:
A)the variable cost per unit increases
B)total fixed costs decrease
C)the contribution margin per unit decreases
D)the selling price per unit decreases
Answer: B
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Page 5
Chapter 4: Job Costing
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Sample Questions
Q1) Annual cost rates are preferred over actual cost rates for all of the following reasons
EXCEPT:
A)budgeted costs allow managers to have cost information on a timely basis
B)budgeted costs may be subject to short-run fluctuations
C)budgeted indirect-cost rates are known prior to the inception of a new job
D)budgeted-cost rates can be used to allocate direct or indirect costs
Q2) All of the following are true of the Work-in-Process Control account EXCEPT that:
A)it tracks all direct material purchases
B)the balance equals the sum of amounts from all in-process individual job-cost records
C)it is an asset account
D)it tracks job costs from beginning through completion
Q3) Overallocated indirect costs occur when the allocated amount of indirect costs is greater than the amount incurred for that period.
A)True
B)False
Q4) Explain how a budgeted indirect-cost rate is determined.
Q5) What is the difference between an actual cost system and a normal cost system?
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Chapter 5: Activity-Based Costing and Activity-Based Management
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Sample Questions
Q1) The materials handling activity-cost driver rate is:
A)$2.00
B)$20.00
C)$0.50
D)$5.00
Q2) ABC systems:
A)highlight the different levels of activities
B)limit cost drivers to units of output
C)allocate costs based on the overall level of activity
D)generally undercost complex products
Q3) It is important that the product costs reflect as much of the diversity and complexity of the manufacturing process so that:
A)product costs will reflect their relative consumption of resources
B)nonvalue-added costs can be eliminated
C)there is less likelihood of cross subsidizing of product costs
D)All of these answers are correct.
Q4) ABC systems are useful in manufacturing, but NOT in the merchandising or service industries.
A)True
B)False
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Chapter 6: Master Budget and Responsibility Accounting
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Sample Questions
Q1) Budgeted financial statements are called pro forma statements.
A)True
B)False
Q2) Explain what is meant by sensitivity analysis in budgeting, and discuss how managers might use sensitivity analysis in practice.
Q3) Even in the face of changing conditions, attaining the original budget is critical.
A)True
B)False
Q4) A responsibility center can be structured to promote better alignment of individual and company goals.
A)True
B)False
Q5) A controllable cost is any cost that can be ________ by a responsibility center manager for a period of time.
A)controlled
B)influenced
C)segregated
D)excluded
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Chapter 7: Flexible Budgets, Direct-Cost Variances, and Management Control
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Sample Questions
Q1) The variance that is best for measuring operating performance is the:
A)static-budget variance
B)flexible-budget variance
C)sales-volume variance
D)selling-price variance
Q2) When standards are used to develop a budget:
A)past inefficiencies are excluded
B)benchmarking must also be used
C)information is available at a low cost
D)flexible-budget amounts are difficult to determine
Q3) The flexible budget will report ________ for the fixed costs.
A)$229,000
B)$225,000
C)$180,000
D)$286,250
Q4) June's direct material price variance is:
A)$1,960 unfavorable
B)$600 favorable
C)$1,360 favorable
D)None of these answers are correct.
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Chapter 8: Flexible Budgets, Overhead Cost Variances, and Management Control
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Sample Questions
Q1) What is the variable overhead efficiency variance?
A)$3,750 favorable
B)$16,875 unfavorable
C)$13,125 unfavorable
D)$30,375 unfavorable
Q2) What is the variable overhead spending variance?
A)$4,500 unfavorable
B)$3,937.50 unfavorable
C)$4,500 favorable
D)$3,937.50 favorable
Q3) The chapter shows that variance analysis of overhead costs can be presented in 4, 3, 2, and 1-variance analysis. Explain what each of the variances presented under each method shows about overhead costs.
Q4) What is the flexible-budget variance for variable manufacturing overhead?
A)$9,000 favorable
B)$9,000 unfavorable
C)zero
D)None of these answers is correct.
Page 10
Q5) Explain why there is no production-volume variance for variable manufacturing overhead costs.
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Chapter 9: Inventory Costing and Capacity Analysis
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Sample Questions
Q1) Direct costing is a perfect way to describe the variable-costing inventory method.
A)True
B)False
Q2) The gross-margin format of the income statement:
A)distinguishes between manufacturing and nonmanufacturing costs
B)distinguishes variable costs from fixed costs
C)is used with variable costing
D)calculates contribution margin
Q3) ________ provides the lowest estimate of denominator-level capacity.
A)Practical capacity
B)Theoretical capacity
C)Master-budget capacity utilization
D)Normal capacity utilization
Q4) Fixed manufacturing costs included in ending inventory total:
A)$2,400
B)$3,000
C)$1,800
D)0
Q5) Discuss the three methods to dispose of production volume variance.
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Chapter 10: Determining How Costs Behave
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Sample Questions
Q1) The cost components of a heater include $35 for the compressor, $12 for the sheet molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 heaters in the coming year. What cost function best represents these costs?
A)y = 1,500 + 127X
B)y = 1,500 +55,000X
C)y = 55,000 + 1,500X
D)y = 55,000 +127X
Q2) A high correlation between two variables s and t indicates that:
A)s may cause t, or t may cause s
B)both may be affected by a third variable
C)the correlation may be due to random chance
D)All of these answers are correct.
Q3) y = a + bX represents the general form of the linear cost function. which is expressed in Excel as y=mx+b.
A)True
B)False
Q4) What are the three criteria a company should use to evaluate and choose a cost driver? Briefly explain each of the three criteria.
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Chapter 11: Decision Making and Relevant Information
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Sample Questions
Q1) The incremental costs of producing one more unit of product include all of the following EXCEPT:
A)direct materials
B)direct labor
C)variable overhead costs
D)fixed overhead costs
Q2) Variable cost per unit is the best product cost to use for one-time-only special order decisions.
A)True
B)False
Q3) The best way to avoid misidentification of relevant costs is to focus on:
A)expected future costs that differ among the alternatives
B)historical costs
C)unit fixed costs
D)total unit costs
Q4) Are relevant revenues and relevant costs the only information needed by managers to select among alternatives? Explain using examples.
Q5) How does a manager go about choosing which of three products to produce and sell when each product uses a single machine with a limited capacity?
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Chapter 12: Pricing Decisions and Cost Management
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Sample Questions
Q1) What is the full cost of the product per unit?
A)$60
B)$180
C)$198
D)$66
Q2) Life-cycle budgeting and life-cycle costing help highlight:
A)an increase in customer-service costs due to using inferior materials
B)high production costs caused by a complex design
C)large ordering costs due to the great number of component parts used
D)an increase in annual operating income resulting from the new product
Q3) What is the change in operating income if marketing is correct and only the sales price is changed?
A)$165,000
B)$45,000
C)$(165,000)
D)$(435,000)
Q4) Companies must always examine pricing decisions through the eyes of their customers.
A)True
B)False
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Chapter 13: Strategy, Balanced Scorecard, and Strategic
Profitability Analysis
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Sample Questions
Q1) When analyzing the change in operating income, the strategy component of price-recovery will increase when:
A)capacity is reduced
B)production efficiencies are successfully implemented
C)selling prices are increased
D)more units are sold
Q2) What is the cost effect of the growth component?
A)$60,000 U
B)$140,000 F
C)$60,000 F
D)$200,000 F
Q3) Managers can reduce capacity-based fixed costs by measuring and managing
A)unused capacity
B)variable costs
C)engineered costs
D)discretionary costs
Q4) What are the four key perspectives in the balanced scorecard?
Page 15
Q5) What is the primary purpose of the balanced scorecard?
Q6) Explain the product differentiation and the cost leadership strategies.
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Page 16
Chapter 14: Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis
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Sample Questions
Q1) What is the contribution margin for the flexible budget?
A)$7,500
B)$8,800
C)$8,500
D)$6,900
Q2) The flexible-budget variance is the difference between an actual result and the flexible-budget amount based on the level of output actually achieved in the budget period.
A)True
B)False
Q3) The cost of visiting customers would most likely be classified as a:
A)customer output unit-level cost
B)customer batch-level cost
C)customer-sustaining cost
D)corporate-sustaining cost
Q4) Advances in information-gathering technology make it more likely that multiple cost-pool systems will pass the cost-benefit test.
A)True
B)False
Q5) Why would a manager perform customer-profitability analysis?
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Chapter 15: Allocation of Support-Department Costs,
Common Costs, and Revenues
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Sample Questions
Q1) AAA offers towing services, auto routing, travel brochures, and other travel services for one annual fee. This is an example of:
A)revenue tracing
B)revenue allocation
C)a bundled product
D)a joint product
Q2) To give more weight to the product that most likely drives the sales of the bundled product, the revenue allocation should be weighted using:
A)selling prices
B)unit costs
C)physical units
D)stand-alone product revenues
Q3) The revenue allocation may be weighted using physical units when:
A)the individual products within the bundle have approximately the same value
B)selling prices are unstable and unit costs are difficult to calculate
C)other methods cannot be used for various reasons
D)All of these answers are correct.
Q4) What is a "common cost"? What are two methods that a manager can use to allocate common costs to two or more users?
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Chapter 16: Cost Allocation: Joint Products and Byproducts
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Sample Questions
Q1) Byproducts are recognized in the general ledger either at the time production is completed or at the time of sale.
A)True
B)False
Q2) What are a joint cost and a splitoff point?
Q3) The sales value at splitoff method presupposes the exact number of subsequent steps undertaken for further processing.
A)True
B)False
Q4) How much is the ending inventory reduction for the byproduct if byproducts are recognized in the general ledger at the point of sale?
A)$0
B)$563
C)$1,500
D)$17,500
Q5) The focus of joint costing is assigning costs to individual products as assembly occurs.
A)True
B)False
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Chapter 17: Process Costing
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Sample Questions
Q1) Conversion costs:
A)include all the factors of production
B)include direct labor and overhead
C)in process costing are usually considered to be added evenly throughout the production process
D)Both B and C are correct.
Q2) Ford Motor Company is said to use a hybrid costing system. What is a hybrid costing system, and what would be the advantage to Ford of such a system?
Q3) What are the equivalent units for direct materials and conversion costs, respectively, for April?
A)1,350 units; 1,350 units
B)1,600 units; 1,600 units
C)1,600 units; 1,475 units
D)250 units; 125 units
Q4) What is the balance in ending work-in-process inventory?
A)$82,000
B)$120,000
C)$155,000
D)$170,000
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Chapter 18: Spoilage, Rework, and Scrap
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Sample Questions
Q1) What are the normal and abnormal spoilage units, respectively, for February when using FIFO?
A)2,800 units; 2,960 units
B)6,560 units; 3,280 units
C)6,480 units; 15,520 units
D)6,480 units; 22,000 units
Q2) Spoilage that is an inherent result of the particular production process and arises under efficient operating conditions is referred to as:
A)ordinary spoilage
B)normal spoilage
C)abnormal spoilage
D)None of these answers is correct.
Q3) If scrap is returned to the company's storeroom and inventoried, it should NOT have any value in the accounting records.
A)True
B)False
Q4) Distinguish among spoilage, reworked units, and scrap. Give an example of each.
Q5) What are the objectives in accounting for spoilage?
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Chapter 19: Balanced Scorecard: Quality, Time, and the
Theory of Constraints
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Sample Questions
Q1) A measurement of market share is considered a financial measure of customer satisfaction.
A)True
B)False
Q2) How much do external failure costs change if all changes are as anticipated with the new prevention procedures? Assume all units produced are sold and there are no ending inventories.
A)$121,500 decrease
B)$121,500 increase
C)$243,000 decrease
D)None of these answers is correct.
Q3) Acme Janitor Service has always taken pride in the fact that it had one of the highest customer response times in the home cleaning service industry. However, as the products manufactured for this industry have become more complex, the company's customer response time has declined.
Required:
Why do you think that response time declined if all other quality factors have remained the same?
Q4) Discuss the methods used to identify quality problems.
22
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Chapter 20: Inventory Management, Just-In-Time, and Simplified Costing Methods
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Sample Questions
Q1) Relevant opportunity cost of capital is the return forgone by investing capital in inventory rather than elsewhere.
A)True
B)False
Q2) One DISADVANTAGE of an enterprise resource planning (ERP)system is:
A)the use of standard costing systems is not allowed
B)these systems are not in accordance with Generally Accepted Accounting Principles (GAAP)
C)the systems must often be customized to fit the strategic needs of the user
D)the systems increase lead times when purchasing material from a supplier
Q3) The costs that result from theft of inventory are:
A)shrinkage costs
B)external failure costs
C)stockout costs
D)costs of quality
Q4) What are the principles of lean accounting? Are there any limitations? Discuss.
Q5) In a backflush-costing system, no record of work in process appears in the accounting records.
A)True
B)False
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Chapter 21: Capital Budgeting and Cost Analysis
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Sample Questions
Q1) The use of an accelerated method of depreciation for tax purposes would usually decrease the present value of the investment.
A)True
B)False
Q2) Upper Darby Park Department is considering a new capital investment. The following information is available on the investment. The cost of the machine will be $72,096. The annual cost savings if the new machine is acquired will be $20,000. The machine will have a 5-year life, at which time the terminal disposal value is expected to be zero. Upper Darby Park is assuming no tax consequences. Upper Darby Park has a 10% required rate of return. What is the payback period on this investment?
A)3 years
B)3.6 years
C)4.2 years
D)5 years
Q3) The nominal approach to incorporating inflation into the net present value method predicts cash inflows in real monetary units and uses a real rate as the required rate of return.
A)True
B)False
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Page 24
Chapter 22: Management Control Systems, Transfer
Pricing, and Multinational
Considerations
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Sample Questions
Q1) Soft Cushion Company is highly decentralized. Each division is empowered to make its own sales decisions. The Assembly Division can purchase stuffing, a key component, from the Production Division or from external suppliers. The Production Division has been the major supplier of stuffing in recent years. The Assembly Division has announced that two external suppliers will be used to purchase the stuffing at $20 per pound for the next year. The Production Division recently increased its unit price to $40. The manager of the Production Division presented the following information variable cost $32 and fixed cost $8 t o top management in order to attempt to force the Assembly Division to purchase the stuffing internally. The Assembly Division purchases 20,000 pounds of stuffing per month. What would be the monthly operating advantage (disadvantage)of purchasing the goods internally, assuming the external supplier increased its price to $50 per pound and the Production Division is able to utilize the facilities for other operations, resulting in a monthly cash-operating savings of $30 per pound?
A)$1,000,000
B)$360,000
C)$(240,000)
D)$(400,000)
Q2) Explain what transfer prices are, and what are the four criteria used to evaluate them?
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Chapter 23: Performance Measurement, Compensation, and Multinational Considerations
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Sample Questions
Q1) A problem with rewarding managers only on the basis of residual income is that:
A)residual income is difficult to measure
B)on occasion the items in the residual income calculation are not quantifiable
C)residual income can depend on items over which the manager has little control
D)All of these answers are correct.
Q2) A report that measures financial and nonfinancial performance measures for various organization units in a single report is called a(n):
A)balanced scorecard
B)financial report scorecard
C)imbalanced scorecard
D)unbalanced scorecard
Q3) What is the Digger Division's return on investment?
A).25
B).30
C).45
D).60
Q4) Discuss the issues and complications that may arise when multinational corporations conduct performance measurement and comparisons among divisions located in different countries.
26
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