Managerial Accounting Final
Exam Questions
Course Introduction
Managerial Accounting focuses on the use of accounting information by managers within organizations to make informed business decisions. This course covers key concepts such as cost behavior, budgeting, performance evaluation, and internal financial analysis. Students will learn how to interpret financial data, manage costs, and design control systems to optimize organizational efficiency and profitability. Emphasis is placed on real-world application and strategic planning, enabling students to develop practical skills for analyzing financial information and supporting effective management practices.
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) ________ is the after-sale support provided to customers.
A)Distribution
B)Customer service
C)Production
D)Marketing
Answer: B
Q2) Customer response time involves:
A)the speed it takes a customer to respond to an advertisement and place an order
B)the speed at which an organization responds to customer requests
C)the speed it takes to develop a new product
D)the speed it takes an organization to develop a Total Quality Management (TQM)program
Answer: B
Q3) Staff management includes:
A)manufacturing managers
B)human-resource managers
C)purchasing managers
D)distribution managers
Answer: B
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Page 3
Chapter 2: An Introduction to Cost Terms and Purposes
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Sample Questions
Q1) When making decisions:
A)it is best to use average costs
B)it is best to use unit costs
C)it is best to use total costs rather than unit costs
D)All of these types of costs can be used for decision making; it varies depending on the decision required.
Answer: D
Q2) A customer could be considered a cost object.
A)True
B)False
Answer: True
Q3) Manufacturing overhead costs are also referred to as:
A)indirect manufacturing costs
B)prime costs
C)period costs
D)direct material
Answer: A
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Chapter 3: Cost-Volume-Profit Analysis
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Sample Questions
Q1) In a company with low operating leverage:
A)fixed costs are high and variable costs are low
B)large changes in sales volume result in small changes in net income
C)there is a higher possibility of net loss than a higher-leveraged firm
D)less risk is assumed than in a highly leveraged firm
Answer: D
Q2) Which of the following statements about determining the breakeven point is FALSE?
A)Operating income is equal to zero.
B)Contribution margin - fixed costs is equal to zero.
C)Revenues equal fixed costs plus variable costs.
D)Breakeven revenues equal fixed costs divided by the variable cost per unit.
Answer: D
Q3) Explain when a manager would use cost-volume-profit analysis and sensitivity analysis.
Answer: Cost-volume-profit analysis is helpful for evaluating the profit impact of management decisions that affect production and sales volume. Sensitivity analysis is helpful for identifying those estimates most critical for a decision.
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Page 5
Chapter 4: Job Costing
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Sample Questions
Q1) Job costing information is used:
A)to develop strategies
B)to make pricing decisions
C)for external financial reporting
D)All of these answers are correct.
Q2) 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
Q3) Direct costs are allocated to the cost object using a cost-allocation method.
A)True
B)False
Q4) Managers and accountants collect most of the cost information that goes into their systems through:
A)an information databank
B)computer programs
C)source documents
D)time surveys
Page 6
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Chapter 5: Activity-Based Costing and Activity-Based Management
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Sample Questions
Q1) For each of the following activities identify an appropriate activity-cost driver.
a. machine maintenance
b. machine setup
c. quality control
d. material ordering
e. production scheduling
f. warehouse expense
g. engineering design
Q2) If products are different, then for costing purposes:
A)an ABC costing system will yield more accurate cost numbers
B)a simple costing system should be used
C)a single indirect-cost rate should be used
D)none of the above
Q3) How much of the account billing cost will be assigned to Department B?
A)$14,000
B)$140,000
C)$7,000
D)None of these answers are correct.
Q4) How are cost drivers selected in activity-based costing systems?
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Chapter 6: Master Budget and Responsibility Accounting
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Sample Questions
Q1) For January, the amount budgeted for the nonmanufacturing costs budget is:
A)$78,000
B)$10,000
C)$168,000
D)$18,000
Q2) Companies implementing kaizen budgeting believe that employees who actually do the job have the best knowledge of how the job can be done better.
A)True
B)False
Q3) Budgetary slack provides management with a hedge against planned adverse circumstances.
A)True
B)False
Q4) The cash flow statement does NOT include:
A)cash inflows from the collection of receivables
B)cash outflows paid toward raw material purchases
C)all sales revenues
D)interest paid and received
Q5) Describe the benefits to an organization of preparing an operating budget.
Q6) Describe the concept of kaizen budgeting.
Page 8
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Chapter 7: Flexible Budgets, Direct-Cost Variances, and Management Control
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Sample Questions
Q1) The textbook discusses three levels of variances, Level 0, Level 1, Level 2, and Level 3.
Briefly explain the meaning of each of those levels and provide an example of a variance at each of those levels.
Q2) The best label for the formula [(AP)(AQ)- (BP)(AQ)] is the:
A)efficiency variance
B)price variance
C)total flexible-budget variance
D)spending variance
Q3) Benchmarking is the continuous process of measuring products, services, and activities against the best possible levels of performance, either inside or outside the organization.
A)True
B)False
Q4) What amounts are reported for revenues in the flexible-budget (A)and the static-budget (B), respectively?
A)$164,320; $158,720
B)$164,320; $169,920
C)$169,920; $177,920
D)$169,920; $166,720
Page 9
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Chapter 8: Flexible Budgets, Overhead Cost Variances, and Management Control
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Sample Questions
Q1) An unfavorable production-volume variance always infers that management made a bad planning decision regarding the plant capacity.
A)True
B)False
Q2) What is the flexible-budget amount?
A)$100,000
B)$53,400
C)$57,500
D)$51,750
Q3) A favorable production-volume variance indicates that the company:
A)has good management
B)has allocated more fixed overhead costs than budgeted
C)has a total economic gain from using excess capacity
D)should increase capacity
Q4) Above is a:
A)4-variance analysis
B)3-variance analysis
C)2-variance analysis
D)1-variance analysis
10
Q5) How is a budgeted fixed overhead cost rate calculated?
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Chapter 9: Inventory Costing and Capacity Analysis
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Sample Questions
Q1) One of the most common problems reported by companies using variable costing is the difficulty of classifying costs into fixed or variable categories.
A)True
B)False
Q2) The breakeven points are the same under both variable costing and absorption costing.
A)True
B)False
Q3) Budgeted fixed manufacturing costs of a product using practical capacity:
A)represents the cost per unit of supplying capacity
B)can result in setting selling prices that are not competitive
C)includes the cost of unused capacity
D)should be used to evaluate a marketing manager's performance in the current year
Q4) The income under variable costing will always be the same as the income under absorption costing.
A)True
B)False
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) An inaccurate cost function with a constant that is estimated too high may most likely result in:
A)evaluating a weak manager as providing strong performance
B)promoting a product that is actually less profitable than budgeted
C)predicting total costs that are too low
D)replicating processes that are truly cost saving
Q2) The account analysis method estimates cost functions by classifying various cost accounts as variable, fixed, or mixed with respect to the identified level of activity.
A)True
B)False
Q3) Managers who design data collection reports that regularly and routinely obtain required data are helping to ensure that:
A)inflationary effects are removed
B)all data are recorded
C)extreme values are not used to calculate cost functions
D)the relationship between the cost driver and the cost remains stable over time
Q4) List and briefly describe the six steps in estimating a cost function under quantitative analysis.
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12
Chapter 11: Decision Making and Relevant Information
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Sample Questions
Q1) Sarasota Bicycles has been manufacturing its own wheels for its bikes. The company is currently operating at 100% capacity, and variable manufacturing overhead is charged to production at the rate of 30% of direct labor cost. The direct materials and direct labor cost per unit to make the wheels are $3.00 and $3.60 respectively. Normal production is 200,000 wheels per year.
A supplier offers to make the wheels at a price of $8 each. If the bicycle company accepts this offer, all variable manufacturing costs will be eliminated, but the $84,000 of fixed manufacturing overhead currently being charged to the wheels will have to be absorbed by other products.
Required:
a. Prepare an incremental analysis for the decision to make or buy the wheels.
b. Should Sarasota Bicycles buy the wheels from the outside supplier? Justify your answer.
Q2) Full costs of a product are relevant for one-time-only special order pricing decisions.
A)True
B)False
Q3) Under what conditions might a manufacturing firm sell a product for less than its long-term price? Why?
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Page 13
Chapter 12: Pricing Decisions and Cost Management
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Sample Questions
Q1) What is the primary reason a firm would adopt target costing?
Q2) What advice would you give a company to avoid the appearance of predatory pricing?
Q3) What is the markup percentage as a percentage of cost for Timothy Company?
A)15.0%
B)17.6%
C)10.0%
D)11.1%
Q4) Life-cycle costing tracks and accumulates business function costs across the entire value chain from a product's initial R&D to its final customer service and support.
A)True
B)False
Q5) 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)
Q6) What factors may influence the level of markups?
Page 14
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Chapter 13: Strategy, Balanced Scorecard, and Strategic
Profitability Analysis
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Sample Questions
Q1) In general, profit potential ________ with greater competition, stronger potential entrants, products that are similar, and more-demanding customers and suppliers.
A)increases
B)stays constant
C)decreases
D)increases exponentially
Q2) Downsizing often means eliminating jobs, which can have an adverse effect on employee morale.
A)True
B)False
Q3) ________ is the ratio of the quantity of output produced to the costs of all inputs used, where the inputs are combined on the basis of current period prices.
A)Total factor productivity
B)Partial productivity
C)Productivity
D)Product yield variance
Q4) What is reengineering. Can you contrast a reengineering approach to change with a kaizen approach to change?
Page 15
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Chapter 14: Cost Allocation,
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Sample Questions
Q1) To manage setup costs, a corporation might focus on the:
A)number of setup-hours
B)number of units included in each production run
C)batch-level costs incurred per setup-hour
D)Both A and C are correct.
Q2) What is the contribution margin for the flexible budget?
A)$1,200,000
B)$4,200,000
C)$5,200,000
D)$5,400,000
Q3) What is the total sales-volume variance in terms of the contribution margin?
A)$216,000 unfavorable
B)$216,000 favorable
C)$556,000 favorable
D)$896,000 favorable
Q4) 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
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Chapter 15:
Allocation of Support-Department Costs, Common Costs, and Revenues
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Sample Questions
Q1) If a dual-rate cost-allocation method is used, what amount of materials laboratory costs will be allocated to the Large Plane Department? Assume budgeted usage is used to allocate fixed materials laboratory costs and actual usage is used to allocate variable materials laboratory costs.
A)$7,825,000
B)$8,175,000
C)$8,225,000
D)$7,050,000
Q2) The single-rate cost-allocation method may base the denominator choice on:
A)master-budget capacity utilization
B)normal capacity utilization
C)practical capacity
D)All of these answers are correct.
Q3) Using the incremental method, what amount of revenue will be allocated to Math Fun in the package that contains all three products?
A)$24.12
B)$30.00
C)$22.80
D)$25.33
Page 17
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Chapter 16: Cost Allocation: Joint Products and Byproducts
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Sample Questions
Q1) When using the physical-volume method, what is Mr. DirtOut's approximate production cost per unit?
A)$3.02
B)$3.08
C)$3.14
D)$3.22
Q2) If the sales value at splitoff method is used, what are the approximate joint costs assigned to ending inventory for paper?
A)$28.58
B)$100.00
C)$870.00
D)$1,500.00
Q3) The benefits-received criteria for allocating joint costs indicate market-based measures are preferred because:
A)physical measures such as volume are a clearer basis for allocating cost than other measures
B)other measures are more difficult to calculate
C)revenues are usually the best indicator of the benefits received
D)None of these answers is correct.
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Chapter 17: Process Costing
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Sample Questions
Q1) The weighted-average process-costing method calculates the equivalent units by:
A)considering only the work done during the current period
B)the units started during the current period minus the units in ending inventory
C)the units started during the current period plus the units in ending inventory
D)the equivalent units completed during the current period plus the equivalent units in ending inventory
Q2) A distinct feature of the FIFO process-costing method is that the:
A)work done on beginning inventory before the current period is blended with the work done during the current period in the calculation of equivalent units
B)work done on beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units
C)work done on ending inventory is kept separate from the work done during the current period in the calculation of equivalent units and is usually not included in the calculation
D)FIFO process-costing method is only minimally different from the weighted-average process-costing method
Q3) List and describe the five steps in process costing.
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Chapter 18: Spoilage, Rework, and Scrap
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Sample Questions
Q1) Rework is finished production that is NOT in accordance with customer desires. The product is redone and sold as finished goods.
A)True
B)False
Q2) What cost is allocated to abnormal spoilage using the weighted-average process-costing method?
A)$ 0
B)$26,880
C)$53,760
D)$29,000
Q3) A production process which involves spoilage and rework occurs in:
A)the manufacture of high precision tools
B)semiconductor units
C)the manufacture of clothing
D)All of these answers are correct.
Q4) Abnormal spoilage totals:
A)3,200 units
B)4,000 units
C)3,360 units
D)3,840 units
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Chapter 19: Balanced Scorecard: Quality, Time, and the Theory of Constraints
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Sample Questions
Q1) Two common operational measures of time are customer-response time and manufacturing lead time.
A)True
B)False
Q2) Regarding the means by which relevant costs and benefits are evaluated when evaluating quality improvement, the key question is:
A)which alternative solution will make the customer happiest
B)how total costs and total revenues will change under each alternative solution C)will the employees of the company be able to implement the change D)how long will it take for the improvement program to be fully functional
Q3) When evaluating alternatives to improve quality, both the relevant benefits as well as the relevant costs should be considered.
A)True
B)False
Q4) Customer-response time is a measure of how long it takes for the customer to return a call.
A)True
B)False
Page 21
Q5) Discuss the methods used to identify quality problems.
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Chapter 20: Inventory Management, Just-In-Time, and Simplified Costing Methods
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Sample Questions
Q1) The Economic Order Quantity increases with demand and carrying costs and decreases with ordering costs.
A)True
B)False
Q2) A "push-through" system, often described as a just-in-time system, emphasizes simplicity and close coordination among work centers.
A)True
B)False
Q3) The optimal safety stock level is the quantity of safety stock that minimizes the sum of the annual relevant:
A)stockout costs and carrying costs
B)ordering costs and carrying costs
C)ordering costs and stockout costs
D)ordering costs and purchasing costs
Q4) Companies that implement JIT purchasing will switch their suppliers when another supplier offers a lower price.
A)True
B)False
Page 22
Q5) What are five features of a just-in-time manufacturing system?
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Chapter 21: Capital Budgeting and Cost Analysis
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Sample Questions
Q1) For capital budgeting decisions, the use of the accrual accounting rate of return for evaluating performance is often a stumbling block to the implementation of the:
A)net cash flow
B)most effective goal-congruence choice
C)discounted cash flow method for capital budgeting
D)most effective tax strategy
Q2) The reason to have a post-investment audits is:
A)they discourage mid-level managers from making overly optimistic estimates during the early stages of the capital budgeting process.
B)they help alert senior management to problems in the implementation of the project.
C)they are a means by which actual results can be compared to the costs and benefits expected.
D)All of the above are correct.
Q3) A weaknesses of the payback method is that it does not consider a project's cash flows after the payback period.
A)True
B)False
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Chapter 22: Management Control Systems, Transfer
Pricing, and Multinational
Considerations
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Sample Questions
Q1) Cost-based transfer prices are helpful when:
A)a market exists for the product
B)a price is easy to obtain
C)the product is unique
D)All of these answers are correct.
Q2) What is the role of unused capacity within the selling division in the determination of a negotiated transfer price to another division?
Q3) Management control systems reflect only financial data.
A)True
B)False
Q4) Cost-based transfer pricing is a better method when the products being transferred are specialized in nature.
A)True
B)False
Q5) Effort in terms of management control systems is defined in terms of physical exertion such as a worker producing at a faster rate.
A)True
B)False
Q6) Briefly explain each of the three methods used to determine a transfer price.
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Chapter 23: Performance Measurement, Compensation, and Multinational Considerations
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Sample Questions
Q1) Imputed costs are costs recognized in particular situations that are NOT usually recognized by accrual accounting procedures.
A)True
B)False
Q2) Using net book value as an investment base will result in a lower ROI than using gross book value as an investment base.
A)True
B)False
Q3) In an Economic Value Added calculation, the measure of the invested capital for a division would be that division's assets minus that division's liabilities.
A)True
B)False
Q4) Team incentives encourage cooperation by:
A)forcing people to work together on difficult tasks
B)improving morale
C)letting individuals help one another as they strive toward a common goal
D)rewarding all teams the same amount
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