Managerial Accounting Practice Exam
Course Introduction
Managerial Accounting is a course designed to equip students with the knowledge and skills required to analyze, interpret, and utilize financial data for internal decision-making within organizations. The course covers key concepts such as cost behavior, budgeting, performance evaluation, cost-volume-profit analysis, and variance analysis. Students will learn how to prepare and use managerial reports that assist in strategic planning, operational control, and informed decision-making, ultimately enabling managers to optimize resources and achieve organizational objectives. Emphasis is placed on real-world applications, ethical considerations, and the integration of managerial accounting tools with overall business strategy.
Recommended Textbook
Cornerstones of Managerial Accounting 2nd Canadian Edition by Maryanne Mowen
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14 Chapters
2059 Verified Questions
2059 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Virtually all management accounting practices were developed to assist managers in maximizing profits.
A)True
B)False
Answer: True
Q2) Which of the following activities does the controller of an organization participate in?
A) controlling,planning,and assessing
B) decision making and assessing
C) planning,assessing,and decision making
D) planning,controlling,and decision making
Answer: D
Q3) Which of the following is a characteristic of management accounting?
A) It provides objective financial information.
B) It must adhere to mandatory rules.
C) It has no mandatory rules.
D) Its main users are outside of the organization.
Answer: C
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Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) A cost object is any item for which costs are measured and assigned.
A)True
B)False
Answer: True
Q2) Refer to the Figure.What was the conversion cost per unit?
A) $50
B) $75
C) $95
D) $125
Answer: B
Q3) What three categories separate the expenses on a manufacturer's income statement?
A) production,period,and indirect
B) materials,work in process,and finished goods
C) production,selling,and administrative
D) variable,fixed,and direct
Answer: C
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Chapter 3: Cost Behaviour
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Sample Questions
Q1) Using a linear regression program,the term intercept refers to the fixed cost.
A)True
B)False
Answer: True
Q2) Refer to the Figure.What does "total cost" represent?
A) the independent variable
B) the dependant variable
C) the intercept
D) the variable rate
Answer: B
Q3) Refer to the Figure.What would be Lake Louise Company's estimate of total janitorial cost at a level of 625 machine hours?
A) $4,080
B) $6,120
C) $7,500
D) $11,580
Answer: D
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Page 5
Chapter 4: Costvolumeprofit Analysis: a Managerial Planning Tool
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Sample Questions
Q1) Refer to the Figure.What is the contribution margin per unit?
A) $5.00
B) $5.40
C) $6.00
D) $6.30
Q2) Wendall Company sells only one product at a regular price of $7.50 per unit.Variable expenses are 60% of sales,and fixed expenses are $30,000.Management has decided to decrease the selling price to $6 in hopes of increasing its volume of sales.What is the contribution margin ratio when the selling price is reduced to $6 per unit?
A) 25%
B) 40%
C) 60%
D) 75%
Q3) What "what-if" technique examines the impact on an answer as a result of changes in underlying assumptions?
A) degree of sensitivity
B) sensitivity training
C) sensitivity analysis
D) degree of operating leverage
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Chapter 5: Job-Order Costing
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Sample Questions
Q1) Refer to the Figure.What is the total amount credited to materials inventory for Xtra in the current year?
A) $110,000
B) $160,000
C) $170,000
D) $480,000
Q2) Ending work in process for Hands On Carpentry was $64,000 for January.Direct labour and direct materials for the month had a combined total of $39,000.Direct labour was twice as much as direct materials.The overhead rate is 70% of direct labour.No jobs were finished during the month.What was the beginning work in process?
A) $0
B) $4,250
C) $6,800
D) $15,250
Q3) The work-in-process account consists of all the job-order costs sheets for the unfinished jobs.
A)True
B)False
Q4) What are the three steps of overhead application?
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Chapter 6: Process Costing
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Sample Questions
Q1) What types of inputs are normally found in a process-costing accounting system?
A) selling costs
B) marketing costs
C) administrative costs
D) overhead costs
Q2) Refer to the Figure.What would be Painting Department's cost per equivalent unit for conversion when using the weighted average method?
A) $3.00
B) $5.00
C) $8.00
D) $9.00
Q3) Which of the following businesses is most likely to use process costing?
A) a paint manufacturer
B) a law firm
C) an orthodontist
D) a custom home builder
Q4) Process costing is most appropriate for manufacturers of unique products.
A)True
B)False
Q5) Describe the differences between sequential and parallel processing.
Page 8
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Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) Refer to StrongLive Company.
A. Calculate the activity rate for machining.
B. Calculate the activity rate for engineering.
C. Calculate the activity rate for packing.
Q2) A work distribution matrix is derived from an interview or a written survey.
A)True
B)False
Q3) Resource drivers are factors that measure the consumption of resources by activities.
A)True
B)False
Q4) The activity driver for the shipping activity is the number of orders shipped.Product X uses 40 orders,and Product Y uses 120 orders.What is the consumption ratio for product X?
A) 0.215
B) 0.250
C) 0.300
D) 0.625
Q5) What is the activity based costing hierarchy? Give an example for each.
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Chapter 8: Absorption and Variable Costing,and Inventory Management
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Sample
Questions
Q1) Refer to the Figure.What is the value of ending inventory when using the variable costing method?
A) $288,000
B) $320,000
C) $250,000
D) $390,000
Q2) Which inventory cost can include insurance,inventory taxes,and obsolescence?
A) the ordering cost
B) the carrying cost
C) the stockout cost
D) the setup cost
Q3) What is the difference between absorption-costing income and variable-costing income?
Q4) Refer to Carmel Company.Carmel has decided to begin ordering 60 units at a time.What is the average annual carrying cost of Benton's new policy?
A) $5
B) $30
C) $120
D) $180
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Chapter 9: Budgeting, production, cash, and Master Budget
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Sample Questions
Q1) Sales in units
A)Production budget
B)Direct materials purchases budget
C)Sales budget
Q2) Cash receipts must be at least as much as sales.
A)True
B)False
Q3) Budgeted income statement
A)Operating budget
B)Financial budget
Q4) Adjustments to the sales budget need to be made for which of the following items when going from the sales budget to the production budget?
A) finished goods inventories
B) cash receipts
C) factory overhead costs
D) selling expenses
Q5) Ideally,managers are held accountable for controllable costs.
A)True
B)False
Q6) Does a not-for-profit agency need to budget? Why or why not?
11
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) Managers develop quantity standards when they decide what amount of input should be used per unit of output.
A)True
B)False
Q2) Which of the following are sources of quantity standards?
A) historical experience
B) budget studies
C) input from interested personnel
D) benchmarks
Q3) Refer to the Figure.What is the total labour budget variance for Bear Company?
A) $12,000 (U)
B) $12,000 (F)
C) $18,000 (U)
D) $18,000 (F)
Q4) To determine whether variances are significant,managers set control limits,which represent the acceptable range,plus or minus an allowable deviation.
A)True
B)False
Q5) Explain the kaizen approach to costing.
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) How is variable overhead applied in a standard cost system?
A) using actual direct labour hours
B) using budgeted direct labour hours
C) using direct labour hours at practical capacity
D) using standard direct labour hours
Q2) Long,Inc.produces small engines.For last year's operations,the following data were gathered: \(\begin{array}{ll}
\text { Units produced: } & 100,000 \\
\text { Direct labour: } & 160,000 \text { hours }(\$ 12.00 \text { per } \\ & \text { hour } \\
\text { Actual variable overhead: } & \$ 1,300,000 \end{array}\) Long,Inc.employs a standard costing system.During the year,a variable overhead rate of $8.00 per hour was used.The labour standard requires 1.5 hours per unit produced.What are the variable overhead spending and efficiency variances,respectively?
A) $20,000 U and $80,000 U
B) $20,000 U and $80,000 F
C) $100,000 U and $20,000 U
D) $100,000 U and $20,000 F
Q3) What is a performance report?
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) Refer to the Figure.Assume that Corrugated,Inc.mandates that any transfers take place at full manufacturing cost.What would be the transfer price if the Box Division transferred boxes to the Candy Division?
A) $0.90
B) $1.00
C) $1.23
D) $1.40
Q2) The practice of delegating decision-making authority to lower levels of management in a company is called centralization.
A)True
B)False
Q3) In calculating residual income,the minimum rate of return is set by top management and is the same as the hurdle rate used for return on investment.
A)True
B)False
Q4) Return on investment is just a specific way of calculating residual income
A)True
B)False
Q5) What is Strategy?
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) A choice between internal and external production is a make-or-buy decision.
A)True
B)False
Q2) What is the term for the act of choosing among alternatives with an immediate or limited end in view?
A) assessing feasible alternatives
B) strategic decision making
C) constructing a decision model
D) short-run decision making
Q3) Resources that are acquired in advance of usage are flexible resources.
A)True
B)False
Q4) Calculus provides a special technique that can be used to determine the optimal product mix when there are multiple constraints.
A)True
B)False
Q5) Why does a special-order decision frequently ignore fixed factory overhead?
Q6) Target costing involves much more up-front work than cost-based pricing.
A)True
B)False
Page 15
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) Both the net present value and the accounting rate of return ignore the time value of money.
A)True
B)False
Q2) Which of the following compares the actual benefits from an investment with the estimated benefits,and the actual operating costs of the investment with estimated operating costs?
A) the internal rate of return
B) the discounted returns
C) the postaudit
D) the opportunity cost
Q3) An advantage of the payback period is that it considers the time value of money.
A)True
B)False
Q4) Which model is better for independent projects,net present value or internal rate of return? Which is better for mutually exclusive projects? Explain your reasoning for each case.
Q5) What are the two types of capital budgeting projects will be considered: independent projects and mutually exclusive projects?
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