Managerial Accounting Practice Questions
Course Introduction
Managerial Accounting focuses on the internal use of accounting information by managers to plan, control, and make decisions within an organization. The course covers key topics such as cost behavior, budgeting, performance evaluation, and decision-making processes. Students learn how to analyze financial data, prepare managerial reports, and utilize various accounting tools to improve organizational efficiency and support strategic goals. Emphasis is placed on practical application, ethical considerations, and the role of accounting in achieving business objectives.
Recommended Textbook
Cost Accounting Foundations and Evolutions 9th Edition by Kinney
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Chapter 1: Introduction to Cost Accounting
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Sample Questions
Q1) The learning and growth perspective of the balanced scorecard addresses stakeholder concerns about profitability and organizational growth.
A)True
B)False
Answer: False
Q2) Managerial accounting is highly regulated by rules and regulations.
A)True
B)False
Answer: False
Q3) The learning and growth perspective of the balanced scorecard focuses on using an organization's intellectual capital to adapt to or influence customer needs and expectations.
A)True
B)False
Answer: True
Q4) Financial accounting is highly regulated by rules and regulations.
A)True
B)False Answer: True
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Chapter 2: Cost Terminology and Cost Behaviors
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Sample Questions
Q1) Jackson Company.
Jackson Company manufactures wood file cabinets.The following information is available for June of the current year. <table ><tr><th scope="col"></th> <th scope="col">Begining</th><th scope="col"> Ending</th> </tr> <tr> <td>Raw material inventory </td> <td>$6,000</td> <td> $7,500</td> </tr> <tr><td>Work in process inventory </td><td>17,300</td> <td> 11,700</td> </tr><tr><td>Finished goods inventory</td><td>21,000</td><td> 16,300</td></tr></tbody>< /table>
The direct labor rate is $9.60 per hour and overhead for the month was $9,600. Refer to Jackson Company.Compute total manufacturing costs for June,if there were 1,500 direct labor hours and $21,000 of raw material was purchased.
A)$58,500
B)$46,500
C)$43,500
D)$43,100
Answer: C
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Chapter 3: Predetermined Overhead Rates, Flexible Budgets,
and Absorptionvariable Costing
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Sample Questions
Q1) If actual overhead is less than applied overhead,factory overhead is said to be
Answer: overapplied
Q2) Another name for absorption costing is
A)full costing.
B)direct costing.
C)job order costing.
D)fixed costing.
Answer: A
Q3) If a firm uses absorption costing,fixed manufacturing overhead will be included
A)only on the balance sheet.
B)only on the income statement.
C)on both the balance sheet and income statement.
D)on neither the balance sheet nor income statement.
Answer: C
Q4) Why is variable costing not used extensively in external reporting?
Answer: Variable costing is not used extensively outside of the firm because absorption costing is required by GAAP and the IRS.
Page 5
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Chapter 4:
Activity-Based Management and Activity-Based Costing
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Sample Questions
Q1) Discuss the characteristics of a company for which ABC would be appropriate.
Q2) _________________________ refers to the number of products made.
Q3) There is a positive relationship between value-added (VA)activities and manufacturing cycle efficiency (MCE).
A)True
B)False
Q4) The costs of non-quality work do not include
A)the cost of handling complaints.
B)the cost of scrap.
C)warranty costs.
D)original design costs.
Q5) When cost driver analysis is used,organizational profit or loss can be determined by subtracting
A)organizational costs from total margin provided by products.
B)organizational costs from total product revenue.
C)total product costs from total product revenue.
D)total unit,batch,product/process,and organizational level costs incurred for a period from total product revenue.
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Q6) Describe the two-step process by which costs are allocated in an ABC system.
Chapter 5: Job Order Costing
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Sample Questions
Q1) A company that manufactures custom bridal gowns will use a job-order costing system to track production costs.
A)True
B)False
Q2) If a normal loss is anticipated on a specific job,the overhead application rate should include an amount for the cost of defective units less disposal value.
A)True
B)False
Q3) Knowing specific job costs enables managers to effectively perform which of the following tasks?
A)estimate costs of future jobs.
B)establish realistic job selling prices.
C)evaluate job performance.
D)all answers are correct.
Q4) A company that manufactures large quantities of homogeneous goods will normally use a ____________________ costing system.
Q5) When production is completed on a job,finished goods are transferred to the _______ account.
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Chapter 6: Process Costing
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Sample Questions
Q1) Discuss how spoilage is treated in EUP computations.
Q2) Continuous production losses are assumed to occur at the end of a process.
A)True
B)False
Q3) Which of the following would be considered a discrete loss in a production process?
A)adding the correct ingredients to make a bottle of ketchup
B)putting the appropriate components together for a stereo
C)adding the wrong components when assembling a stereo
D)putting the appropriate pieces for a bike in the box
Q4) Abnormal spoilage can be \(\text {\underline{ Continuous }}\) &nb sp;\(\text {\underline{ discrete} }\)
A)yes no
B)no no
C)yes yes
D)no yes
Q5) Discuss why units are lost during production.
Q6) Discuss process costing in a multi-department atmosphere.
Page 8
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Chapter 7: Standard Costing and Variance Analysis
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Sample Questions
Q1) The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the variable overhead spending variance.
A)True
B)False
Q2) At the end of a period,a significant material quantity variance should be
A)closed to Cost of Goods Sold.
B)allocated among Raw Material,Work in Process,Finished Goods,and Cost of Goods Sold.
C)allocated among Work in Process,Finished Goods,and Cost of Goods Sold.
D)carried forward as a balance sheet account to the next perioD.
Q3) Explain the source of fixed overhead spending and volume variances and how these variances are computed.
Q4) Standards that allow for waste and inefficiency are referred to as
Q5) An operations flow document shows all processes necessary to manufacture one unit of a product.
A)True
B)False
Q6) List and discuss briefly the three standards of attainability.
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Chapter 8: The Master Budget
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Sample Questions
Q1) In a manufacturing organization,the cash budget is prepared immediately after the sales budget.
A)True
B)False
Q2) For the month of November,Whetzel Corporation.predicts total cash collections to be $1 million.Also for November,Whetzel Corporation.estimates that its beginning cash balance will be $50,000 and that it will borrow cash in the amount of $70,000.If Whetzel Corporation.estimates an ending cash balance of $30,000 for November,what must its projected cash disbursements be?
A)$1,090,000
B)$1,120,000
C)$1,070,000
D)$1,020,000
Q3) A budget aids in
A)communication.
B)motivation.
C)coordination.
D)all of the above.
Q4) What are some of the benefits of a well-prepared budget?
Q5) Explain why managers might want to build slack into a budget.
Page 10
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Chapter 9: Break-Even Point and Cost-Volume-Profit Analysis
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Sample Questions
Q1) After the level of volume exceeds the break-even point
A)the contribution margin ratio increases.
B)the total contribution margin exceeds the total fixed costs.
C)total fixed costs per unit will remain constant.
D)the total contribution margin will turn from negative to positive.
Q2) The following information pertains to Venus Company's cost-volume-profit relationships:
Break-even point in units sold 1,000
Variable costs per unit \( \$ 500 \)
Total fixed costs \( \$ 150.000 \)
How much will be contributed to profit before taxes by the 1,001st unit sold?
A)$650
B)$500
C)$150
D)$0
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Chapter 10: Relevant Information for Decision Making
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Sample Questions
Q1) When a scarce resource,such as space,exists in an organization,the criterion that should be used to determine production is
A)contribution margin per unit.
B)selling price per unit.
C)contribution margin per unit of scarce resource.
D)total variable costs of production.
Q2) Why is depreciation expense irrelevant to most managerial decisions,even when it is a future cost?
Q3) The relative product quantities composing a company's total sales is referred to as a company's __________.
Q4) When making a decision to discontinue an operating segment,avoidable fixed costs are not considered.
A)True
B)False
Q5) What are three characteristics of relevant information?
Q6) The amount of revenue that differs across decision choices is referred to as
Q7) When a company has work performed by an external supplier,it is engaging in
Chapter 11: Allocation of Joint Costs and Accounting for
By-Products
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Sample Questions
Q1) The net realizable value approach is used to account for scrap and by-products when the net realizable value is significant.
A)True
B)False
Q2) The relative sales value method requires a common physical unit for measuring the output of each product.
A)True
B)False
Q3) Three monetary measures used to allocate joint costs to products are ____________,________,and ______
Q4) Two incidental products of a joint process are __________ and ___________.
Q5) Costs that are incurred after the split-off point in a production process are referred to as _________.
Q6) By-products are
A)items resulting from a joint process that have no further value.
B)not sufficient alone,in terms of sales value,for management to justify undertaking the joint process.
C)also known as scrap.
D)the primary reason management undertook the production process.
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Chapter 12: Introduction to Cost Management Systems
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Sample Questions
Q1) Feedback is another name for an effector.
A)True
B)False
Q2) Reactions to information provided by the management control system are
A)formulated in the organization's strategic plan.
B)judgmental,and are based on interpretations and circumstances.
C)assessed by the communications network of the MCS.
D)determined as those activities that will be most efficient and effective given the organization's available technology.
Q3) A structure of interrelated elements that enables management to plan,control,and evaluate performance is referred to as a _____________________________________________.
Q4) What are five ways that an organization could reduce product costs? Provide an example of how each method would cause cost reduction.
Q5) Information provided by financial reporting systems provides the most useful information to cost managers.
A)True
B)False
Q6) Discuss the four primary components of a control system.
14
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Chapter 13: Responsibility Accounting,support Department
Allocations,and Transfer Pricing
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Sample Questions
Q1) Decentralization can lead to greater job enrichment and satisfaction.
A)True
B)False
Q2) Market based transfer prices are most appropriate for customized high-volume and high-cost services.
A)True
B)False
Q3) A service department provides specific functional tasks for other internal units.Which of the following activities would not be engaged in by a service department?
A)purchasing
B)warehousing
C)distributing
D)manufacturing
Q4) The maximum of the transfer price negotiation range is
A)determined by the buying division.
B)set by the selling division.
C)influenced only by internal cost factors.
D)negotiated by the buying and selling division.
Q5) What are four common methods used to allocate service department costs?
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Chapter 14: Performance Measurement, balanced
Scorecards, and Performance Rewards
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Sample Questions
Q1) The Du Pont model measures
A)residual income.
B)return on investment.
C)throughput.
D)profit.
Q2) The number of good units or quantity of services that are produced and sold by an organization within a specified time is referred to as ____________________.
Q3) Total units produced during the period divided by the value-added processing time is referred to as ______________________________.
Q4) Financial measures are lagging indicators.
A)True
B)False
Q5) An increase in productive processing time will increase A)throughput.
B)process yield.
C)return on investment.
D)productive capacity.
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Q6) List the five general criteria that should be considered when designing a performance measurement system.
Chapter 15: Capital Budgeting
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Sample Questions
Q1) Alan Arnold has just turned 65.He has $100,000 to invest in a retirement annuity.One investment company has offered to pay Alan $10,000 per year for 15 years (payments to begin in one year)in exchange for an immediate $100,000 payment.If Alan accepts the offer from the investment company,what is his expected return on the $100,000 investment (assume a return that is compounded annually)? Present value tables or a financial calculator are required.
A)between 5 and 6 percent
B)between 6 and 7 percent
C)between 7 and 8 percent
D)between 8 and 9 percent
Q2) How are capital budgeting models affected by potential investments in automated equipment investment decisions?
Q3) A decision regarding whether a capital project is desirable based upon some previously established minimum criteria is referred to as a(n)___________________________________.
Q4) Does a project that generates a positive internal rate of return also have a positive net present value? Explain.
Q5) Why is it important for organizations to conduct post investment audits of capital projects?
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Chapter 16: Managing Costs and Uncertainty
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Sample Questions
Q1) If a cost can be reduced to zero in the short run without significantly harming the organization,the cost is a
A)variable cost.
B)committed cost.
C)discretionary cost.
D)product cost.
Q2) Assume actual output exceeds the level of output in the original budget.Costs in which of the following categories will exceed the original budget?
A)total variable costs
B)committed fixed costs
C)discretionary fixed costs
D)all of the above
Q3) All of the following are explanations of cost changes.Which of these influences can be substantially affected by cost containment measures?
A)inflation/deflation
B)changes in quantities purchased
C)technological change
D)changes in supply chain costs
Q4) Discuss the various elements of the cost control process.
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Chapter 17: Implementing Quality Concepts
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Sample Questions
Q1) Mobile Corporation
Mobile Corporation is a manufacturer of electronic blood pressure monitors for home use.The following is a summary of quality costs for the first year of operations.
\(\begin{array}{ll}
\text { Total defective units } & 1,500 \\
\text { Number of units reworked } & 800 \\
\text { Number of customer units returned } & 200 \\
\text { Profit for a good unit } & \$ 50 \\
\text { Profit for a defective unit } & \$ 30 \\
\text { Cost to rework a defective urit } & \$ 12 \\
\text { Cost of a returned unit } & \$ 20 \\
\text { Total prevention cost } & \$ 17,500 \\
\text { Total rppraisal cost } & \$ 9,500
\end{array}\)
Refer to Mobile Corporation.Determine the total quality cost.
Q2) Inspection of incoming inventory is a value-added activity.
A)True
B)False
Q3) Discuss the four categories of quality costs.
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Chapter 18: Inventory and Production Management
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Sample Questions
Q1) What does the term "pull" mean in the context of production control?
Q2) Most studies have indicated that what percent of a product's total life-cycle costs are determined in the development/design stage?
A)60%-70%
B)70%-80%
C)80%-90%
D)90%-95%
Q3) With JIT manufacturing,which of the following costs would be considered an indirect product cost?
A)cost of specific-purpose equipment
B)cost of equipment maintenance
C)property taxes on the plant
D)salary of a manufacturing cell worker
Q4) An organization's value chain can aid in the reduction of non-value added activities.
A)True
B)False
Q5) A search for various feasible combinations of resources and methods that will increase functionality and reduce costs is referred to as
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Chapter 19: Emerging Management Practices
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Sample Questions
Q1) An agreement involving two or more firms with complementary core competencies to jointly contribute to the supply chain is referred to as a(n)______________________________.
Q2) An analysis tool employing statistical techniques to answer business-related questions is referred to as _________________________.
Q3) Diversity applies to differences in A)race. B)religion.
C)culture.
D)all of the above.
Q4) A method of examining processes to identify and eliminate or reduce functions that add little customer value to products or services is referred to as __________________________________________________.
Q5) What is data mining and how is it used?
Q6) An advantage of downsizing is A)decreased costs in the long run. B)layoffs.
C)one-time losses.
D)reduced communication.
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