Managerial Accounting Pre-Test Questions
Course Introduction
Managerial Accounting focuses on the internal use of accounting information by managers within organizations to facilitate decision-making, planning, and control. This course covers key concepts such as cost behavior, budgeting, performance evaluation, and variance analysis, equipping students with tools to analyze financial data and support strategic business decisions. Emphasis is placed on interpreting financial reports, implementing cost control measures, and understanding the impact of accounting information on organizational efficiency and profitability.
Recommended Textbook
Cornerstones of Cost Accounting 1st Edition by Don R. Hansen
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20 Chapters
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2433 Flashcards
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Chapter 1: Introduction to Cost Management
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Sample Questions
Q1) Discuss four factors that are changing the way we manufacture. Answer: Technology has fostered computer-integrated manufacturing-changing the way laborers work.The theory of constraints (TOC) has enabled firms to identify bottlenecks and improve the time and quality of production.JIT has reorganized the production line to respond to customer demand, rather than sequential, efficient supply.Total quality management (TQM) has focused firms on quality and continuous improvement, reducing waste and cost.
Q2) Briefly discuss the relationship between cost accounting, management accounting, and cost management?
Answer: Management accounting is concerned with using financial and non-financial information for planning and control, continuous improvement and decision-making.Cost accounting gathers information to satisfy the cost objectives necessary for internal and external reporting.Cost management encompasses both cost accounting and management accounting.It is concerned with the assigning costs to cost objectives and using that information to make decisions that use resources effectively and maximize shareholder value.
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Chapter 2: Basic Cost Management Concepts
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Sample Questions
Q1) Refer to Figure 2-12.The prime costs per unit for July were
A) $ 20.00
B) $ 14.7375
C) $ 8.8125
D) $ 7.05
Answer: D
Q2) Which of the following is an example of an expense?
A) the cost of a product delivered to a customer
B) the cost of a proposed advertising campaign
C) the cost of the purchase of equipment
D) the write-off of an obsolete product
Answer: A
Q3) Which of the following costs would be included in traditional product costs used for external reporting?
A) research and development
B) production
C) marketing
D) all of these
Answer: B
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Page 4
Chapter 3: Cost Behavior
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Sample Questions
Q1) Refer to Figure 3-6.Using a computer or calculator, compute the estimate of maintenance costs at 100 units of production using the method of least squares.This value would be
A) $291.
B) $321.
C) $336.
D) $698.
Answer: A
Q2) Advantages of the method of least squares over the high-low method include all of the following EXCEPT
A) a statistical method is used to mathematically derive the cost function.
B) only two points are used to develop the cost function.
C) the squared differences between actual observations and the line (cost function) are minimized.
D) all the observations have an effect on the cost function.
Answer: B
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Chapter 4: Activity-Based Costing
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Sample Questions
Q1) Refer to Figure 4-3.The company uses a predetermined overhead rate to apply overhead.Manufacturing overhead applied is
A) $750,000.
B) $700,000.
C) $690,000.
D) $648,000.
Q2) Refer to Figure 4-17.What is the cost assigned to the creating BOMs activity?
A) $31,250
B) $7,500
C) $43,750
D) $125,000
Q3) Refer to Figure 4-22.What is the capacity cost rate?
A) $35
B) $25
C) $4
D) $105
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Chapter 5: Product and Service Costing: Job-Order System
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Sample Questions
Q1) Which cost accounting process would be most appropriate for accumulating costs of identical, standardized units?
A) job-order costing
B) process costing
C) normal costing
D) standard costing
Q2) Unit costs are critical for
A) valuing inventory.
B) determining net income.
C) decisions to enter a new product line.
D) all of these.
Q3) Refer to Figure 5-2.What the total cost assigned to Job XY5?
A) $5,1500
B) $4,400
C) $4,200
D) $4,950
Q4) What are the source documents used in a job-order costing system? How do the source documents relate to the job cost sheet? How do these documents inform work in process?
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Chapter 6: Process Costing
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Sample Questions
Q1) Refer to Figure 6-13.If materials were added when the units were 80 percent complete, how many equivalent units of production for materials would there be for Irvin using the weighted average costing method?
A) 110,000 units
B) 95,000 units
C) 107,000 units
D) 105,500 units
Q2) _______________ represents the number of completed units that is equal, in terms of production inputs, to a given number of partially completed units.
A) Units completed
B) Equivalent units
C) Units started and completed
D) Total units in production
Q3) Which is NOT a difference between the job-order costing system and the process costing system?
A) They accumulate their costs to different cost objectives.
B) The number of work-in-process accounts is different.
C) One does not use the finished goods account.
D) All of these.
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Page 8
Chapter 7: Allocating Costs of Support Departments and Joint Products
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Sample Questions
Q1) Refer to Figure 7-4.For purposes of performance evaluation, fixed costs allocated to Copy Center 2 are
A) $28,800.
B) $60,000.
C) $51,200.
D) $24,000.
Q2) Which of the major objectives of allocation as identified by the IMA would NOT be relevant in a service organization?
A) to obtain a mutually agreeable price
B) to compute product-line profitability
C) to predict the economic effects of planning and control
D) all are objectives of allocation
Q3) Which of the following cost categories would most likely use the number of employees or new hires as its activity driver?
A) maintenance
B) purchasing
C) personnel
D) accounting
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) Volume variances examine differences between
A) the static budget and actual costs.
B) the flexible budget and static budget.
C) the static budget and the rolling budget.
D) none of these.
Q2) The cost of goods sold for next month is expected to be
A) $29,500.
B) $30,500.
C) $50,000.
D) $30,000.
Q3) The _______________ is responsible for directing and coordinating the overall budgeting process.
A) budget committee
B) president
C) budget director
D) treasurer
Q4) Discuss the features of an ideal budgetary process.
Q5) Define budgeting and control.How are budgets used in planning? How are budgets used to control? What are some of the reasons for budgeting?
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Chapter 9: Standard Costing: a Functional-Based Control Approach
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Sample Questions
Q1) Refer to Figure 9-4.What is the materials usage variance?
A) $10,000 (U)
B) $ 8,000 (U)
C) $ 8,000 (F)
D) $18,000 (U)
Q2) Using the three variance method, what is the budget variance?
A) $6,000 (U)
B) $6,000 (F)
C) $24,000 (F)
D) $24,000 (U)
Q3) The _______________ is the standard plus the allowable deviation.
A) upper control limit
B) standard price
C) standard quantity
D) total budget variance
Q4) The direct labor efficiency variance is
A) $8,000 favorable.
B) $8,000 unfavorable.
C) $20,000 unfavorable.
D) $20,000 favorable.
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Chapter 10: Decentralization: Responsibility Accounting, Performance
Evaluation, and Transfer Pricing
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Sample Questions
Q1) When there is an outside market for an intermediate product that is perfectly competitive, the most equitable method of transfer pricing is
A) market price.
B) production cost pricing.
C) variable cost pricing.
D) cost plus markup pricing.
Q2) What is the total sales amount for B?
A) $666,667
B) $800,000
C) $1,200,000
D) $1,300,000
Q3) What are the sales for Division Y?
A) $25,000
B) $125,000
C) $500,000
D) $208,333
Q4) What problems do owners face in encouraging goal congruence of managers? What is a stock option? How can stock options encourage goal congruence?
Q5) How are information, responsibility, and accountability related?
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Chapter 11: Strategic Cost Management
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Sample Questions
Q1) What is the original cost per unit?
A) $390
B) $450
C) $318
D) $378
Q2) _______________ is the length of time that a product serves the needs of customers.
A) Product life cycle
B) Revenue producing life
C) Consumable life
D) Introduction stage
Q3) JIT manufacturing differs from traditional manufacturing in all of the following ways EXCEPT
A) the treatment of direct materials and direct labor for product costing.
B) the level of inventories.
C) the approach to quality control.
D) the physical layout of the manufacturing process.
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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Sample Questions
Q1) The value-added costs would be
A) $100,000.
B) $10,000.
C) $5,000.
D) $-0-.
Q2) The non-value-added costs for inspection are
A) $420,000.
B) $60,000.
C) $480,000.
D) $40,000.
Q3) What is Kaizen costing? How does activity analysis help reduce costs?
Q4) Which of the following is NOT a reason for ABM implementation failure?
A) lack of support from higher-level managers
B) expected results do not materialize
C) implementation is performed in a timely fashion
D) resistance to change
Q5) What is process value analysis?
Q6) What is responsibility accounting? Compare and contrast financial-based responsibility accounting with activity-based responsibility accounting.
Page 14
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Chapter 13: The Balanced Scorecard: Strategic-Based Control
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Sample Questions
Q1) _______________ are outcome measures that relate to customers.
A) Objective measures
B) External measures
C) Financial measures
D) Lag measures
Q2) How does the Balanced Scorecard communicate strategy to the organization? How is strategy translated into performance measures?
Q3) Which of the following would be a subjective measure?
A) employee capabilities
B) market share
C) return on investment
D) cost per unit
Q4) Which of the following would be a lag measure?
A) budget forecasts
B) sales per employee
C) plant investment
D) employee training hours
Q5) Compare and contrast activity-based measures and strategic-based measures.
Page 15
Q6) Why does the Balanced Scorecard differ from company to company? Whose responsibility is the implementation?
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Chapter 14: Quality and Environmental Cost Management
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Sample Questions
Q1) Refer to Figure 14-3.For the current year, appraisal costs are what percentage of sales?
A) 1.40%
B) 1.00%
C) 0.14%
D) 0.40%
Q2) If management is reviewing a multiple-period trend graph that shows individual quality cost categories, what might they expect to see?
A) Overall quality costs decreasing as a percentage of sales with prevention costs, as a category, increasing over time.
B) Overall quality costs decreasing as a percentage of sales with all categories decreasing over time.
C) Overall quality costs increasing as a percentage of sales with external failure costs decreasing and prevention costs increasing.
D) Overall quality costs remaining the same as a percentage of sales with prevention and appraisal costs increasing over time.
Q3) 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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Sample Questions
Q1) Which is NOT a benefit of lean manufacturing?
A) increased productivity
B) reduced lead times
C) reduced direct labor costs
D) reductions in inventory
Q2) What is the total change in profits from 2011 to 2012?
A) $33,300
B) $180,000
C) $60,000
D) $243,300
Q3) The JIT solution
A) requires carrying materials inventory in order to lower the cost of inventory without production delays.
B) requires selection of vendors based on lowest cost alone.
C) exploits supplier linkages by negotiating long-term contracts with a few chosen suppliers located closest to the production facility and establishing more supplier involvement.
D) requires a solid forecast to push production.
Q4) Describe the objectives and characteristics of a Lean Manufacturing system.
Q5) Explain the difference between partial and total measures of productivity.
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Chapter 16: Cost-Volume-Profit Analysis
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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) What is the sales volume required to earn a profit of $9,000?
A) 3,300 units
B) 10,000 units
C) 7,300 units
D) 4,300 units
Q3) The break-even point is
A) the volume of activity where all fixed costs are recovered.
B) where fixed costs equal total variable costs.
C) where total revenues equal total costs.
D) where total costs equal total contribution margin.
Q4) If sales increase by 1,000 units, what will happen to profit?
A) increase by $4,800
B) increase by $1,200
C) increase by $7,200
D) increase by $12,000
Page 19
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Chapter 17: Activity Resource Usage Model and Tactical Decision Making
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Sample Questions
Q1) Sound tactical decision making
A) only concerns the short run.
B) consists of large scale actions that serve a broad purpose.
C) consists of supporting the strategic objectives of the firm.
D) only concerns the long run.
Q2) An important qualitative factor to consider regarding a special order is the A) variable costs associated with the special order.
B) avoidable fixed costs associated with the special order.
C) effect the sale of special-order units will have on the sale of regularly priced units.
D) incremental revenue from the special order.
Q3) Assuming Meco Company is operating at capacity and accepting the order would require an offsetting reduction in regular sales, the effect on profits of accepting the order would be a
A) $240,000 decrease.
B) $30,000 increase.
C) $120,000 decrease.
D) $150,000 decrease.
Q4) What are relevant costs? How do they relate to decision making?
Page 20
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Chapter 18: Pricing and Profitability Analysis
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Sample Questions
Q1) What is the net income for Eastwood using the variable costing method?
A) $412,000
B) $480,000
C) $1,200,000
D) $600,000
Q2) Which of the following stages is characterized by rapid increases in sales and production?
A) Introduction
B) Growth
C) Maturity
D) Decline
Q3) Which of the following stages has revenues for the entire industry decreasing?
A) Introduction
B) Growth
C) Maturity
D) Decline
Q4) Many products have a predictable profit or product life cycle.Describe the product life cycle from the marketing perspective.In addition, graph profit versus the different phases.Finally, discuss the impact of the product life cycle on products, learning effects, setups, purchasing, and marketing expenses.
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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) Which of the following methods consider the time value of money?
A) payback and accounting rate of return
B) payback and internal rate of return
C) internal rate of return and accounting rate of return
D) internal rate of return and net present value
Q3) A firm is considering a project with an annual cash flow of $200,000.The project would have a 7-year life, and the company uses a discount rate of 10 percent.Ignoring income taxes, what is the maximum amount the company could invest in the project and have the project still be acceptable?
A) $718,200
B) $1,400,000
C) $973,600
D) $200,000
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Chapter 20: Inventory Management: Economic Order
Quantity, Jit, and the Theory of Constraints
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Sample Questions
Q1) Using the graphic approach to linear programming, the solution is usually
A) a corner point where two or more constraints intersect.
B) where the lines intersect farthest from zero.
C) the point farthest from the Y-axis.
D) the point farthest from the X-axis.
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) The objectives of JIT are achieved by
A) controlling costs.
B) improving delivery performance.
C) improving quality.
D) all of these.
Q4) Refer to Figure 20-5.What is the objective function for maximizing profits?
A) Maximize $15A + $30B
B) Maximize $50A + $80B
C) Maximize $35A + $50B
D) Minimize $15A + $30B
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