Managerial Accounting Test Preparation
Course Introduction
Managerial Accounting introduces students to the critical role accounting information plays in internal business decision-making. This course covers concepts and techniques for planning, controlling, and evaluating business operations, including budgeting, cost behavior analysis, performance measurement, and decision support using relevant cost and profitability assessments. Emphasis is placed on the interpretation and application of accounting data by managers for effective strategic and operational decision-making within various organizational settings.
Recommended Textbook Cornerstones of Managerial Accounting 3rd Edition by Maryanne M. Mowen
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14 Chapters
2120 Verified Questions
2120 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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64 Verified Questions
64 Flashcards
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Sample Questions
Q1) Which of the following is a characteristic of managerial accounting?
A) It has no mandatory rules.
B) It must adhere to mandatory rules.
C) Its main users are outside of the organization.
D) It provides only objective financial information.
Answer: A
Q2) Which of the following involves choosing actions that are right, proper, and just?
A) balanced costing
B) ethical behaviour
C) activity-based costing
D) cross-functional perspective
Answer: B
Q3) Virtually all managerial accounting practices were developed to assist managers in maximizing profits.
A)True
B)False
Answer: True
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Chapter 2: Basic Managerial Accounting Concepts
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217 Verified Questions
217 Flashcards
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Sample Questions
Q1) What is opportunity cost?
A) a benefit that is difficult to accurately trace to a cost object
B) a cost that increases as output increases and decreases as output decreases
C) a cost that decreases as output increases and increases as output decreases
D) a benefit given up or sacrificed when one alternative is chosen over another
Answer: D
Q2) (total manufacturing costs + work-in-process beginning - work-in-process ending)/units produced
A)Per-unit prime cost
B)Per-unit conversion cost
C)Per-unit cost of goods manufactured
Answer: C
Q3) Refer to TechCom Inc. What was the amount of cost of goods manufactured last month?
A) $1,250,000
B) $1,300,000
C) $1,750,000
D) $2,000,000
Answer: D
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Page 4
Chapter 3: Cost Behaviour
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211 Verified Questions
211 Flashcards
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Sample Questions
Q1) Refer to Montreal Clothing Store. What does "number of customers" represent?
A) the intercept
B) the variable rate
C) the dependent variable
D) the independent variable
Answer: D
Q2) Salary of manager
A)Discretionary fixed cost
B)Committed fixed cost
Answer: B
Q3) Factory supplies
A)Variable cost
B)Fixed cost
Answer: A
Q4) Refer to the Crazy Toys, Inc. What is the materials cost per unit of output?
A) $0.10
B) $0.30
C) $0.40
D) $0.60
Answer: B
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Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) If a multi-product company simply wants to know the overall break-even point and is willing to assume its product mix stays constant, it is easiest to use the break-even point in dollar sales revenue approach.
A)True
B)False
Q2) If variable costs decrease and the sales price increases, the break-even point decreases.
A)True
B)False
Q3) By what amount can sales decline before losses are incurred?
A) by the fixed costs
B) by the margin of safety
C) by the contribution margin
D) by the degree of operating leverage
Q4) In the equation to determine the number of units that must be sold to earn a target income, targeted income is added to fixed cost in the denominator.
A)True
B)False
Q5) What are two concepts useful to management when assessing risk?
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Chapter 5: Job-Order Costing
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195 Verified Questions
195 Flashcards
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Sample Questions
Q1) Which statement best describes overhead costs?
A) Overhead costs are not incurred uniformly throughout the year.
B) Low production in one month would give rise to low unit overhead costs.
C) High production in one month would give rise to high unit overhead costs.
D) Overhead costs have a definite, identifiable relationship with units produced.
Q2) Refer to Valley Water Slides. What is the Cost of Goods Sold for September?
A) $3,575.00
B) $5,129.00
C) $5,720.00
D) $8,206.40
Q3) The journal entry for overhead applied at the rate of $3 per direct labour hour when 210 direct labour hours were worked is:
Work-in-Process Inventory 630
Overhead Control 630
A)True
B)False
Q4) Actual overhead is used to arrive at the cost of goods manufactured.
A)True
B)False
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Chapter 6: Process Costing
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) Refer to LuLu, Inc. What would be the mixing department's equivalent units of production?
A) 20,000
B) 23,000
C) 27,000
D) 28,750
Q2) To calculate the equivalent units of production, the number of physical units is divided by the percentage of completion.
A)True
B)False
Q3) Which of the following does NOT appear in the production report?
A) costs added in the department
B) retail value of the units produced
C) costs transferred from prior departments
D) physical units passing through the department
Q4) Which business is most likely to use process costing?
A) a dentist
B) an accounting firm
C) a tire manufacturer
D) a custom machine manufacturer
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Chapter 7: Activity-Based Costing and Management
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159 Verified Questions
159 Flashcards
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Sample Questions
Q1) Which of the following are setups, material handling, and inspection all possible examples of?
A) product diversity
B) sustainable diversity
C) unit-level manufacturing overhead activities
D) non-unit-level manufacturing overhead activities
Q2) What costs are incurred when products and services do NOT conform to either specifications or customer needs prior to being delivered?
A) appraisal costs
B) prevention costs
C) internal failure costs
D) external failure costs
Q3) What type of product meets or exceeds customer expectations?
A) a robust product
B) a quality product
C) a defective product
D) a traditional product
Q4) The consumption ratio is the amount of each activity consumed by all products.
A)True
B)False
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Refer to Nute Corporation. What is the value of the ending Finished Goods Inventory using the absorption costing method?
A) $240,000
B) $360,000
C) $420,000
D) $600,000
Q2) Refer to Cara Company. What is the net income for Cara Company?
A) $2,000
B) $32,500
C) $150,000
D) $300,000
Q3) Stockout costs
A)The costs of not having a product available when demanded by a customer
B)The costs of carrying inventory
C)Approach that maintains goods should be pulled through the system by present demand
D)The number of units in the order quantity that minimizes the total cost
E)The costs of placing and receiving an order
Q4) List three problems that inventory is meant to solve. How does the JIT producer handle these problems?
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Chapter 9: Budgeting, Production, Cash, and Master Budget
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165 Verified Questions
165 Flashcards
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Sample Questions
Q1) A company expects the following sales for the coming year: \(\begin{array}{lllll}&\text { 1st Ouarter}&\text {2nd Ouarter }&\text {3rd Ouarter}&\text { 4th Ouarter }\\
\text { Units } & 50,000 & 40,000 & 30,000 & 90,000 \\
\text { Average selling price } & \$ 5 & \$ 4.50 & \$ 5 & \$ 6 \end{array}\) What is the company's budgeted sales revenue for the year?
A) $1,050,000
B) $1,120,000
C) $1,155,000
D) $1,260,000
Q2) What budgets are needed to calculate a budgeted unit cost?
A) budgeted income statement, direct labour budget, and cash budget
B) direct materials purchases budget, direct labour budget, and manufacturing overhead budget
C) budgeted balance sheet, selling and administration budget, and finished goods inventory budget
D) direct materials purchases budget, selling and administration budget, finished goods inventory budget
Q3) Is budgeting relevant for not-for-profit organizations? Explain your position.
Q4) What are the advantages of budgeting?
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Chapter 10: Standard Costing: a Managerial Control Tool
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) Refer to Roofus Company. What is the journal entry to record the purchase of materials?
A) Materials 18,900
Materials Price Variance 5,600
Accounts Payable 24,500
B) Materials 19,575
Materials Price Variance 5,800
Accounts Payable 25,375
C) Materials 24,500
Materials Price Variance 5,600
Accounts Payable 18,900
D) Materials 25,375
Materials Price Variance 5,800
Accounts Payable 19,575
Q2) To compute the standard direct labour hours allowed, multiply the unit labour standard by the standard output.
A)True
B)False
Q3) How are standards developed?
Q4) Explain the kaizen approach to costing.
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Chapter 11: Flexible Budgets and Overhead Analysis
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) Which of the following may cause an unfavourable variable overhead spending variance?
A) the use of excessive quantities of variable overhead items
B) the payment of lower prices for variable overhead items used
C) the payment of higher prices for variable overhead items used
D) the use of excessive quantities of the variable overhead allocation base
Q2) What does the fixed overhead volume variance measure?
A) the cost of unused activity capacity
B) the cost of overspending on fixed overhead items
C) the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate
D) both the effect of the actual output differing from the output used to calculate the predetermined fixed overhead rate and the cost of unused activity capacity
Q3) Discuss the following statement: "As long as the total variable overhead variance is small, the managers can be assured that actual activity is proceeding as planned. No further action is necessary."
Q4) Define static budget and flexible budget. Briefly explain the use of each of these types of budgets?
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Page 13
Chapter 12: Performance Evaluation and Decentralization
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) Refer to Borraw Company. What are the average operating assets for Division A?
A) $5,000
B) $25,000
C) $125,000
D) $208,333
Q2) A responsibility centre in which a manager is responsible for sales, costs, and investments
A)Centralization
B)Revenue centre
C)Profit centre
D)Cost centre
E)Investment centre
F)Decentralization
Q3) The ratio of sales to average operating assets
A)Turnover
B)Margin
C)ROI
D)Residual income
Q4) How is EVA (economic value added) different from standard residual income calculations?
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Chapter 13: Short-Run Decision Making: Relevant Costing
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84 Verified Questions
84 Flashcards
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Sample Questions
Q1) Joseph Giovine owns a successful hole-in-the-wall bagel shop called Peach Tree Bagels. Joseph wants to expand the shop by leasing the space next door for $1,000 per month and adding tables and chairs so that customers can dine in. He figures that the tables and chairs will cost $5,000 and that the bagel machine, which cost $4,500 five years ago, will have to be scrapped in favour of a larger machine costing $7,400. He thinks sales will increase by $5,500 per month. Variable costs are 55% of sales.
Required:
A. What are the relevant costs and benefits of expanding into the new space?
B. What are the irrelevant costs and benefits of expanding into the new space?
Q2) What is the decision called when a manager must decide whether or not to outsource a product?
A) make-or-buy
B) special-order
C) keep-or-drop
D) sell-or-process-further
Q3) Resources that are acquired in advance of usage are flexible resources.
A)True
B)False
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Chapter 14: Capital Investment Decisions
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) An obvious advantage of postaudits is that the assumptions driving the original analysis my often be invalidated by changes in the actual operating environment.
A)True
B)False
Q2) Refer to Cary Swenson. What is the accounting rate of return for the project?
A) 20.00%
B) 20.83%
C) 64.17%
D) 166.70%
Q3) Net present value analysis and internal rate of return analysis can sometimes produce erroneous choices because they ignore the time value of money.
A)True
B)False
Q4) Companies that perform postaudits of capital projects do NOT experience any benefits.
A)True
B)False
Q5) Explain the concept of capital investment decision. Give an example of each.
Q6) Which model of capital investment decision making is most widely used? Why?
Page 16
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