MBA Managerial Accounting Review Questions
Course Introduction
MBA Managerial Accounting explores the principles and applications of accounting information critical for effective managerial decision-making. The course covers key topics such as cost behavior, cost-volume-profit analysis, budgeting, variance analysis, performance measurement, and strategic cost management. Emphasis is placed on the use of accounting data for planning, controlling, and evaluating business operations in various organizational settings. Students will develop analytical and problem-solving skills to interpret financial information, align accounting practices with organizational goals, and support strategic business decisions in a dynamic global environment.
Recommended Textbook Managerial Accounting 2nd Edition by Charles
E. Davis
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Page 2
Chapter 1: Accounting As a Tool for Management
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Sample Questions
Q1) The Sarbanes-Oxley Act requires that all publicly traded companies disclose whether certain executives are subject to a corporate code of ethics.Which of the following executive position need not be disclosed?
A)Principal production officer.
B)Principal financial officer.
C)Principal accounting officer.
D)Principal executive officer.
Answer: A
Q2) Which of the following is not a standard of the IMA statement of ethical professional practice?
A)Competence
B)Integrity
C)Credibility
D)Independence
Answer: D
Q3) Managerial accounting information is always prepared by the controller or cost accountant.
A)True
B)False
Answer: False
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Chapter 2: Cost Behavior and Cost Estimation Summary of
Questions by Objectives and Blooms Taxonomy
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Sample Questions
Q1) A mixed cost is a cost that contains both a fixed and a variable component. Both the total cost and the unit cost will vary with changes in level of activity. Total cost will increase as the level of activity increases. Unit cost will decrease as activity increases since the fixed component is being spread among a larger number of units.
Answer: TC = VCX + FC
Q2) Which of the following is a true statement relating to step costs?
A)Step costs remain constant over only a small range of activity.
B)Step costs do not contain a fixed component.
C)Step costs are also referred to as fixed costs.
D)None of these ans choices is a true statement.
Answer: A
Q3) All costs are either fixed or variable.That is,a cost cannot have a fixed and a variable component.
A)True
B)False
Answer: False
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4
Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) Assume a sales price per unit of $20, variable cost per unit $16, and total fixed costs of $168,000. What is the breakeven point?
A) 420,000
B) $420,000
C) 840,000
D) $840,000
Answer: D
Q2) Which of the following is \(\textbf{ not }\) an assumption about the data when using CVP analysis?
A)All costs can be easily and accurately separated into fixed and variable components.
B)Total fixed costs remain at a constant level and variable costs per
C)A linear relationship exists between variable costs and sales activity over the relevant range of interest.
D)Inventory is sold in the period following purchase or manufacture.
Answer: D
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Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) Which of the following is\(\textbf{ not }\) associated with period costs?
A)Selling of a product
B)Creation of overhead
C)The passage of time
D)Administration of the business
Q2) Randy's Garden Supply Manufacturing Company had $105,000 in raw materials' inventory at the beginning of the month.During the month Randy used $920,000 and had $120,000 remaining in inventory at the end of the month.How much inventory did Randy purchase during the month?
A) $815,000
B) $905,000
C) $920,000
D) $935,000
Q3) Which of the following items is \(\textbf{ not }\) classified as indirect labor for a furniture manufacturing company?
A)The production foreman's salary
B)Wages paid to the workers on the assembly line
C)The forklift driver who delivers raw materials to the production floor
D)All of these ans choices are classified as indirect labor.
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Page 6
Chapter 5: Planning and Forecasting
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Sample Questions
Q1) Because people talk about wage rates rather than wage prices,we refer to standard direct labor prices as direct labor rates,expressed as
A)Per direct labor hour
B)Per unit
C)A percentage
D)All of these ans choices are correct.
Q2) Which of the following is the most popular way to begin the budgeting process?
A)The incremental approach
B)Zero-based approach
C)Rolling approach
D)None of these ans choices are correct.
Q3) The standard price of direct labor includes which of the following items?
A)FICA taxes
B)Health insurance
C)Retirement contributions
D)All of these ans choices are correct.
Q4) Ideal standards represent a level of performance that can be attained with reasonable effort.
A)True
B)False
Page 7
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) Thrope,Inc.purchased 1,700 pounds of direct material at a price of $1.20 per pound.The standard price of the material is $1.30 per pound.Thrope used 1,500 pounds in production while the standard pounds allowed for actual production was 1,300.
Required:
Calculate the direct materials price and quantity variances and indicate whether the variances are favorable or unfavorable.
Q2) Adler Industries uses a standard cost system. Adler has established the following standards for one unit of product: standard labor of .25 hour and standard wage rate of $8 per hour. During January, Adler used 5,000 hours of direct labor and paid $37,800 in wages in producing 18,700 units.
Required:
Calculate the direct labor rate variance and indicate whether the variance is favorable or unfavorable.
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8
Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) In changing from a traditional costing system to an activity-based costing system,overhead costs tend to shift from high-volume standard products to low-volume premium products because
A)All overhead costs are indirect.
B)Premium products usually consume more activities per
C)Standard products use more total activities than premium products.
D)None of these ans choices are correct.
Q2) With activity-based costing,the goal is to
A)Develop a product cost that captures the amount of each resource consumed by the activities performed to produce a specific product.
B)Develop a product cost that allocates manufacturing overhead to each resource consumed by the activities performed to a group of similar products.
C)Develop a product cost that eliminates all waste such as machine down time and defective products.
D)None of these ans choices are correct..
Q3) What is an activity cost pool and how are activity cost pool rates calculated?
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9
Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) The Theory of Constraints was developed by Eli Goldratt to
A)Maximize the performance of a value chain by focusing on constraints that limit an organization's output.
B)Maximize the performance of a value chain by focusing on those processes that do not have constraints.
C)Limit or eliminate defective product that constrain production.
D)None of these ans choices are correct.
Q2) Managers becoming overwhelmed by the huge amount of information available to them is referred to as
A)Unavoidable overload.
B)Information overload.
C)Phenomenon overload.
D)Irrelevance overload.
Q3) Offshoring means moving a company's business processes to a foreign country.
A)True
B)False
Q4) If a product has a positive segment margin but is not as profitable as other products,what should managers do? What if the segment margin is negative?
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Chapter 9: Capital Budgeting
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Sample Questions
Q1) Capital budgeting differs from cash budgeting in that
A)Cash budgeting focuses on short-term results while capital budgeting focuses on five,ten,or even twenty years in the future.
B)Cash budgeting focuses on the balance sheet while capital budgeting focuses on the income statement.
C)Cash budget does not contain cash outflows for capital assets while capital budgeting does.
D)All of these ans choices are correct.
Q2) The payback period of a project that produces even cash flows each year is calculated by dividing
A)Net initial investment by the projected annual cash flow.
B)Gross initial investment by the projected annual cash flow.
C)Net initial investment by the projected annual cash inflows.
D)Gross initial investment by the projected annual cash inflows.
Q3) Assume that on January 1,2012 you purchased ten shares of XYZ Corporate stock for $22 each.On September 30,2014,you sell one-half of your stock for $28 each.What is your return on your investment?
Q4) What are the three factors needed to determine the present value of any future amount?
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Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) If you think of an organization's structure as a continuum,on the centralized end of the continuum,operational managers
A)Are never evaluated.
B)Are evaluated on costs,revenue,and profit.
C)Have complete control over operational decisions.
D)Have no authority to make decisions.
Q2) Marshall Industries has sales of $600,000 and net operating income of $30,000.Marshall's average operating assets total $200,000.What is the company's return on investment? Show your work.
Q3) An investment center manager's performance can be based on
A)The same methods as managers of cost centers.
B)The same methods as managers of profit centers.
C)Residual income.
D)All of these ans choices are correct.
Q4) In calculating EVA,invested capital is determined by
A)Subtracting current liabilities from total assets.
B)Subtracting total liabilities from total assets.
C)Subtracting total liabilities from long-term assets.
D)None of these ans choices are correct.
Q5) What is EVA and how is it calculated?
Page 12
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) For managers to adequately monitor the organization's performance,they need to use
A)Leading indicators.
B)Lagging indicators.
C)Both leading indicators and lagging indicators.
D)Neither leading indicators nor lagging indicators.
Q2) A balanced scorecard should include five to seven measures in each of four perspectives: Learning and growth,internal business processes,customer,and financial. Required:
List five measures that relate to the financial perspective.
Q3) Which of the following is a measure that relates to the customer perspective?
A)Time to market
B)Market share
C)Revenue growth
D)Defect rate
Q4) Benchmarking is appropriate only within a company's industry.
A)True
B)False
13
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) The accounts receivable turnover is calculated as a. \(\frac{\text { Gross sales }}{\text { Ending Accounts Receivable Balance }}\)
b.\( \frac{\text{Gross sales }}{\text{Average Accounts Receivable Balance}}\)
c.\(\frac{\text{Net credit sales }}{\text{Average Accounts Receivable Balance }} \)
d.\(\frac{\text{Net credit sales}}{\text{Ending Accounts Receivable Balance}}\)
Q2) The calculation of working capital is
A)Current assets plus current liabilities.
B)Current assets less current liabilities.
C)Current assets times current liabilities.
D)Current assets divided by current liabilities.
Q3) Dun & Bradstreet's Industry Norms and Key Business Ratios provide financial ratios for key industries,as well as condensed common-sized balance sheets and income statements.
A)True B)False
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) During the current year,XYZ Corporation purchased land for $5,000 and sold a piece of factory machinery with a book value of $15,000 for $12,000 cash.What is XYZ's net cash flows provided by investing activities for the year?
A) $8,000
B) $11,000
C) $7,000
D) $10,000
Q2) When preparing the statement of cash flows using the indirect method,non-cash expenses such as amortization is added to net income to arrive at cash flows from operating activities.
A)True
B)False
Q3) Using the direct method of preparing the statement of cash flows,which of the following is not an activity generating operating cash flows?
A)Collections from customers
B)Payments to suppliers
C)Payments for income taxes
D)Payments of dividends
Q4) What is the basic form of the statement of cash flows?
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Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) Which of the following types of entities would probably use a process costing system?
A)Oil refiner
B)Construction company
C)Airplane manufacturer
D)CPA firm
Q2) When a department has work in process at the end of the period,we need to determine the percentage of completion for the work in process.Based on that percentage we calculate
A)Actual units of production
B)Particular units of production
C)Equivalent units of production
D)Half- units of production
Q3) The journal entries used to record cost flows in a process costing system differ from those used to record cost flows in a job order costing system.
A)True
B)False
Q4) List three goods or services likely to use a process costing system and three that are likely to use a job order costing system.
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Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) When the units produced equals the units sold
A)Operating income is higher under absorption costing than under variable costing.
B)Operating income is lower under absorption costing than under variable costing.
C)Operating is the same under absorption costing and variable costing.
D)Cannot be determined with the information given.
Q2) Absorption costing is also referred to as full costing.
A)True
B)False
Q3) Under variable costing,subtract variable costs from sales to arrive at
A)Gross profit
B)Gross margin
C)Contribution margin
D)Net income
Q4) When production volume equals sales volume,fixed overhead expensed is higher using absorption costing than with variable costing.
A)True
B)False
Q5) Describe the format for a variable costing income statement.
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Chapter 16: Topic Focus Standard Costing Systems
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Sample Questions
Q1) When using a standard costing system,the direct materials price variance is recorded at the time direct materials are transferred to the production floor.
A)True
B)False
Q2) At what amount will the inventory and cost of goods sold amounts be reported on the financial statements?
A)Inventory at standard and cost of goods sold at actual
B)Inventory at actual and cost of goods sold at actual
C)Inventory at standard and cost of goods sold at standard
D)Inventory at actual and cost of goods sold at standard
Q3) When using a standard costing system,at the end of an accounting period,the balances in which of the following accounts will be at standard amounts?
A)Raw materials inventory and Work in process only
B)Cost of goods sold only
C)Finished goods and cost of goods sold only
D)Raw materials,Work in process,Finished goods,and Cost of goods sold
Q4) What is the difference between a normal costing system and a standard costing system?
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Chapter 17: Topic Focus Customer Profitability
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Sample Questions
Q1) Assume you are a sales manager responsible for analyzing the profitability of the customers in your territory.You have gathered the following information on one of your customers:
\[\begin{array} { l l l }
&\text {Sales}&&\$300,000\\
&\text {Cost of goods sold}&&220,000\\
&\text{Selling Cost:}\\
&\text {~In-person sales calls}&50\text{~@~}\$100\text{~each}& 5,000\\
&\text {~Phone orders}&500\text{~@~}\$10\text{~each}&5,000\\
&\mathrm{~Shipping}&10,000\text{~@~}\$2\text{~each}&\mathrm{20,000}\\
&\text {~Express shipping}&100\text{~@~}\$20 \text{~each}&\mathrm{2,000}\\
&\text{Administrative cost:}\\
&\text {~Salaries}&\text {~Amount allocated to customer}&3,000\\
&\text {~Supplies}&\text {~Amount allocated to customer}&500\\
&\text {~Depreciation}&\text {~Amount allocated to customer}&250\\ \end{array}\]
a.Calculate the customer net profit.
b.Calculate the profit margin.
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