Performance Measurement and Control
Solved Exam Questions
Course Introduction
This course explores the principles and techniques of performance measurement and control within organizations. Students will learn how to design and implement effective performance evaluation systems that align organizational objectives with operational activities. The course covers topics such as key performance indicators (KPIs), budgeting, variance analysis, balanced scorecards, and responsibility accounting. Emphasis is placed on the use of quantitative and qualitative tools to monitor, assess, and improve performance at various levels within the organization. Through case studies and practical applications, students will develop the skills necessary to measure outcomes accurately and use control mechanisms to drive strategic decision-making and achieve organizational goals.
Recommended Textbook
Cornerstones of Managerial Accounting 3rd Edition by Maryanne M. Mowen
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Which statement best describes the controller of an organization?
A) They generally have no influence in policies and decisions.
B) They can have significant input into policies and decisions.
C) They typically set operating policy within the organization.
D) They typically have authority over managers in the production area.
Answer: B
Q2) The process of choosing among competing alternatives is called decision making.
A)True
B)False
Answer: True
Q3) What is a primary objective of managerial accounting?
A) to provide the Canada Revenue Agency with information about taxable income
B) to provide management with information useful for planning and control of operations
C) to provide banks and other creditors with information useful in making credit decisions
D) to provide existing shareholders and potential investors with useful information for decision making
Answer: B
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Page 3
Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) Refer to ComPrint Co. What was the amount of Cost of Goods Manufactured for the year?
A) $100,000
B) $101,000
C) $102,000
D) $124,000
Answer: C
Q2) Costs incurred to produce future benefits would generally be categorized as liabilities.
A)True
B)False Answer: False
Q3) Refer to Bowring Company. How many units were sold during the year?
A) 1,000
B) 1,500
C) 2,000
D) 3,333 Answer: C
Q4) Refer to Owen Sound Company. Calculate the per-unit prime cost.
Answer: $516,000 (DM) + $430,000 (DL) = $946,000 Prime Costs / 86,000 = $11.00
Page 4
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Chapter 3: Cost Behaviour
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Sample Questions
Q1) Refer to Prince Edward Company. What is the variable rate of maintenance cost when using the results of regression?
A) $9.82 per machine hour
B) $9.85 per machine hour
C) $12.14 per machine hour
D) $12.74 per machine hour
Answer: A
Q2) Total cost depends on the level of output
A)Relevant range
B)Cost behaviour
C)Driver
D)Variable cost
E)Fixed cost
Answer: D
Q3) Refer to Drumheller Company. Which element is the slope?
A) output
B) total cost
C) fixed cost
D) variable rate
Answer: D
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Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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Sample Questions
Q1) McKenzie Company expects to produce and sell 1000 units next month. Data on costs follows:
Per unit costs:
Selling sales price $8
Variable manufacturing costs $2.75
Variable selling costs $0.25
Total costs:
Fixed manufacturing costs $1,000
Fixed selling costs $ 125
A. Calculate the break-even point in units.
B. Calculate the break-even point in sales dollars.
C. Calculate the expected operating income for next month.
D. Calculate the margin of safety in dollars.
E. Calculate the break-even point in units if fixed manufacturing costs increase by $500.
F. Calculate the break-even point in units if variable manufacturing costs decrease by $0.75.
Q2) If fixed costs increase, the break-even point will decrease.
A)True
B)False
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Chapter 5: Job-Order Costing
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Sample Questions
Q1) Discuss overapplied and underapplied overhead.
Q2) Estimated overhead for a single department divided by the estimated activity level for that same department
A)Predetermined overhead rate
B)Plantwide overhead rate
C)Departmental overhead rate
D)Overhead variance
E)Overapplied overhead
F)Underapplied overhead
G)Applied overhead
H)Normal Cost of Goods Sold
Q3) Direct materials, direct labour and applied overhead are totalled to yield manufacturing cost of job
A)Completion of job
B)End of each accounting period
C)Materials are removed from storage into production
D)Product is sold
E)End of year
Q4) What are the three steps of overhead application?
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Chapter 6: Process Costing
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Sample Questions
Q1) Beginning inventory for the month contained 12,000 units that were 60% complete with respect to materials. During the month, 80,000 units were completed and transferred out. Ending inventory contained 6,000 units, 30% complete with respect to materials. What would be the weighted average equivalent units of production for materials for the month?
A) 12,000
B) 80,000
C) 81,800
D) 92,000
Q2) Units must pass through one process before they can be worked on in later processes.
A)Parallel processing
B)Sequential processing
C)Process costing
D)Weighted average costing method
Q3) What goods are moved from a prior department to subsequent department?
A) Beginning Goods
B) Transferred-in Goods
C) Finished Goods Inventory
D) Work-in-Process Inventory
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Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) Unit-level activities are performed each time a batch is produced.
A)True
B)False
Q2) Control activities are performed by an organization or its customers in response to poor quality.
A)True
B)False
Q3) 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
Q4) To calculate an activity rate, the practical capacity of each activity must be determined.
A)True
B)False
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 Carmel Company. What is the EOQ?
A) 20
B) 30
C) 45
D) 64
Q2) Just-in-time
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
Q3) LaTiffa Company orders 250 units at a time and places 15 orders per year. Total ordering cost is $1,100, and total carrying cost is $1,100. Which statement best describes the economic order quantity?
A) The economic order quantity (EOQ) is 15.
B) The economic order quantity (EOQ) is 250.
C) The economic order quantity (EOQ) is less than 250.
D) The economic order quantity (EOQ) is more than 250.
Page 10
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Chapter 9: Budgeting, Production, Cash, and Master Budget
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Sample Questions
Q1) In which order are budgets prepared?
A) sales budget, cash budget, production budget
B) production budget, sales budget, direct labour budget
C) sales budget, production budget, direct materials purchases budget
D) production budget, cost of goods sold budget, direct labour budget
Q2) Cash budget
A)Operating budget
B)Financial budget
Q3) A continuous budget is a static 15-month budget.
A)True
B)False
Q4) Refer to Emerald Company. What was the ending direct materials inventory for January?
A) 3,000 kg
B) 4,000 kg
C) 6,000 kg
D) 12,000 kg
Q5) Is budgeting relevant for not-for-profit organizations? Explain your position.
Q6) Briefly describe the attributes of an ideal budgetary system. What features of budgeting have been identified that encourage positive behaviour?
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) Currently attainable standards can be achieved under efficient operating conditions.
A)True
B)False
Q2) When accounting for variances, favourable variances are always debits to the variance account, and unfavourable variances are always credits to the variance account.
A)True
B)False
Q3) Kaizen means continuous improvement.
A)True
B)False
Q4) Refer to Serenity Equestrian Corporation. What is the standard cost of direct labour for the production of 150 saddles?
A) $33,750
B) $36,000
C) $37,500
D) $40,000
Q5) Explain the kaizen approach to costing.
Q6) How are standards developed?
12
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) Refer to Bridgestone Company. Prepare an overhead budget for the expected activity level of 10,000 units. What is the total budgeted overhead?
A) $12,400
B) $17,400
C) $27,400
D) $139,400
Q2) Refer to Kelsey Inc. What is the flexible budget for August?
A) $165,000
B) $171,000
C) $185,000
D) $194,000
Q3) For which of the following is a cost formula developed for activity flexible budgeting?
A) each activity as a function of activity drivers
B) each activity as a function of resource drivers
C) each overhead item as a function of resource drivers
D) each overhead item as a function of direct labour hours
Q4) In an activity framework, controlling costs results from managing activities.
A)True
B)False
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) Refer to Sunshine National Bank. Calculate the following:
A. Actual cycle time in minutes
B. Theoretical cycle time in minutes
C. Actual velocity per hour
D. Theoretical velocity per hour
Q2) Which statement best describes the Manufacturing Cycle Efficiency (MCE)?
A) As MCE improves, cycle time decreases.
B) MCE takes on values between 0 and 100.
C) MCE is used by manufacturing firms only.
D) The lower the MCE, the more efficient the firm.
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) Refer to Borraw Company. What is the turnover for Division B?
A) 0.150
B) 1.500
C) 2.500
D) 6.670
Q5) What are the advantages and disadvantages of return on investment (ROI)?
Page 14
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) Entertech Company is designing a tablet aimed at families travelling with young children. The company believes that the product can be sold for $150, and it requires a 25% profit on new products. What is the target cost of the tablet?
A) $28.00
B) $112.50
C) $140.00
D) $187.50
Q2) Refer to Rudder Company.
Required:
A. Based on the cost figures, if Rudder purchases metallic ink from the outside supplier, will operating income be higher or lower, and by how much?
B. What is the highest price per millilitre that Rudder would pay an outside supplier for the ink?
Q3) Resources that are acquired in advance of usage are flexible resources. A)True B)False
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15
Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) Refer to Present Value Tables. Cinnamon Company is considering an investment in new imaging equipment that will cost $400,000. The equipment is expected to yield cash inflows of $80,000 per year for a six-year period. The company has set a required rate of return at 10%. What is the net present value of the investment?
A) ($348,600)
B) ($51,600)
C) $51,600
D) $348,400
Q2) What is a drawback of the payback period?
A) It uses a set discount rate.
B) It ignores a project's total profitability.
C) It uses before-tax cash flows rather than after-tax cash flows.
D) It considers total profitability, requiring the forecasting of all future cash flows.
Q3) Refer to Darth Company. What is the average annual income for this project?
A) $62,500
B) $300,000
C) $500,000
D) $1,900,000
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