Principles of Managerial Accounting Exam
Answer Key
Course Introduction
Principles of Managerial Accounting introduces students to the fundamental concepts and techniques used by managers to make informed business decisions. The course covers key topics such as cost behavior, budgeting, performance evaluation, and decision-making processes that aid in planning and controlling organizational activities. Students will learn how to interpret and apply financial information to optimize operations, allocate resources efficiently, and support strategic initiatives. Emphasis is placed on real-world applications, ethical considerations, and the use of managerial accounting tools to enhance both short-term and long-term business performance.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 11th Edition by Tracie L. Miller Nobles
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9 Chapters
1673 Verified Questions
1673 Flashcards
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Chapter 18: Introduction to Managerial Accounting
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210 Verified Questions
210 Flashcards
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Sample Questions
Q1) Merchandising companies,like service companies,do not have a Cost of Goods Sold account.
A)True
B)False
Answer: False
Q2) The accountant for Myra Lido deliberately recorded operating expenses as operating assets in order to record a higher net income for the company.As long as the amount of the misstatement was not material,this would not be considered unethical behavior.
A)True
B)False
Answer: False
Q3) For decision-making purposes,________ costs are often divided into prime costs and conversion costs.
A) fixed costs
B) product costs
C) period costs
D) sunk costs
Answer: B
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Page 3
Chapter 19: Job Order Costing
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170 Verified Questions
170 Flashcards
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Sample Questions
Q1) Work-in-Process Inventory is debited when indirect labor costs are incurred in a job order costing system.
A)True
B)False
Answer: False
Q2) Manufacturing overhead is allocated by debiting the Finished Goods Inventory account.
A)True
B)False
Answer: False
Q3) Unlike manufacturing companies,service companies use an allocation base for allocating both direct and indirect costs.
A)True
B)False
Answer: False
Q4) Accounting firms,building contractors,and healthcare providers use process costing. A)True
B)False Answer: False
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Chapter 20: Process Costing
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167 Flashcards
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Sample Questions
Q1) Under the first-in,first-out (FIFO)method,the cost of equivalent units of production is calculated by ________.
A) summing up only the transferred in costs of each department
B) combining beginning inventory costs with current period costs
C) considering only the transferred out costs of each department
D) accounting for beginning inventory costs separately from current period costs
Answer: D
Q2) The Refining Department of Sweet Sugar,Inc.had 80,000 tons of sugar to account for in July.Of the 80,000 tons,49,000 tons were completed and transferred to the Boiling Department,and the remaining 31,000 tons were 75% complete.The materials required for production are added at the beginning of the process.Conversion costs are added equally throughout the refining process.Calculate the total equivalent units of production for direct materials.
A) 72,250 units
B) 49,000 units
C) 23,250 units
D) 80,000 units
Answer: D
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Page 5
Chapter 21: Cost-Volume-Profit Analysis
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Sample Questions
Q1) If fixed costs go up,and all other factors remain the same,the margin of safety will become larger.
A)True
B)False
Q2) Indiana Hot Tubs,Inc.reports the following information for August: \[\begin{array} { |
l | r | }
\hline \text { Sales Revenue } & \$ 770,000 \\
\hline \text { Variable Costs } & 220,000 \\
\hline \text { Fixed Costs } & 73,000 \\
\hline
\end{array}\] Calculate the operating income for August using variable costing.
A) $550,000
B) $697,000
C) $477,000
D) $770,000
Q3) If variable costs go down,and all other factors remain the same,the margin of safety will become larger.
A)True
B)False
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6
Chapter 22: Master Budgets
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172 Flashcards
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Sample Questions
Q1) Which of the following would not appear on a multiple-step budgeted income statement?
A) A) \(\text {gross profit }\)
B) income tax expense
C)C)\(\text { operating income }\)
D) salaries payable
Q2) Blake Sodas,Inc.has budgeted direct materials inventory purchases as follows: October: $345,000
November: $370,000
December: $440,000
Blake Sodas,Inc.pays for 10% of their purchases during the month of purchase,70% during the month following the purchase,and the remaining 20% two months after the month of purchase.What is the budgeted accounts payable balance on December 31?
A) $396,000
B) $470,000
C) $440,000
D) $433,000
Q3) List the four budgeting objectives.Why is this process a loop?
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Page 7
Chapter 23: Flexible Budgets and Standard Cost Systems
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204 Flashcards
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Sample Questions
Q1) The production manager of a company,in an effort to gain a promotion,negotiated a new labor contract with the factory employees that required them to bear a greater percentage of benefit costs than before,thus bringing down the cost of direct labor to the company.Shortly afterward,several experienced and highly skilled workers resigned,and were replaced by new employees whose work was very slow during their training period.At the end of the quarter,the company's profits fell 10%.This would produce a(n)________.
A) unfavorable direct materials cost variance
B) favorable direct labor cost variance
C) favorable direct labor efficiency variance
D) unfavorable direct materials efficiency variance
Q2) The flexible budget variance is the difference between the actual results and the expected results in the flexible budget for the actual units sold.
A)True
B)False
Q3) A standard is a sales price,cost,or quantity that is expected under normal conditions. A)True
B)False
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Chapter 24: Cost Allocation and Responsibility Accounting
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Sample Questions
Q1) Long-term investments are made by the investment center manager for the purpose of ________.
A) increasing profits
B) decreasing profits
C) increasing interest expense
D) decreasing plant assets
Q2) Companies evaluate investment centers using the same measures as the profit centers.
A)True
B)False
Q3) The level of employee satisfaction is a key performance indicator of the ________ perspective of a balanced scorecard.
A) financial
B) learning and growth
C) internal business
D) customer
Q4) In many cases,the amount of the transfer price does not affect overall company profits.
A)True
B)False
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Chapter 25: Short-Term Business Decisions
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Sample Questions
Q1) Nelson Products is a price-setter that uses the cost-plus pricing approach.The products are specialty vacuum tubes used in sound equipment.The CEO is certain that the company can produce and sell 300,000 units per year,due to the high demand for the product.Variable costs are $2.30 per unit.Total fixed costs are $980,000 per year.The CEO will receive stock options if $300,000 of operating income for the year is reported.What sales price would allow the CEO to achieve the target if the cost-plus pricing method is used? (Round your answer to the nearest cent.)
A) $2.30 per unit
B) $6.57 per unit
C) $4.27 per unit
D) $4.57 per unit
Q2) Which of the following is always irrelevant to short-term operating decisions?
A) relevant cost
B) differential cost
C) opportunity cost
D) sunk cost
Q3) Define joint cost.Should joint costs be considered in the decision to sell or further process the product? Explain your answer.
Q4) Define the terms Relevant Cost and Sunk Cost.
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Chapter 26: Capital Investment Decisions
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Sample Questions
Q1) An annuity is a series of unequal payments over equal intervals.
A)True
B)False
Q2) The following formula is used to compute the present value of a lump sum: Future value = Present value × PV factor for i = X%,n = X periods
A)True
B)False
Q3) The last step in the capital budgeting process is control,which compares the actual results with the projected results.These comparisons are known as ________.
A) net cash inflows
B) post-audits
C) rankings
D) variance analysis
Q4) Discounted cash flow methods typically ________.
A) use simple interest calculations
B) assume that cash flows will be reinvested when received
C) focus on the payback period
D) comply with the requirements of GAAP
Q5) What are the strengths of the net present value capital budgeting method?
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