Principles of Managerial Accounting Question Bank
Course Introduction
Principles of Managerial Accounting introduces students to the concepts, techniques, and practices used by managers to make informed business decisions. The course covers cost classification, behavior, and allocation, budgeting, performance measurement, and analysis of financial information for planning, controlling, and decision-making purposes. Emphasis is placed on understanding how accounting information supports internal management processes including product costing, pricing strategies, and operational efficiency. Students gain practical skills in preparing and interpreting reports that guide effective management and strategic planning in various organizational settings.
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) Poodle Grooming Salon provides dog grooming services.In March,the business groomed 245 dogs,earned $10,300 in revenues,and incurred the following operating costs:
\[\begin{array} { | l | r | }
\hline \text { Grooming Supplies Expense } & \$ 485 \\
\hline \text { Wages Expense } & 3,260 \\
\hline \text { Utilities Expense } & 285 \\
\hline \text { Rent Expense } & 1,200 \\
\hline \text { Depreciation Expense - Equipment } & 500 \\ \hline
\end{array}\]
Compute the cost of one grooming.(Round to two decimal places.)
Answer: \[\begin{aligned}
\text { Cost of one grooming } & = \text { Total operating costs / Total number of dogs groomed } \\
& = ( \$ 485 + \$ 3,260 + \$ 285 + \$ 1,200 + \$ 500 ) / 245 \text { dogs groomed } \\ & = \$ 5730 / 245 \\
& = \$ 23.39 \mathrm { per } \text { dog groomed } \end{aligned}\]
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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) Which of the following is true about ERP systems?
A) Because ERP systems are software based, they have given way to a more service-based economy.
B) Because ERP systems track costs more efficiently, the benefit from the cost information outweighs the cost of obtaining the information.
C) Because ERP systems track costs more efficiently, process costing systems are becoming more prevalent.
D) Because ERP systems have the ability to trace all production costs to individual units, all product costs can now be classified as either direct materials or direct labor.
Answer: B
Q2) Which of the following statements is true of costing systems?
A) A process costing system would be used by manufacturers of custom-made perfumes.
B) A job order costing system would be used by manufacturers of baking utensils.
C) A construction company would likely use a process costing system.
D) An accounting firm would likely use a job order costing system.
Answer: D
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Chapter 20: Process Costing
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167 Flashcards
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Sample Questions
Q1) Which of the following is used to calculate the number of units accounted for under first-in,first-out (FIFO)method of inventory valuation of process costing?
A) Accounted for = Beginning balance + Started and completed + In process
B) Accounted for = Beginning balance + Started and completed
C) Accounted for = Beginning balance + In process
D) Accounted for = Beginning balance + Amount transferred in Answer: A
Q2) In a production cost report,the number of units to account for must always be greater than the number of units accounted for.
A)True
B)False
Answer: False
Q3) The production cost report for Department 1 shows that $160,000 was assigned to the 31,000 units transferred to Department 2.This transfer cost assigned to units transferred to Department 2 is recorded with a debit to Work-in-Process-Department 2.
A)True
B)False
Answer: True
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5
Chapter 21: Cost-Volume-Profit Analysis
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Sample Questions
Q1) The phone bill for Laurel Accounting consists of both fixed and variable costs.Refer to the four month data below and apply the high-low method to answer the question.(Round your calculation to two decimal places.) \[\begin{array} { | l | r | r | }
\hline & \text { Minutes } & \text { Total Bill } \\
\hline \text { May } & 480 & \$ 3,000 \\
\hline \text { June } & 240 & \$ 2,675 \\
\hline \text { July } & 160 & \$ 2,640 \\
\hline \text { August } & 320 & \$ 2,880 \\
\hline
\end{array}\] What is the variable cost per minute?
A) $1.13
B) $0.38
C) $1.02
D) $0.75
Q2) Gross profit is calculated by deducting ________ from sales revenue.
A) total fixed costs
B) cost of goods sold
C) total variable costs
D) selling and administrative costs
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Page 6
Chapter 22: Master Budgets
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172 Flashcards
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Sample Questions
Q1) Regarding the sales budget,which of the following statements is incorrect?
A) The forecast of sales revenue is the cornerstone of the master budget.
B) The level of sales affects expenses and almost all other elements of the master budget.
C) The budgeted sales are carried from the sales budget to the balance sheet.
D) Budgeted total sales for each product equal the sales price multiplied by the expected number of units sold.
Q2) If the cost of indirect materials needed for production is insignificant,it should not be included in the budgeting process.
A)True
B)False
Q3) A flexible budget is prepared to represent various levels of sales volume.
A)True B)False
Q4) A master budget is a financial plan for a specific segment of an organization. A)True B)False
Q5) What is a common method of accessing short-term financing?
Q6) List the three sections of the cash budget.
Page 7
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Chapter 23: Flexible Budgets and Standard Cost Systems
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Sample Questions
Q1) Fernandez Manufacturing uses a standard cost system.Standard and actual data for manufacturing overhead are as follows:
Variable overhead allocation rate: $30 per direct labor hour
Fixed overhead allocation rate: $10 per direct labor hour
Actual overhead incurred (variable and fixed): $45,600
Standards for direct labor are as follows:
Hours per unit 0.5,Direct labor cost per hour $18.00
Actual direct labor for the month: 1,200 hours for a total cost of $24,000
Actual and planned production for the month: 3,000 units
Prepare the journal entry to allocate overhead cost (both variable and fixed)to production.
Q2) Favorable and unfavorable variances are subtracted from each other to arrive at a net favorable or unfavorable variance.
A)True
B)False
Q3) In a standard costing system,each input of direct materials,direct labor,and manufacturing overhead has a cost standard and an efficiency standard.
A)True
B)False
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Page 8
Chapter 24: Cost Allocation and Responsibility Accounting
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Sample Questions
Q1) Define cost-based transfer price.When should cost-based transfer pricing be used? Explain your answer.
Q2) List and briefly discuss the two limitations of financial performance measures.
Q3) The balanced scorecard system requires management to consider ________.
A) both financial and operational performance measures
B) only performance measures
C) only leading indicators
D) only financial and customer perspectives
Q4) Ewan Logistics provides the following information: \[\begin{array} { | l | r | }
\hline \text { Operating income } & \$ 1,600,000 \\
\hline \text { Net sales } & \$ 14,000,000 \\
\hline \text { Average total assets } & \$ 1,800,000 \\
\hline \text { Management's target rate of return } & 30 \% \\
\hline
\end{array}\] What is the company's residual income?
A) $(200,000)
B) $540,000
C) $1,320,000
D) $1,060,000
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Chapter 25: Short-Term Business Decisions
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Sample Questions
Q1) A company produces 1,000 packages of chicken feed per month.The sales price is $6 per pack.Variable cost is $1.50 per unit,and fixed costs are $1,700 per month.Management is considering adding a vitamin supplement to improve the value of the product.The variable cost will increase from $1.50 to $2.00 per unit,but there will be no change in fixed costs.The company will price the new product at $4.30 to compete with other products.How will this affect operating income?
A) Operating income will decrease by $2,200 per month.
B) Operating income will increase by $2,200 per month.
C) Operating income will decrease by $1,700 per month.
D) Operating income will remain unchanged.
Q2) Marlow Company makes bulk quantities of cleaning fluids.They currently sell 1,400 containers a month at a sales price of $25 per unit.If they add a new scent,they could charge $30 per unit for the improved product.It would cost them a total of $1,000 per month to make that alteration.If they decide to process further,it will improve their operating income.
A)True
B)False
Q3) Explain the difference between price-takers and price-setters.
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) Lora Corporation will receive $10,000 a year at the end of each of the next five years.Using a discount rate of 14%,the present value of the receipts can be stated as
A) PV = $10,000 (Ordinary Annuity FV factor, i = 14%, n = 5)
B) PV = $10,000 (PV factor, i = 14%, n = 5)
C) PV = $10,000 (Ordinary Annuity PV factor, i = 14%, n = 5)
D) PV = $10,000 (FV factor, i = 14%, n = 5)
Q2) An annuity is a stream of equal cash payments made at equal time intervals. A)True B)False
Q3) 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
Q4) Compound interest means that interest is calculated only on the principal amount. A)True B)False
Q5) What are the strengths of the net present value capital budgeting method?
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