Strategic Management Accounting
Mock Exam
Course Introduction
Strategic Management Accounting explores the integration of accounting information with business strategy to support effective decision-making and enhance competitive advantage. The course covers key topics such as cost management, performance measurement systems, budgeting, and the use of financial and non-financial information for strategic planning and control. Students will learn how management accounting tools and techniques can be applied to analyze business environments, assess organizational performance, and inform strategic decisions in various organizational contexts. Emphasis is placed on contemporary issues in management accounting, including value creation, benchmarking, and the role of accounting in shaping sustainable business strategies.
Recommended Textbook
Managerial Accounting 3rd Canadian Edition by Karen W. Braun
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) The treasurer and the controller report directly to the CFO.
A)True
B)False
Answer: True
Q2) The cost of improved production equipment and production processes is a(n)
A) external failure cost.
B) internal failure cost.
C) prevention cost.
D) appraisal cost.
Answer: C
Q3) Which of the following are the internal decision-makers of a company?
A) Vendors
B) Customers
C) Managers
D) Shareholders
Answer: C
Q4) Lean production cuts the throughput time of a manufacturing concern.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) What was operating income for the year at Back Yards Inc.?
A) $86,000
B) $81,000
C) $96,000
D) $76,000
Answer: A
Q2) Which of the following describes the way fixed costs per unit behave?
A) They will remain the same as production levels change.
B) They will decrease as production decreases.
C) They will increase as production increases.
D) They will increase as production decreases.
Answer: D
Q3) Conversion for Rustic Living Furniture Company totaled
A) $215,500.
B) $275,500.
C) $272,500.
D) $271,500.
Answer: D
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Chapter 3: Cost Behaviour
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Sample Questions
Q1) If a regression analysis shows an R squared of .85 exists, it is safe to assume
A) a strong positive relationship between cost and volume.
B) a strong negative relationship between cost and volume.
C) no relationship between cost and volume.
D) a perfect positive relationship between cost and volume.
Answer: A
Q2) Using variable costing, what is the contribution margin at Xenna Company for last month?
A) $1,350,000
B) $1,069,200
C) $1,204,200
D) $1,215,000
Answer: C
Q3) Using the high-low method, what will the total monthly manufacturing costs be if Snow Enterprises produces 7,500 units?
A) $3,915
B) $5,790
C) $1,875
D) $3,860
Answer: B
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Chapter 4: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Fixed costs divided by weighted-average contribution margin per unit equals A) contribution margin ratio.
B) margin of safety ratio.
C) break-even sales in dollars.
D) break-even sales in units.
Q2) The higher the operating leverage factor, the
A) greater the impact of volume on operating income.
B) less the impact of volume on operating income.
C) more likely operating income is to stay constant.
D) greater the chance that none of the above occur.
Q3) Which of the following will decrease the break-even point in units assuming no other changes in the cost-volume-profit relationship?
A) An increase in the sale price per unit
B) A decrease in the sale price per unit
C) An increase in total fixed costs
D) An increase in the variable costs per unit
Q4) Contribution margin and gross margin income statements have different operating incomes.
A)True
B)False
Page 6
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Chapter 5: Job Costing
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Sample Questions
Q1) Service firms follow the same approach for indirect costs as manufacturing companies because they develop a predetermined indirect cost allocation rate.
A)True
B)False
Q2) Paulson Enterprises uses a job costing system. Record the following transactions in Paulson Enterprises' general journal for the current month:
a) Purchased raw materials on account, $75,000.
b) Requisitioned $44,500 of direct materials and $7,000 of indirect materials for use in production.
c) Factory payroll incurred, $90,000; 80% direct labour, 20% indirect labour.
d) Recorded depreciation expense factory equipment $12,000, and other manufacturing overhead of $42,100 (credit accounts payable).
e) Allocated manufacturing overhead costs based on 120% of direct labour cost.
f) Cost of completed production for the current month, $142,000.
g) Cost of finished goods sold, $115,000; selling price, $175,000 (all sales on account).
Q3) Briefly explain the difference between job order and process costing and give examples of each.
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Page 7
Chapter 6: Process Costing
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Sample Questions
Q1) The journal entry to record the ultimate completion of the units would include a debit to Finished Goods Inventory.
A)True
B)False
Q2) What is the total cost of units completed and transferred out at Onyx Corporation?
A) $540,658
B) $600,000
C) $750,000
D) $628,696
Q3) At the end of the period, the cost per equivalent unit for direct materials for the Adams Company would be closest to
A) $26.17.
B) $27.08.
C) $23.43.
D) $21.96.
Q4) Direct materials are usually added evenly throughout the production process. A)True
B)False
Q5) Compare and contrast process costing and job order costing.
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Chapter 7: Activity Based Costing
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Sample Questions
Q1) What is activity-based management and how can it be used to improve the profitability of a company?
Q2) To determine the amount of overhead allocated, the overhead rate is divided by the cost driver.
A)True
B)False
Q3) Sustainability and lean thinking are both important but have little in common.
A)True
B)False
Q4) The benefits are lower when ABC reports different product costs than reported under the old system.
A)True
B)False
Q5) Cost distortion occurs when some products are overcosted while other products are undercosted by the cost allocation system.
A)True
B)False
Q6) Describe each of the four cost hierarchies used to define levels for activities in activity-based costing.
Page 9
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Chapter 8: Short-Term Business Decisions
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Sample Questions
Q1) Snow Sports Company received a special order for 1,000 units of its extreme snowboards at a selling price of $40 per snowboard. Snow Sports has enough capacity to accept the order. Unit costs to make and sell this product are as follows: Direct Materials $12; Direct Labour $19; Variable Manufacturing Overhead $6; Fixed Manufacturing Overhead $12; and Variable Selling Costs $5. List the relevant costs (and amount) to Snow Sports Company for this special order.
Q2) Outsourcing decisions are sometimes referred to as A) buy decisions.
B) make decisions.
C) make-or-buy decisions. D) incremental decisions.
Q3) Using a cost-plus approach, what price should Rosemont Tennis charge for an hour of court time?
A) $33.00
B) $36.00
C) $24.00
D) $0.20
Q4) What the reasons a firm would adopt target costing?
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Chapter 9: The Master Budget and Responsibility Accounting
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Sample Questions
Q1) Which of the following is an example of a financial budget?
A) Sales budget
B) Budgeted balance sheet
C) Budgeted income statement
D) Operating expenses budget
Q2) The local McDonald's restaurant which reports revenues and expenses would be a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.
Q3) Which of the following statements about budgeting is NOT true?
A) The operating budget should be prepared by top management, rather than mid-management personnel, because they have the overall objectives of the company in mind.
B) Budgeting is an aid to planning and control.
C) Budgets help to coordinate the activities of the entire organization.
D) Budgets promote communication and coordination between departments.
Q4) Describe the four types of responsibility centres. Give a specific example of each of the four types of responsibility centres.
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Chapter 10: Flexible Budgets and Standard Costs
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Sample Questions
Q1) Red River Corporation reports the following standards for direct labour for the year: Standard cost per hour $18.50
Standard quantity per finished good 2.5 hours
During the year, 180,000 finished goods were produced. The direct labour efficiency variance was $38,850 favourable. The direct labour flexible budget variance was $700 favourable.
Calculate the following items regarding direct labour for Red River Corporation for the year:
1. Direct labour price variance
2. Standard quantity of direct labour for actual production
3. Actual hours of direct labour incurred for actual production
Q2) What is the direct materials price variance at Dazzle Toy Company?
A) $1,250 unfavourable
B) $2,000 favourable
C) $1,250 favourable
D) $2,000 unfavourable
Q3) Another name for a static budget is a flexible budget.
A)True
B)False
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Page 12
Chapter 11: Performance Evaluation and the Balanced Scorecard
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Sample Questions
Q1) What is the Photocopier Division's residual income?
A) $1,686,400
B) $353,600
C) $1,156,000
D) $1,690,000
Q2) Corrective actions are sometimes taken as a result of which of the following goals of a performance evaluation system?
A) Benchmarking
B) Communicating expectations
C) Promoting goal congruence
D) Providing feedback
Q3) Which of the following aspects of a performance evaluation system best describes when a company's actual results are compared to the results of competitors?
A) Motivating unit managers
B) Promoting goal congruence
C) Benchmarking
D) Communicating expectations
Q4) Describe the limitations of financial performance measurement.
Q5) List and describe five reasons why a company might choose to decentralize.
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Chapter 12: Capital Investment Decisions and the Time
Value of Money
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Sample Questions
Q1) Your best friend just received a gift of $12,000 from his favourite aunt. He wants to save the money to open his own business after school. He can (1) invest it risk-free at 3%, (2) take on moderate risk at 8%, or (3) take on high risk at 16%. Help your friend project the investment's worth at the end of four years under each investment strategy and explain the results to him.
Q2) What is the net present value of the Neptune Ltd. investment?
A) ($26,291)
B) ($47,277)
C) ($60,613)
D) $93,000
Q3) The three factors that affect the time value of money are principal, number of periods, and interest rate.
A)True
B)False
Q4) The net present value model differs from the IRR model in that it does not show the project's unique rate of return.
A)True
B)False
Page 14
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