Strategic Management Accounting Test
Bank
Course Introduction
Strategic Management Accounting explores the application of accounting techniques and information to support strategic decision-making within organizations. This course examines how managers use cost management, performance measurement, budgeting, and financial analysis to formulate and implement business strategies. Students will learn to analyze internal and external business environments, align accounting processes with organizational objectives, and use non-financial data in tandem with traditional financial metrics. The course also covers contemporary issues such as value chain analysis, benchmarking, and the design of management control systems, equipping students with the critical thinking and analytical skills needed to drive long-term organizational success.
Recommended Textbook
Managerial Accounting 3rd 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) All other things held equal
A)the more frequent the controlling activity,the slower an out-of-control process will be corrected.
B)the more frequent the controlling activity,the faster an out-of-control process can be corrected.
C)the more frequent the controlling activity,the more likely employees are to ignore the control.
D)the more frequent the controlling activity,the less likely employees are to ignore the control.
Answer: B
Q2) Which of the following is not a standard of the IMA statement of ethical professional practice?
A)Competence
B)Integrity
C)Objectivity
D)Confidentiality
Answer: C
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Page 3
Chapter 2: Cost Behavior and Cost Estimation
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Sample Questions
Q1) A scattergraph is a simple graph that shows
A)total costs in relation to volume.
B)the fixed portion of a total cost.
C)the variable portion of a total cost.
D)the point where revenue equals total costs.
Answer: A
Q2) Four common cost behavior patterns that serve as the foundation for cost-volume-profit analysis are
A)variable cost,fixed cost,selling cost,and administrative cost.
B)variable cost,fixed cost,mixed cost,and step cost.
C)variable cost,fixed cost,period cost,and other cost.
D)selling cost,administrative cost,cost of goods sold,and depreciation.
Answer: A
Q3) If activity level decreases,what happens to the
A)It decreases.
B)It increases.
C)It remains the same.
D)It depends on how much the activity level increases.
Answer: A
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) Assume a company wishes to maintain a markup of 35% on a product with a
A)$30.00
B)$33.75
C)$38.46
D)$43.90
Answer: B
Q2) Operating leverage is the change in total variable costs relative to sales revenue.
A)True
B)False
Answer: False
Q3) Which of the following formulas represents the calculation for markup percentage?
A)Sales price - Cost ÷ Cost
B)Sales price - Cost ÷ Sales price
C)Sales price ÷ Cost
D)Sales price ÷ Contribution margin
Answer: A
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Page 5
Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) When inventory is sold to customers,its cost is removed from work-in-process and transferred to cost of goods sold.
A)True
B)False
Q2) Which of the following items would not be classified as direct material for Dole Food Company?
A)Pineapple
B)Sugar
C)Stainless steel pots
D)Glass jars
Q3) The amount of manufacturing overhead applied to a particular job is calculated as
A)predetermined overhead rate x budgeted activity level of application base.
B)predetermined overhead rate x actual activity level of application base.
C)predetermined overhead rate x budgeted total manufacturing overhead.
D)predetermined overhead rate x actual total manufacturing overhead.
Q4) Period costs are associated with manufacturing overhead.
A)True
B)False
Q5) Predetermined overhead rates and manufacturing overhead application
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Chapter 5: Planning and Forecasting
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Sample Questions
Q1) Which of the following is not a component of the master budget?
A)Manufacturing overhead budget
B)Horizontal budget
C)Ending inventory and cost of goods sold budget
D)All of these answer choices are components of the master budget.
Q2) On a pro-forma balance sheet,the accounts receivable balance comes directly from
A)the cash receipts budget.
B)the general ledger.
C)the cash budget.
D)the sales journal.
Q3) The standard cost of direct material is the
A)standard price of direct material input x standard quantity of direct material inputs.
B)standard price of direct material input x actual quantity of direct material inputs.
C)actual price of direct material input x standard quantity of direct material inputs.
D)Actual price of direct material input x actual quantity of direct material inputs.
Q4) What is budgetary slack and why is it an issue in budget preparation?
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) Since fixed overhead does not vary with volume within the relevant range,the flexible budget will always agree with
A)actual results.
B)static budget.
C)both actual results and the static budget.
D)neither actual results nor the static budget.
Q2) Assume the static budget sales revenue is $69,000 and the flexible budget sales revenue is $70,000.If the actual sales price is $6 and the budgeted sales price is $6.50,what is the sales volume variance?
A)$1,000 favorable
B)$1,000 unfavorable
C)$6,000 favorable
D)$6,500 unfavorable
Q3) The difference between actual sales volume and budgeted sales volume has an effect on
A)price variance.
B)quantity variance.
C)both the price and the quantity variance.
D)neither the price nor the quantity variance.
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Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) With activity-based costing,the goal is to develop a product cost that captures the amount of each resource consumed by the activities performed to produce a specific product.
A)True
B)False
Q2) The second step in the preparation of activity-based costing data is to
A)calculate activity cost pool rates.
B)develop activity cost pools.
C)allocate costs to products.
D)calculate the
Q3) Activity-based costing information may be used by managers for A)process improvement.
B)distribution channel profitability decisions.
C)pricing decisions.
D)process improvement,distribution channel profitability decisions,and pricing decisions.
Q4) The greatest use of activity-based costing information is for product costing and cost control.
A)True
B)False
9
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) If a company produces its products in a constrained resource environment,the company should
A)always produce the product with the lowest contribution margin per constrained resource.
B)always produce the product with the highest contribution margin per constrained resource.
C)produce a mix of products such that opport
Q2) Information overload can lead to
A)information fatigue syndrome
B)data overload condition.
C)data volume disease.
D)chronic Information syndrome.
Q3) Which of the following costs would be relevant in deciding whether to accept a special order?
A)Direct material
B)Variable overhead
C)Both direct material and variable overhead
D)Neither direct material nor variable overhead
Q4) Paris Manufacturing Company Inc.uses 400
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Chapter 9: Capital Budgeting
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Sample Questions
Q1) Discount rates are used to value which of the following items?
A)Future earnings
B)A partnership's property when a new partner is being admitted
C)Distributions of estate assets
D)All of these answer choices are correct
Q2) Compounding interest more frequently than annually changes the
A)Number of periods
B)The discount rate
C)Both the number of periods and the discount rate.
D)Neither the number of periods nor the discount rate
Q3) Given a present value factor of 0.7921,assuming a 6% discount rate,the present value of $16,000 payment received in 4 years is
A)$3,168
B)$12,674
C)$20,199
D)None of these answer choices are correct
Q4) The accounting rate of return is also known as the unadjusted rate of return.
A)True
B)False
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Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) A segment of an organization is any part of the organization that management wishes to evaluate.
A)True
B)False
Q2) To increase both margin and asset turnover
A)Increase sales revenue.
B)Decrease expenses.
C)Both increase sales revenue and decrease expenses.
D)Neither increase sales revenue nor decrease expenses.
Q3) Marshall Industries operates as an investment center.Buddy Hall,the region's division manager,has set a required minimum rate of return of 15%.Marshall's total assets are $350,000,current liabilities are $150,000,and operating income is $60,000.The company's weighted-average cost of capital is 18% and its tax rate is 28%.
Required:
Calculate Marshall's EVA.Show your work.
Q4) If a cost was incurred to support the company as a whole,then it is a common cost.
A)True
B)False
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Page 12
Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) When a company creates a balanced scorecard,managers are stating a hypothesis about the results that will occur if certain performance measures are stressed.
A)True
B)False
Q2) A lagging indicator "lags" the time period when a performance is measured.
A)True
B)False
Q3) In determining whether benchmarking is worth the effort,a company must assess the potential return from a benchmarking project.
A)True
B)False
Q4) If a public utility company wanted to benchmark ways to protect its underground electrical cables,which of the following companies should they not contact?
A)Telephone company.
B)Wi-Fi company.
C)Another public utility company.
D)Cable television company.
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) Foreman Outfitters,a retail store of camping supplies,has sales of $300,000 and cost of goods sold of $210,000.Beginning inventory was $20,000 and ending inventory was $12,000.What is the company's average days to sell inventory?
Q2) On a common-size balance sheet,notes receivable is shown as a percentage of A)Total liabilities.
B)Current liabilities.
C)Total stockholders' equity.
D)Total assets.
Q3) Another form of horizontal analysis is called trend analysis. A)True B)False
Q4) Two measures of liquidity are the accounts receivable turnover and the inventory turnover.What do each of these measures,and how are they each calculated?
Q5) The formula for return on common stockholders' equity is Net sales revenue minus preferred dividends divided by average common stockholders' equity.
A)True
B)False
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14
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) When preparing the statement of cash flows using the indirect method,gains from financing activities are added to net income to arrive at cash flows from operating activities.
A)True
B)False
Q2) A company's salaries payable account decreased by $1,000 during the year.Which of the following would appear on the statement of cash flows prepared using the indirect method?
A)An addition under investing activities
B)A deduction under investing activities
C)An addition under operating activities
D)A deduction under operating activities
Q3) Which of the following items would be added to net income when using the indirect method of calculating cash flows provided by operating activities?
A)An decrease in accounts payable
B)An decrease in prepaid expenses
C)A decrease in accrued revenues
D)A decrease in taxes payable
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) In a job order costing system,all product costs for the period are accumulated and divided evenly over all
A)True
B)False
Q2) At the end of January,Monroe Industries had completed 65,000
A)1,600
B)6,400
C)4,800
D)8,000
Q3) Costs incurred in a process costing system include direct material,direct labor and overhead.
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.
Q5) In a process costing system,labor and overhead costs are typically combined and referred to as equivalent costs.
A)True
B)False
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Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) When the
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) The process of classifying all the costs incurred in the production of a product is referred to as absorption costing.
A)True
B)False
Q3) The underlying principle that absorption costing satisfies is the historical cost principle.
A)True
B)False
Q4) When production volume equals sales volume,the amount of fixed overhead expensed is higher using absorption costing than with variable costing.
A)True
B)False
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17
Chapter 16: Topic Focus Standard Costing Systems
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Sample Questions
Q1) When using a standard costing system,which of the following should be recorded when recording the purchase of direct materials?
A)Debit raw materials inventory at the standard price and credit accounts payable at the standard price
B)Debit raw materials inventory at the standard price and credit accounts payable at the actual price with a debit or credit to direct materials price variance
C)Credit raw materials inventory at the standard price and debit accounts payable at the actual price with a debit or credit to direct materials price variance
D)Credit raw materials inventory at the standard price and debit accounts payable at the standard price
Q2) Wolfe Manufacturing Company's standards are set at one gallon of liquid for each a.Calculate the direct material price variance.
b.Calculate the direct material quantity variance.
Q3) When using a normal costing system,only over- or under-applied overhead cost needs to be adjusted to the actual overhead cost.
A)True
B)False
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Chapter 17: Topic Focus Customer Profitability
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Q1) Some companies believe that as long as the sales revenue a customer generates exceeds the cost of goods sold,that the customer is profitable.However,companies incur product costs,selling costs,and administrative costs.
Required:
a.List three items that would be classified as product costs.
b.List three items that would be classified as selling costs.
c.List three items that would be classified as administrative costs.
Q2) Which of the following would not be a selling expense?
A)Rent on warehouse space
B)Advertising on local TV station
C)Indirect labor
D)Depreciation on delivery truck
Q3) As long as the sales revenue a customer generates exceeds the cost of goods sold,the customer is profitable.
A)True
B)False
Q4) Customer net profit divides customer net profit by customer revenues.
A)True
B)False
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