Accounting for Business Managers
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Course Introduction
This course provides business managers with a solid foundation in accounting principles and practices necessary for effective decision-making. Students will learn to interpret financial statements, analyze costs, manage budgets, and apply accounting information to strategic and operational planning. Emphasizing real-world applications, the course covers topics such as financial reporting, managerial accounting, performance measurement, and internal controls. By the end of the course, participants will be able to utilize accounting data to solve business problems, support organizational objectives, and contribute to enhanced financial performance.
Recommended Textbook Managerial Accounting 5th Edition by Karen W. Braun
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Torque Engine Company is considering opening a plant in China. It will cost $3,500,000 to set up the plant and $800,000 to train employees. An additional $160,000 will be spent to build relationships with the local suppliers. The company anticipates gross profit of $4,500,000 from this new plant. Do the benefits outweigh the costs or do the costs outweigh the benefits, and by how much?
A)Costs outweigh benefits by $200,000.
B)Benefits outweigh costs by $200,000.
C)Costs outweigh benefits by $40,000.
D)Benefits outweigh costs by $40,000.
Answer: D
Q2) Managerial accounting would use which of the following types of information?
A)Forecasts of future earnings
B)Financial information
C)Nonfinancial information
D)All of the above
Answer: D
Q3) The Board of Directors is elected jointly by the CEO and CFO.
A)True
B)False
Answer: False
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Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) Variable costs
A)are fixed per unit and vary in total as production levels change.
B)are fixed in total as production levels change.
C)decrease per unit as production volume increases.
D)vary per unit of output as production levels change.
Answer: A
Q2) Cost of goods sold is a major expense of service companies.
A)True
B)False
Answer: False
Q3) Direct labor for a company was $145,800; manufacturing overhead was $300,400; and direct materials were $270,600. Prime costs would total
A)$716,800.
B)$446,200.
C)$416,400.
D)$571,000.
Answer: C
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4
Chapter 3: Job Costing
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Sample Questions
Q1) A labor time record identifies the employee and the amount of time the employee spent on a particular job.
A)True
B)False
Answer: True
Q2) Overallocated and underallocated manufacturing overhead is calculated by comparing allocated manufacturing overhead to actual manufacturing overhead.
A)True
B)False
Answer: True
Q3) The most significant cost for a service company is A)labor.
B)manufacturing overhead.
C)supplies.
D)indirect costs.
Answer: A
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Page 5
Chapter 4: Activity-Based Costing, Lean Operations, and the Costs of Quality
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Sample Questions
Q1) Inspection is considered a non-value-added activity.
A)True
B)False
Q2) A departmental overhead rate is calculated by dividing the total estimated departmental overhead cost pool by the estimated total amount of the department's cost allocation base.
A)True
B)False
Q3) Traditional costing systems are generally more accurate than ABC costing.
A)True
B)False
Q4) The cost of downtime caused by quality problems with the raw materials would be classified as what type of cost?
A)Prevention cost
B)Appraisal cost
C)External failure cost
D)Internal failure cost
Q5) One key element of lean production is to produce large batches. A)True
B)False
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Chapter 5: Process Costing
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Sample Questions
Q1) The weighted average and FIFO methods differ only in how they treat beginning inventory.
A)True
B)False
Q2) If conversion costs are added evenly throughout the production process, and the units have made it 50% of the way through the production process, then the percentage completion for conversion costs is A)0%.
B)50%.
C)100%.
D)none of the above.
Q3) The costing system used by a company producing custom fireplace mantels would be
A)process costing.
B)job costing.
C)equivalent units costing.
D)conversion cost costing.
Q4) Process costing is typically used for businesses that make large quantities of identical items.
A)True
B)False
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Chapter 6: Cost Behavior
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Sample Questions
Q1) Under absorption costing, variable manufacturing costs are treated as period costs.
A)True
B)False
Q2) Under absorption costing, all nonmanufacturing costs are treated as period costs.
A)True
B)False
Q3) When using the high-low method, the "high" point should be chosen as the data point with the highest cost (not the highest volume).
A)True
B)False
Q4) At Dwight Incorporated, total fixed and variable costs are $410,000 at a production level of 120,000 units. The company has total fixed costs of $245,000. The fixed cost per unit at a production level of 200,000 units is
A)$3.42
B)$2.04
C)$1.67
D)$1.23
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Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) The Suit Emporium carries brand name business attire. Each suit sells for the set price of $99.99. The variable cost per suit is $59.71 and the contribution margin is $40.28. The fixed expenses at Suit Emporium are $16,300. A new business apparel outlet has opened fifteen miles from the emporium's location and sales have decreased because local competition offers consumers similar products at lower price per unit. As a result of this decrease, the management at Suit Emporium is considering reducing the sales price per unit to attract the consumer base back to the emporium. The forecasted price per unit is $89.99. 1. What is the unit contribution margin using the forecasted sales price?
2) What is the new breakeven point in units?
A)$30.28; 539 units
B)$149.70; 109 units
C)$40.28; 405 units
D)$19.43; 839 units
Q2) Which of the following is an underlying assumption of the cost-volume-profit graph?
A)Total fixed expenses will change during the accounting period.
B)The sales mix of products is constantly changing.
C)Volume is the only cost driver.
D)Inventory levels are constantly changing.
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Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) Fixed costs that do not differ between two alternatives are
A)irrelevant to the decision.
B)considered opportunity costs.
C)relevant to the decision.
D)important only if they represent a material dollar amount.
Q2) A "sales mix" is best described by which of the following?
A)A factor that restricts production or sales of a product
B)Costs that were incurred in the past and cannot be changed
C)Expected future costs that differ among alternatives
D)The relative number of all products to be sold
Q3) Stoneycreek golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $20 million for the golfing season. About 500,000 golfers are expected each year. Variable costs are about $12 per golfer. The Stoneycreek course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Based on these numbers, what are Stoneycreek's total costs?
Q4) What is the difference between relevant and irrelevant information for making decisions. Provide examples of each.
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Chapter 9: The Master Budget
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Sample Questions
Q1) A merchandising company has a production budget.
A)True
B)False
Q2) SportSupplies Corporation has budgeted purchases of inventory for December of $266,400. Expected beginning inventory on December 1 and ending inventory on December 31 are $50,000 and $180,000, respectively. If cost of goods sold averages 88% of sales, what are budgeted sales for December?
A)$155,000
B)$120,032
C)$450,455
D)$564,091
Q3) The final step in the preparation of the financial budget is the preparation of which of the following?
A)Master budget
B)Cash budget
C)Operating budgets
D)Budgeted balance sheet
Q4) The master budget includes both the operating budgets and the financial budgets.
A)True
B)False
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Chapter 10: Performance Evalulation
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Sample Questions
Q1) Goal congruence is more likely to occur at a centralized organization rather than a decentralized organization.
A)True
B)False
Q2) For the most recent year, Robin Company reports operating income of $660,000. Robin's sales margin is 7%, and capital turnover is 2.0. What is Robin's return on investment (ROI)?
A)4%
B)7%
C)2%
D)14%
Q3) Employee satisfaction would be an example of measuring which perspective of the balanced scorecard?
A)Financial
B)Customer
C)Learning and growth
D)Internal business
Q4) An investment center is generally a large division of a corporation.
A)True
B)False
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Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) Happy Helpers Maid Service is calculating its standard direct labor rate. The direct labor rate is $19 per hour. Happy Helpers incurs payroll tax expense of 12% of the direct labor rate and incurs costs for sick-days and vacation days of $3 per hour. What is the standard rate per direct labor hour?
A)$22.00
B)$24.28
C)$19.00
D)$21.28
Q2) A(n)________ is a carefully predetermined cost that is usually expressed on a per unit basis.
A)allocated cost
B)applied cost
C)standard cost
D)flexible cost
Q3) Just as in job costing, the manufacturing costs flow through the inventory accounts in the following order: raw materials work in process cost of goods sold finished goods.
A)True
B)False
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13
Chapter 12: Capital Investment Decisions and the Time Value of Money
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Sample Questions
Q1) The residual value is considered in a net present value computation.
A)True
B)False
Q2) The profitability index equals the present value of net cash inflows from the investment divided by the cost of the investment.
A)True
B)False
Q3) In calculating the net present value of an investment in equipment, the required investment and its residual value should be subtracted from the present value of all future cash inflows.
A)True
B)False
Q4) Accounting Rate of Return is the only method used for analyzing capital investments that uses accrual basis accounting.
A)True
B)False
Q5) One dollar to be received in the future is worth more than one dollar today. A)True B)False
Page 14
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) The only difference in a statement of cash flows prepared under the direct method as opposed to the indirect method is the presentation of financing activities.
A)True
B)False
Q2) The statement of cash flows does not report why cash increased or decreased during the period.
A)True
B)False
Q3) The purchase of inventory would be considered a
A)cash outflow from investing activities.
B)cash outflow from operating activities.
C)cash outflow from financing activities.
D)cash outflow from depreciation.
Q4) A statement of cash flows is generated to show
A)the revenues the company has earned during the period.
B)the expenses the company incurred during the period.
C)how profits were generated during the period.
D)the inflow and outflow of cash during the time period.
Q5) List three ways that owners and investors use the statement of cash flows.
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) The comparison of operating expenses in Year 1 and Year 2 would be included in which of the following types of analysis?
A)Profitability
B)Capital
C)Horizontal
D)Trend
Q2) The formula to compute accounts receivable turnover is
A)net credit sales/average net accounts receivable.
B)net credit sales/average inventory.
C)cost of goods sold/average inventory.
D)average net accounts receivable/one day's sales.
Q3) Which of the following is the formula for computing the rate of return on total assets?
A)(Net income - preferred dividends)/number of shares of outstanding common stock
B)Net income/net sales
C)(Net income + interest expense)/average total assets
D)(Net income - preferred dividends)/average common stockholders' equity
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Chapter 15: Sustainability
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Sample Questions
Q1) Which of the following organizations has developed the G4 Guidelines?
A)Global Reporting Initiative (GRI)
B)International Accounting Standards Board (IASB)
C)Carbon Disclosure Project (CDP)
D)International Organization for Standardization (ISO)
Q2) The Global Reporting Initiative has developed a framework for companies to use for sustainability reporting that is used worldwide.
A)True
B)False
Q3) Sustainability Accounting Standards Board (SASB)is attempting to standardize the sustainability reporting so that the reports are comparable between companies within the same industry.
A)True
B)False
Q4) Materials flow accounting (MFA)reconciles physical output with all physical inputs.
A)True
B)False
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