Accounting for Decision Making Exam
Materials
Course Introduction
Accounting for Decision Making introduces students to the fundamental concepts and techniques of accounting as they apply to managerial decision-making within organizations. The course covers the interpretation and analysis of financial statements, cost behavior, budgeting, performance evaluation, and relevant costing. Emphasizing the use of accounting information for internal planning and control, students learn how to assess financial data, support strategic business decisions, and improve organizational efficiency. Real-world case studies and practical exercises provide insight into how managers use accounting information to make informed choices in dynamic business environments.
Recommended Textbook
Managerial Accounting 11th Canadian Edition by Ray Garrison
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14 Chapters
2025 Verified Questions
2025 Flashcards
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Page 2
Chapter 1: Managerial Accounting and the Business Environment
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49 Verified Questions
49 Flashcards
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Sample Questions
Q1) Which of the following would be an example of a performance report?
A) An income statement reporting actual results for the past month.
B) An income statement showing the amounts budgeted for the past month.
C) A balance sheet showing the actual financial position at the end of the past month.
D) A production report showing budgeted and actual production for the past month.
Answer: D
Q2) Both financial and managerial accounting rely on the same underlying financial data but there are major differences.Managerial Accounting:
A) emphasizes financial consequences of past activities.
B) emphasizes precision.
C) emphasizes relevance.
D) must follow GAAP.
Answer: C
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Page 3
Chapter 2: Cost Terms,concepts,and Classifications
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) Assuming that cost of goods sold for Boardman Company for January was $140,000,what was the cost of goods manufactured for the month?
A) $140,000
B) $135,000
C) $145,000
D) $139,000
Answer: C
Q2) What was the beginning work-in-process inventory?
A) $10,000.
B) $14,000.
C) $1,000.
D) $4,000.
Answer: A
Q3) Manufacturing overhead combined with direct materials is known as conversion cost.
A)True
B)False Answer: False
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Chapter 3: Cost Behaviour: Analysis and Use
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) Which of the following classifications best describes the behaviour of Cost B?
A) Mixed.
B) Variable.
C) Fixed.
D) Opportunity cost.
Answer: C
Q2) Using the high-low method,the estimated variable cost per machine hour for electricity is closest to which of the following?
A) $0.40 per hour.
B) $0.98 per hour.
C) $1.68 per hour.
D) $2.50 per hour.
Answer: A
Q3) The planning horizons for committed fixed costs and discretionary fixed costs are generally the same.
A)True
B)False
Answer: False
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Chapter 4: Cost-Volume-Profit Relationships
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) If the fixed expenses of a product increase while variable expenses and the selling price remain constant,what will happen to the total contribution margin and the break-even point?
\(\begin{array}{|l|l|l|}
\hline & \text { Contribution margin } & \text { Break-even point } \\
\hline \text { A) } & \text { Increase } & \text { Decrease } \\
\hline \text { B) } & \text { Decrease } & \text { Increase } \\
\hline \text { C) } & \text { No change } & \text { Increase } \\
\hline \text { D) } & \text { No change } & \text { No change } \\
\hline
\end{array}\)
A) Option A
B) Option B
C) Option C
D) Option D
Q2) What is the break-even point in units per year?
A) 15,200 units.
B) 26,600 units.
C) 38,000 units.
D) 40,000 units.
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Page 6
Chapter 5: Systems Design: Job-Order Costing
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113 Verified Questions
113 Flashcards
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Sample Questions
Q1) What is the cost of goods sold?
A) $131,000.
B) $91,000.
C) $81,000.
D) $111,000.
Q2) What is the cost of goods manufactured for March?
A) $67,250.
B) $67,300.
C) $81,800.
D) $75,550.
Q3) What is the cost of raw materials used in production?
A) $26,000.
B) $71,000.
C) $76,000.
D) $66,000.
Q4) In a normal job-order costing system,the Work in Process inventory account contains the actual costs of direct labour,direct materials,and manufacturing overhead incurred on partially completed jobs.
A)True
B)False
Page 7
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Chapter 6: Systems Design: Process Costing
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131 Flashcards
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Sample Questions
Q1) Assuming that Tru-Colour Paint Company uses the weighted-average method,what are the equivalent units of production for conversion costs?
A) 44,400 units.
B) 42,600 units.
C) 46,000 units.
D) 48,000 units.
Q2) The weighted-average method of process costing can only be used if materials are added at the beginning of the production process.
A)True
B)False
Q3) Assuming that the company uses the weighted-average method,what is the cost per equivalent unit for conversion costs for June,rounded to the nearest cent?
A) $1.64.
B) $1.56.
C) $1.74.
D) $1.48.
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Chapter 7: Activity-Based Costing: A Tool to Aid Decision Making
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Why may departmental overhead rates NOT correctly assign overhead costs?
A) Because of the use of direct labour hours in allocating overhead costs to products rather than machine time or quantity of materials.
B) Because of the high correlation between direct labour hours and the incurrence of overhead costs.
C) Because of the over-reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production.
D) Because of the difficulties associated with identifying cost pools for the first stage of the allocation process.
Q2) The predetermined overhead rate (i.e.,activity rate)for Activity 2 under the activity-based costing system is closest to which of the following?
A) $10.25.
B) $16.77.
C) $24.91.
D) $26.36.
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9
Chapter 8: Variable Costing: A Tool for Management
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143 Flashcards
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Sample Questions
Q1) What is the total contribution margin for the month under the variable costing approach?
A) $27,900.
B) $72,000.
C) $198,000.
D) $234,000.
Q2) What was the total period cost for the month under the absorption costing approach?
A) $61,200.
B) $88,400.
C) $93,600.
D) $182,000
Q3) What was the unit product cost for the month under absorption costing?
A) $74.
B) $81.
C) $83.
D) $90.
Q4) Absorption costing treats all manufacturing costs as product costs.
A)True
B)False
10
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Chapter 9: Budgeting
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137 Flashcards
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Sample Questions
Q1) The PDQ Company makes collections on credit sales according to the following schedule:
25% in month of sale
70% in month following sale
4% in second month following sale
1% uncollectible
The following sales have been budgeted: \(\begin{array}{|l|r|}
\hline \text { Month } & \text { Sales } \\
\hline \text { April } & \$ 100,000 \\
\hline \text { May } & 120,000 \\
\hline \text { June } & 110,000 \\ \hline
\end{array}\)
What would be the cash collections in June?
A) $110,000.
B) $111,500.
C) $113,400.
D) $115,500.
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Chapter 10: Standard Costs and Overhead Analysis
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234 Flashcards
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Sample Questions
Q1) What was the labour efficiency variance?
A) $1,375 favourable.
B) $1,375 unfavourable.
C) $1,600 favourable.
D) $1,600 unfavourable.
Q2) Under a standard cost system,who is usually held responsible for the materials price variances?
A) The production manager.
B) The sales manager.
C) The purchasing manager.
D) The engineering manager.
Q3) Direct labour efficiency variance can be analyzed further into mix and yield variances if more than one class of direct labour that are good substitutes is used in operations.
A)True
B)False
Q4) The standard direct labour rate should NOT include fringe benefits.
A)True
B)False
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Chapter 11: Reporting for Control
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202 Flashcards
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Sample Questions
Q1) Which of the following statements provide(s)an argument in favour of including only a plant's net book value rather than gross book value as part of operating assets in the ROI computation?
I.Net book value is consistent with how plant and equipment items are reported on a balance sheet.
II.Net book value is consistent with the computation of operating income,which includes amortization as an operating expense.
III.Net book value allows ROI to decrease over time as assets get older.
A) I only.
B) III only.
C) I and II only.
D) I and III only.
Q2) What were the total fixed costs (traceable and common)for Canon Company for the year?
A) $24,000.
B) $25,000.
C) $49,000.
D) $50,000.
Q3) Describe the balanced scorecard concept and explain the reasoning behind it.
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Page 13
Chapter 12: Relevant Costs for Decision Making
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Sample Questions
Q1) Which of the following items are included in the cost base under the absorption costing approach to cost-plus pricing?
\(\begin{array}{|l|l|l|l|l|}
\hline & {\text { Variable Cost }} &&{\text { Fixed Cost }} \\
\hline & \text { Production } & \text { Selling } & \text { Production } & \text { Selling } \\
\hline \text { A) } & \text { Yes } & \text { Yes } & \text { Yes } & \text { No } \\
\hline \text { B) } & \text { No } & \text { Yes } & \text { No } & \text { Yes } \\
\hline \text { C) } & \text { Yes } & \text { Yes } & \text { No } & \text { No } \\
\hline \text { D) } & \text { Yes } & \text { No } & \text { Yes } & \text { No } \\
\hline
\end{array}\)
A) Option A
B) Option B
C) Option C
D) Option D
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Chapter 13: Capital Budgeting Decisions
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185 Flashcards
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Sample Questions
Q1) The net present value method of capital budgeting assumes that cash flows are reinvested at what rate?
A) The internal rate of return on the project.
B) The rate of return on the company's debt.
C) The discount rate used in the analysis.
D) A zero rate of return.
Q2) The net present value of this investment is closest to which of the following? (Do not round your intermediate calculations.)
A) $4,779.
B) $81,025.
C) $50,000.
D) $80,000.
Q3) The present value of a given sum to be received in five years will be exactly twice as great as the present value of an equal sum to be received in ten years.
A)True
B)False
Q4) The present value of a cash flow decreases as it moves further into the future.
A)True
B)False
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Chapter 14: Financial Statement Analysis
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203 Flashcards
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Sample Questions
Q1) Selected data from Sheridan Corporation's year-end financial statements are presented below.The difference between average and ending inventory is immaterial.
\(\begin{array}{|l|r|}
\hline \text { Current Ratio } & 2.0 \\
\hline \text { Acid-Test Ratio } & 1.5 \\
\hline \text { Current Liabilities } & \$ 120,000 \\
\hline \text { Lnventory Turnover } & 8 \text { times } \\
\hline \text { Gross Profit Margin } & 40 \% \\
\hline \text { Prepaid Expenses } & \$ 0 \\
\hline
\end{array}\)
What were Sheridan's sales for the year?
A) $240,000.
B) $480,000.
C) $800,000.
D) $1,200,000.
Q2) When calculating the acid-test ratio,prepaid expenses are ignored.
A)True
B)False
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Page 16