Accounting for Management Decisions
Exam Questions
Course Introduction
Accounting for Management Decisions explores the fundamental accounting concepts and techniques essential for effective managerial decision-making. The course covers topics such as cost behavior, budgeting, variance analysis, performance measurement, and the use of financial information for planning and control. Emphasis is placed on interpreting accounting data to support strategic and operational business choices, enabling students to critically analyze financial reports and utilize accounting tools to improve organizational efficiency and achieve business objectives. Through case studies and practical exercises, students develop the skills necessary to integrate accounting insights into the decision-making process within a dynamic business environment.
Recommended Textbook
Managerial Accounting 2nd Edition by Karen
W. Braun
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) You take printer paper home from work for personal use.You have violated which ethical standard?
A)Competence
B)Confidentiality
C)Credibility
D)Integrity
Answer: D
Q2) The person or position who is directly responsible for all financial concerns is the:
A)CEO.
B)CFO.
C)COO.
D)Treasurer.
Answer: B
Q3) Which of the following is NOT one of the primary responsibilities of management?
A)Controlling
B)Decision-making
C)Adhering to GAAP
D)Directing
Answer: C
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Page 3
Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) Which of the following describes the way fixed costs per unit behave?
A)They will remain the same throughout production levels.
B)They will decrease as production decreases.
C)They will increase as production increases.
D)They will increase as production decreases.
Answer: D
Q2) Average variable costs:
A)remain the same as production decreases.
B)remain the same as production increases.
C)go down as production decreases.
D)remain the same no matter if production increases or decreases.
Answer: D
Q3) What is the total cost for the distribution category of the value chain?
A)$ 20,000
B)$123,000
C)$ 21,000
D)$194,000
Answer: C
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4
Chapter 3: Job Costing
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Sample Questions
Q1) At a service company,the indirect costs of serving the client is consist of operating expenses.
A)True
B)False
Answer: True
Q2) Which comes third in the flow of costs?
A)Cost of goods sold
B)Finished goods inventory
C)Raw materials inventory
D)Work in process inventory
Answer: B
Q3) In job costing,when raw materials are requisitioned for a job,the raw materials inventory is credited.
A)True
B)False
Answer: True
Q4) A food and beverage company like Pepsi would most likely use process costing.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Activity-Based Costing,
and the Costs of Quality
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Sample Questions
Q1) Total units costs for all parts is:
A)$ 4.34.
B)$ 6.06.
C)$ 7.98.
D)$13.48.
Q2) When calculating the total amount of manufacturing overhead to allocate to a particular job,the company would multiply each departmental overhead rate by ___________ and then _________ together the allocated amounts from each department.
A)the actual amount of the departmental allocation based used by the job; add B)the actual amount of the plantwide allocation based used by the job; add C)the actual amount of the departmental allocation based used by the job; multiply D)the actual amount of the plantwide allocation based used by the job; multiply
Q3) Companies often refine their cost allocation systems to minimize the amount of cost distortion caused by the simpler cost allocation systems.
A)True
B)False
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Page 6
Chapter 5: Process Costing
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Sample Questions
Q1) If conversion costs are added evenly throughout the production process,and the units have made it 50% of the way through the production process,then the percentage completion for direct materials is: A)0%.
B)100%.
C)50%.
D)unknown,based on the given information.
Q2) In a process costing system,manufacturing costs are usually combined into two categories:
A)direct materials and conversion costs.
B)direct labor and conversion costs.
C)manufacturing overhead and conversion costs.
D)direct materials and direct labor.
Q3) Costs are transferred,along with the units,from one WIP inventory to the next.
A)True
B)False
Q4) The entry to transfer goods in process from Dept.A to Dept.B includes a credit to WIP inventory in Dept A.
A)True
B)False
Page 7
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Chapter 6: Cost Behavior
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Sample Questions
Q1) What would her operating income be if she prepared a contribution margin income statement for a month?
A)$ 8,100
B)$ 7,300
C)$13,500
D)$ 5,400
Q2) Regression analysis can be used in ABC implementations to help managers select the primary cost driver for an activity cost pool.
A)True
B)False
Q3) The slope of a mixed cost line is represented by the__________ on the regression analysis output.
A)Intercept coefficient
B)X variable 1 coefficient
C)R-square
D)Residual
Q4) Unit variable costs change as total production increases.
A)True
B)False
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Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) When a company sells more than one product,there is one unique breakeven point.
A)True
B)False
Q2) The Sweet Factory produces and sells specialty fudge.The selling price per pound is $20,variable costs are $12 per pound,and total fixed costs are $6,000.What are breakeven sales in dollars?
A)$ 9,000
B)$ 3,750
C)$ 750
D)$15,000
Q3) The operating leverage factor will be exactly "1" only if a company has no fixed costs.
A)True
B)False
Q4) On a CVP graph,the intersection of the sales revenue line and the variable expense line is known as:
A)the margin of safety point.
B)the breakeven point.
C)the unit contribution margin.
D)none of the above.
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Chapter 8: Short Term Business Decisions
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Sample Questions
Q1) When using a target costing approach,the company starts with revenue at market price,and then subtracts its desired profit,to yield the target total cost.
A)True
B)False
Q2) Sierra has the following information to evaluate-her current salary of $45,000 versus total revenues of $62,000 and expenses of $57,000 from starting a new business.How much is the opportunity cost associated with starting the new business?
A)$62,000
B)$5,000
C)$57,000
D)$45,000
Q3) When deciding whether to outsource a product or service,managers should consider which of the following?
A)Quality of the product or service
B)Delivery schedule of the product or service
C)Cost charged for the product or service
D)All of the above
Q4) Based on these numbers,what is Burr Hill's target revenue?
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Chapter 9: The Master Budget and Responsibility Accounting
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Sample Questions
Q1) Busch Enterprises has budgeted sales for the months of September and October at $120,000 and $150,000,respectively.Monthly sales are 60% credit and 40% cash.Of the credit sales,25% are collected in the month of sale and 75% are collected in the following month.What are the October cash collections from customers?
A)$162,000
B)$ 76,500
C)$136,500
D)$ 82,500
Q2) 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
Q3) The same types of financial budgets prepared for manufacturers are also prepared for merchandising and service companies.
A)True
B)False
Q4) List and describe three reasons why a company and its managers could benefit from the use of budgeting.
Page 11
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Chapter 10: Flexible Budgets and Standard Costs
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Sample Questions
Q1) What is the flexible budget variance for operating income?
A)$65,000 favorable
B)$65,000 unfavorable
C)$35,000 unfavorable
D)$35,000 favorable
Q2) What is the flexible budget variance for variable expenses?
A)$55,000 favorable
B)$50,000 favorable
C)$55,000 unfavorable
D)$50,000 unfavorable
Q3) A graph of a flexible budget formula reflects fixed costs of $30,000 per month and total costs of $90,000 at a volume of 6,000 units.Assuming the relevant range is 1,000 to 12,000 units,the graph would reflect total monthly costs at 10,000 units of what dollar amount?
A)$90,000
B)$130,000
C)$100,000
D)$180,000
Q4) Journalize the purchase and usage of direct materials including the related variances.
Page 12
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Chapter 11: Performance Evaluation and the Balanced Scorecard
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Sample Questions
Q1) What is the division's Return on Investment (ROI)?
A)15.00%
B)25.00%
C)30.00%
D)200.00%
Q2) Chardon had the following financial results for last month.What type of responsibility center do these financial results reflect?
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A)Revenue center
B)Profit center
C)Investment center
D)Cost
Q3) Prescott Enterprises has a target rate of return of 12%,an ROI of 30%,and capital turnover of 2.0.The sales margin for Prescott Enterprises would be closest to:
A)6%.
B)15%.
C)24%.
D)60%.
Q4) Describe the limitations of financial performance measurement.
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Chapter 12: Capital Investment Decisions and the Time
Value of Money
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Sample Questions
Q1) The payback method can only be used when the net cash inflows from a capital investment are the same for each period.
A)True
B)False
Q2) Which term below is best described as "management's minimum desired rate of return on an investment?"
A)Payback return
B)Discount rate
C)Internal rate of return
D)Net present value
Q3) Total net inflows during the useful life of the asset are:
A)$595,000.
B)$575,000.
C)$555,000.
D)$ 75,000.
Q4) Simone Corporation bought a new machine which cost $87,500,has a useful life of 10 years,and will generate annual cash inflows of $25,000.The residual value of the machine is $5,500.What is the payback period?
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) A company uses the indirect method to prepare the statement of cash flows.How will the adjustment to reflect the amount of cash received from customers be presented on the statement?
A)The adjustment will be for the increase or decrease in accounts receivable for the period and will adjust net income in the operating activities section.
B)The adjustment will be for the increase or decrease in accounts payable for the period and will adjust net income in the operating activities section.
C)The adjustment will be for the increase or decrease in accrued expenses for the period and will adjust net income in the operating activities section.
D)The adjustment will be for the increase or decrease in inventory for the period and will adjust net income in the operating activities section.
Q2) A payment of interest on a loan would be considered a:
A)cash outflow from operating activities.
B)cash outflow from investing activities.
C)cash outflow from financing activities.
D)cash outflow from depreciation.
Q3) Compute the change in accounts receivable for the year.
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Which of the following is the formula to compute the acid-test ratio?
A)(Cash + short-term investments + net current receivables)/current assets
B)Current liabilities/current assets
C)(Cash + short-term investments + net current receivables)/current liabilities
D)Currents assets/current liabilities
Q2) Trend analysis is the same thing as a vertical analysis.
A)True
B)False
Q3) Horizontal analysis is the study of percentage changes in comparative financial statements.
A)True
B)False
Q4) Working capital is current assets minus current liabilities.
A)True
B)False
Q5) Which ratio measures the ability of a company to sell inventory?
A)Inventory turnover ratio
B)Acid-test ratio
C)Current ratio
D)Day's sales in receivables
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