Accounting Information for Decision Making Test
Questions
Course Introduction
Accounting Information for Decision Making introduces students to the fundamental concepts and techniques used in generating and analyzing accounting information relevant to managerial decision-making. The course focuses on the role of financial and managerial accounting information in planning, controlling, and evaluating business operations. Topics covered include cost behavior, budgeting, performance measurement, and decision analysis, with an emphasis on how accounting data supports strategic and operational choices. Through real-world examples and case studies, students will learn to interpret and use accounting information to solve business problems and enhance organizational performance.
Recommended Textbook Cornerstones of Managerial Accounting 3rd Edition by Maryanne
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14 Chapters
2120 Verified Questions
2120 Flashcards
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Page 2
M. Mowen
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) A type of accounting that is primarily concerned with producing information for external users
A)Financial accounting
B)Managerial accounting
C)Planning
D)Controlling
E)Decision making
F)Value chain
G)Continuous improvement
H)Line positions
I)Time
J)Total quality management
K)Lean accounting
L)Staff positions
M)Controller
N)Treasurer
O)Ethical behaviour
Answer: A
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Page 3
Chapter 2: Basic Managerial Accounting Concepts
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217 Flashcards
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Sample Questions
Q1) Global Inc. manufactured 6,000 units during the month of April and incurred a direct materials cost of $110,000 and a manufacturing overhead cost of $50,000. Suppose the per-unit prime cost was $30.00 per unit. How much direct labour cost did Global incur during April?
A) $20,000
B) $70,000
C) $85,000
D) $90,000
Answer: B
Q2) How many inventory accounts does a typical manufacturer have?
A) 1
B) 2
C) 3
D) 4
Answer: C
Q3) Car manufacturer
A)Tangible
B)Intangible
Answer: A
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Page 4
Chapter 3: Cost Behaviour
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Sample Questions
Q1) Refer to Regina Company. What is the independent variable of the cost formula for equipment maintenance?
A) the total cost
B) the fixed cost
C) the variable rate
D) number of machine hours
Answer: D
Q2) Has both a variable and a fixed component
A)Variable cost
B)Fixed cost
C)Mixed cost
D)Step cost
Answer: C
Q3) Is a statistical method
A)High-low method
B)Scattergraph method
C)Least squares (regression) method
Answer: C
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Page 5
Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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154 Flashcards
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Sample Questions
Q1) Refer to Desjardin Tools. What is the variable cost ratio?
A) 19%
B) 42%
C) 50%
D) 54%
Q2) What formula is used to calculate the degree of operating leverage?
A) total sales / profit
B) profit / fixed costs
C) profit / variable costs
D) contribution margin / profit
Q3) The point where total sales revenue equals total cost
A)Break-even point
B)Common fixed expenses
C)Contribution margin
D)Direct fixed expenses
E)Margin of safety
F)Operating leverage
G)Degree of operating leverage
H)Sales mix
Q4) Explain why cost-volume-profit analysis can be useful to managers.
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Chapter 5: Job-Order Costing
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195 Flashcards
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Sample Questions
Q1) What are the three steps of overhead application?
Q2) Refer to Valley Water Slides. What is the sales price of Job 816?
A) $2,840
B) $2,864
C) $3,408
D) $4,544
Q3) Refer to HiTech Housing. What is the cost of goods sold for the month?
A) $1,163
B) $1,733
C) $1,760
D) $2,640
Q4) Refer to Valley Water Slides. Suppose the beginning balance of Finished Goods Inventory was $0. What is the ending balance of Finished Goods Inventory?
A) $2,785.00
B) $3,457.00
C) $5,531.20
D) $8,206.40
Q5) Discuss overapplied and underapplied overhead.
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Chapter 6: Process Costing
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Sample Questions
Q1) Refer to Door Specialists. How many units were completed in the second department during March?
A) 40,000
B) 47,000
C) 63,000
D) 73,000
Q2) Which statement best describes parallel processing?
A) A large number of similar products pass through an identical set of processes.
B) Units typically pass through a series of manufacturing or producing departments.
C) Units must pass through one process before they can be worked on in later processes.
D) Partially completed units can be worked on simultaneously in different processes and then brought together in a final process for completion.
Q3) Vitamin manufacturer
A)Process costing
B)Job-order costing
Q4) List the five steps in preparing a production report.
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8
Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) Refer to Powen. What is the cost of unloading?
A) $50,500
B) $52,000
C) $54,000
D) $56,000
Q2) Consider the following two activities: performing warranty work and purchasing components. The warranty work costs $60,000, and the warranty cost of the most efficient competitor is $10,000. Purchasing components costs $100,000 (5,000 purchase orders). A study reveals that the most efficient level would use 2,500 purchase orders and entail a cost of $55,000. What is the non-value-added cost?
A) $45,000
B) $55,000
C) $60,000
D) $105,000
Q3) One of the questions answered by activity analysis should be "What activities are done?"
A)True
B)False
Q4) What is the activity based costing hierarchy? Give an example for each.
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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Sample Questions
Q1) Refer to Triple M Company. What is the operating income using the absorption costing method?
A) ($540)
B) $3,540
C) $3,740
D) $7,980
Q2) Refer to Ella Company. What is the value of ending Finished Goods Inventory using the absorption costing method?
A) $2,000
B) $3,000
C) $3,720
D) $5,000
Q3) Lauren Company orders 250 units at a time and places 15 orders per year. Total ordering cost is $1,600, and total carrying cost is $1,250. Which statement best describes the economic order quantity?
A) The economic order quantity (EOQ) is 15.
B) The economic order quantity (EOQ) is 250.
C) The economic order quantity (EOQ) is less than 250.
D) The economic order quantity (EOQ) is more than 250.
Page 10
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Chapter 9: Budgeting, Production, Cash, and Master Budget
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Sample Questions
Q1) Which budget is the first one that must be done in the master budgeting process, and why?
Q2) Budgeted sales in dollars
A)Production budget
B)Direct materials purchases budget
C)Sales budget
D)Production budget and Direct materials purchases budget
E)Production budget and Sales budget
F)Direct materials purchases budget and Sales budget
G)Product budget, Direct materials purchases budget, and Sales budget
Q3) Forces managers to plan
A)Advantage
B)Disadvantage
Q4) If the initial cash budget indicates a cash deficiency, the company must go out of business.
A)True
B)False
Q5) Describe some problems with participative budgeting.
Q6) Briefly describe the advantages and disadvantages of using budgeting for performance evaluation?
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) The actual quantity of input at the standard price less the standard quantity of input at the actual price equals the usage variance.
A)True
B)False
Q2) Appliance Company inspects every steam iron it manufactures for safety issues. The standard labour cost is $12 per hour. The maintenance standard at the beginning of the first quarter is 20 minutes per iron. Appliance is implementing a new production process that will aid in reducing any potential electrical defects in the irons. This will decrease the inspection time to 15 minutes per iron. After the end of the first quarter, the new process had reduced the inspection time per iron from 20 minutes to 14 minutes.
Required:
A. Identify the kaizen and maintenance labour standards in place at the beginning of the first quarter. Express the standards in both physical and financial terms.
B. Calculate the expected cost reduction and actual cost reduction on a per unit basis.
Q3) Explain the kaizen approach to costing.
Q4) How are standards developed?
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Chapter 11: Flexible Budgets and Overhead Analysis
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147 Flashcards
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Sample Questions
Q1) The fixed overhead volume variance is often interpreted as a measure of capacity utilization.
A)True
B)False
Q2) Using activity-based budgeting, assessing variances according to fixed and variable components provides insight into the source of variances.
A)True
B)False
Q3) Why are flexible budgets powerful control tools?
A) They allow the preparation of historical reports.
B) They allow managers to set the budget at a budgeted activity level.
C) They allow the calculation of what cost should be for the actual level of activity.
D) They allow the calculation of what cost should be for the budgeted level of activity.
Q4) Discuss the following statement: "As long as the total variable overhead variance is small, the managers can be assured that actual activity is proceeding as planned. No further action is necessary."
Q5) Briefly explain the concept of performance report.
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) The manager is evaluated on the basis of income
A)Centralization
B)Revenue centre
C)Profit centre
D)Cost centre
E)Investment centre
F)Decentralization
Q2) Transfer pricing decisions may harm the company as a whole.
A)True
B)False
Q3) When using economic value added (EVA) to calculate residual income, what is the formula for the cost of capital employed?
A) the actual percentage cost of capital × the total capital employed
B) the standard percentage cost of capital × the total capital employed
C) the actual percentage cost of capital × the average capital employed
D) the standard percentage cost of capital × the average capital employed
Q4) Unlike ROI, residual income can encourage a short-run orientation.
A)True
B)False
Q5) Describe the four perspectives of the Balanced Scorecard.
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) Classify Company has a product that its sales department believes can be sold for $40 each. The company requires that all new products yield 20% profit. What is the target cost of the new product?
A) $4.00
B) $25.50
C) $26.00
D) $32.00
Q2) Depreciation of equipment is an example of which of the following types of costs?
A) a sunk cost
B) a variable cost
C) a relevant cost
D) an opportunity cost
Q3) In deciding the optimal mix of products that use a constrained resource, it is important to determine the contribution margin per unit of scarce resource.
A)True
B)False
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) Two discounting models for capital investment decision making are net present value and internal rate of return.
A)True
B)False
Q2) What is characteristic of capital investment decision making?
A) It is used only for independent projects.
B) It is used only for mutually exclusive projects.
C) It places large amounts of resources at risk for long periods of time.
D) It requires that funding for a project must come from sources with the same opportunity cost of funds.
Q3) What capital investment decision-making model assumes that each cash inflow is reinvested at the required rate of return?
A) the payback period
B) the net present value
C) the internal rate of return
D) the accounting rate of return
Q4) There are two types of capital budgeting projects: independent projects and mutually exclusive projects. Describe both types of projects.
Q5) Which model of capital investment decision making is most widely used? Why?
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