Advanced Managerial Accounting Final Exam Questions
Course Introduction
Advanced Managerial Accounting explores the complex concepts, tools, and practices used by managers to make informed financial decisions within organizations. The course covers topics such as cost allocation, budgeting, performance measurement, strategic cost management, and decision-making under uncertainty. Students will analyze real-world case studies and scenarios to understand how advanced accounting information can drive organizational goals, support strategic initiatives, and improve operational efficiency. Emphasis is placed on contemporary issues faced by managers, including sustainability accounting, ethical considerations, and the integration of financial data with business strategy.
Recommended Textbook Managerial Accounting 9th Canadian Edition by Ray Garrison
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Page 2
Chapter 1: Managerial Accounting and the Business Environment
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Q1) Which one of the following is NOT a characteristic of a pull production system?
A) Inventories are reduced to a minimum by purchasing raw materials and producing units only as needed to meet consumer demand.
B) Raw materials are released to production far in advance of being needed to ensure no interruptions in work flows due to shortages of raw materials.
C) Products are completed just in time to be shipped to customers.
D) Manufactured parts are completed just in time to be assembled into products.
Answer: B
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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Chapter 2: Cost Terms, Concepts, and Classifications
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Q1) The beginning balance of the raw materials inventory account for May was $27,500.The ending balance for May was $28,750,and $128,900 of raw materials were used during the month.What was the cost of the materials purchased during the month?
A) $131,300.
B) $127,650.
C) $130,150.
D) $157,650.
Answer: C
Q2) Haack Inc.is a merchandising company.Last month,the company's cost of goods sold was $84,000.The company's beginning merchandise inventory was $20,000,and its ending merchandise inventory was $18,000.What was the total amount of the company's merchandise purchases for the month?
A) $86,000.
B) $82,000.
C) $84,000.
D) $122,000.
Answer: B
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4
Chapter 3: Systems Design: Job-Order Costing
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Q1) (Appendix 3A)Basing predetermined overhead rate on capacity will almost certainly result in overapplied overhead.
A)True
B)False
Answer: False
Q2) Which of the following contain(s)the detailed cost data that support the Work in Process control account?
A) Job cost sheets.
B) The Manufacturing Overhead account.
C) The Finished Goods inventory account.
D) Purchase requisitions.
Answer: A
Q3) What was the cost of goods manufactured during the year?
A) $636,000.
B) $766,000.
C) $736,000.
D) $716,000.
Answer: C
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5
Chapter 4: Systems Design: Process Costing
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Q1) David Company uses the weighted-average method in its process costing system.The first processing department,the Welding Department,started the month with 20,000 units that were 80% complete with respect to conversion costs.The conversion cost in this beginning work-in-process inventory was $123,200.An additional 65,000 units were started into production during the month.There were 19,000 units in the ending work-in-process inventory of the Welding Department that were 10% complete with respect to conversion costs.A total of $389,250 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.)
A) $7.547.
B) $7.700.
C) $4.634.
D) $5.988.
Q2) (Appendix 4B)In both the direct and step-down methods of allocating service department costs,any amount of the allocation base that is attributable to the service department whose cost is being allocated is ignored.
A)True
B)False
Q3) $112,000 ÷ 28,000 EUs = $4 per EU
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Page 6
Chapter 5: Activity-Based Costing: A Tool to Aid Decision Making
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Q1) What would be the total overhead cost per delivery according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Deliveries activity cost pool?
A) $6.00
B) $6.60
C) $6.80
D) $7.20
Q2) Setting up equipment is an example of an activity at which of the following levels?
A) Unit-level activity.
B) Batch-level activity.
C) Product-level activity.
D) Organization-sustaining activity.
Q3) (Appendix 5A)In an action analysis report prepared for the function mentioned above,what would be the "red margin" in the report,rounded to the nearest whole dollar?
A) ($70).
B) ($20).
C) $80.
D) $230.
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Chapter 6: Cost Behaviour: Analysis and Use
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Q1) What is the best estimate of the company's contribution margin for this year?
A) $252,000.
B) $300,000.
C) $158,000.
D) $225,000.
Q2) Given the cost formula Y = $15,000 + $5X,what is the total cost at an activity level of 8,000 units?
A) $15,000.
B) $23,000.
C) $40,000.
D) $55,000.
Q3) Using the high-low method,the estimated fixed cost per month for electricity is closest to which of the following?
A) $870.00.
B) $1,150.00.
C) $1,290.00.
D) $1,306.50.
Q4) A mixed cost is partially variable and partially fixed.
A)True B)False
8
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Chapter 7: Cost-Volume-Profit Relationships
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Q1) The contribution margin ratio is closest to which of the following?
A) 47.1%.
B) 2.1%.
C) 1.9%.
D) 52.9%.
Q2) A company has sales of $87,500 at the break even point and fixed costs are $35,000.Assuming cost behaviour does not change if sales increase by $20,000 how much will operating income will increase by?
A) $20,000.00.
B) $12,000.00.
C) $8,000.00.
D) $4,000.00.
Q3) Last year,Black Company reported sales of $640,000,a contribution margin of $160,000,and an operating loss of $40,000.Based on this information,what was the break-even point?
A) $640,000.
B) $480,000.
C) $800,000.
D) $960,000.
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Page 9
Chapter 8: Variable Costing: A Tool for Management
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Q1) What was the carrying value on the balance sheet of the ending finished goods inventory under absorption costing?
A) $10,000.
B) $12,000.
C) $16,000.
D) $21,000.
Q2) What was the unit product cost for the month under absorption costing?
A) $74.
B) $81.
C) $83.
D) $90.
Q3) Under absorption costing,what was the total amount of fixed manufacturing cost in the ending inventory?
A) $0.
B) $9,000.
C) $14,400.
D) $27,000.
Q4) Direct labour is always considered to be a product cost under variable costing. A)True B)False
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Chapter 9: Budgeting
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Q1) What would be the expected cash collections from customers during April?
A) $117,600.
B) $137,000.
C) $139,000.
D) $150,000.
Q2) If the company has budgeted to sell 24,000 units of Product SW in September,what would be the total budgeted fixed selling and administrative expenses for September?
A) $48,000.
B) $54,000.
C) $67,000.
D) $78,000.
Q3) What was the total flexible budget variance for January?
A) $20,750
B) $9,000 U.
C) $29,750
D) $12,750 U.
Q4) In a not-for-profit entity a budget can be prepared either on an expenditure basis or on a program basis.Discuss.
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Chapter 10: Standard Costs and Overhead Analysis
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Q1) What amount of fixed overhead would Dori apply to finished production?
A) The actual direct labour hours multiplied by the standard fixed overhead rate per direct labour hour.
B) The standard hours allowed for the actual units of finished output multiplied by the standard fixed overhead rate per direct labour hour.
C) The standard units of output for the actual direct labour hours worked multiplied by the standard fixed overhead rate per unit of output.
D) The actual fixed overhead cost per direct labour hour multiplied by the standard hours allowed.
Q2) What was the total variance for variable overhead for January?
A) $40 favourable.
B) $85 favourable.
C) $100 unfavourable.
D) $125 favourable.
Q3) Purchase of poor quality materials will generally result in a favourable materials price variance and an unfavourable labour rate variance.
A)True
B)False
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12
Chapter 11: Reporting for Control
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Q1) The use of return on investment as a performance measure may lead managers to make decisions that are NOT in the best interests of the company as a whole.
A)True
B)False
Q2) What would be a good example of a common cost that normally could NOT be assigned to products on a segmented income statement except on an arbitrary basis?
A) Product advertising outlays.
B) Salary of a corporation president.
C) Direct materials.
D) The product manager's salary.
Q3) Which of the following would be classified as an internal failure cost on a quality cost report?
A) Re-entering data because of keying errors.
B) Final product testing and inspection.
C) Supplies used in testing and inspection.
D) Amortization of test equipment.
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Chapter 12: Relevant Costs for Decision Making
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Q1) Suppose that total regular sales of jigs are 85,000 units per month,and all other conditions remain the same.If Immanuel accepts the special order,what will be the change in monthly operating income?
A) $3,600 decrease.
B) $5,400 decrease.
C) $7,200 increase.
D) $14,000 increase.
Q2) (Appendix 12A)The markup on absorption cost is closest to which of the following?
A) 15.0%.
B) 30.0%.
C) 31.2%.
D) 96.5%.
Q3) How much will the company's operating income be increased or (decreased)if it prices the 1,000 units in the special order at $6 each?
A) ($500).
B) $400.
C) $1,000.
D) $2,500.
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14
Chapter 13: Capital Budgeting Decisions
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Q1) If the net present value of a project is zero,based on a discount rate of 16%,which of the following statements about the project's internal rate of return is correct?
A) It is equal to 16%.
B) It is less than 16%.
C) It is greater than 16%.
D) It cannot be determined from the information given.
Q2) Sue Falls is the president of Sports,Inc.She is considering buying a new machine that would cost $14,125.Sue has determined that the new machine promises an internal rate of return of 12%,but Sue has misplaced the paper that gives the annual cost savings promised by the new machine.She does remember that the machine has a projected life of ten years.Based on these data,what are the annual cost savings? (Ignore income taxes in this problem.)
A) It is impossible to determine from the data given.
B) $1,412.50.
C) $1,695.00.
D) $2,500.00.
Q3) Monson Company is considering three investment opportunities with cash flows as described below: (Ignore income taxes in this problem.)
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Page 15
Chapter 14: Financial Statement Analysis
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Q1) Lisa Inc.'s acid-test (quick)ratio at December 31,Year 2,was closest to which of the following?
A) 0.6 to 1.
B) 1.1 to 1.
C) 1.8 to 1.
D) 2.0 to 1.
Q2) Financial statements for AAR Company appear below:
Q3) Larned Company's dividend yield ratio on December 31,Year 2 was closest to which of the following?
A) 5.5%.
B) 8.3%.
C) 8.7%.
D) 9.1%.
Q4) Starrs Company has current assets of $300,000 and current liabilities of $200,000.Which of the following transactions would increase its working capital?
A) Prepayment of $50,000 of next year's rent.
B) Refinancing $50,000 of short-term debt with long-term debt.
C) Acquisition of land valued at $50,000 by issuing new common shares.
D) Purchase of $50,000 of marketable securities for cash.
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