Course Introduction
Business Decision Making
Chapter Exam Questions
Business Decision Making explores the processes, models, and tools managers use to make effective decisions in complex and dynamic business environments. Students learn to identify and analyze problems, evaluate alternatives, and apply both quantitative and qualitative decision-making techniques. The course emphasizes the role of data, risk assessment, ethics, and group dynamics in decision processes. Through case studies, simulations, and real-world examples, students develop practical skills in judgment, problem-solving, and strategic planning to enhance organizational performance.
Recommended Textbook
Managerial Accounting 2nd Edition by
Charles E. Davis
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2470 Verified Questions
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Page 2
Chapter 1: Accounting As a Tool for Management
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Sample Questions
Q1) Which of the following is least likely to be in a company's code of ethics?
A)Transparency of information
B)Commitment to the environment
C)Maximum amount of bonuses to be paid to executives
D)Discrimination
Answer: C
Q2) Which of the following is not an activity in which managerial accounting is designed to assist managers?
A)Reporting
B)Controlling
C)Decision making
D)Evaluation
Answer: A
Q3) A company that wants to be successful needs to know:
A)What it wants to accomplish.
B)How it is going to achieve it
C)Both what it wants to accomplish and how it is going to achieve it.
D)Neither what it wants to accomplish nor how it is going to achieve it.
Answer: C
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Page 3
Chapter 2: Cost Behavior and Cost Estimation Summary of
Questions by Objectives and Blooms Taxonomy
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Sample Questions
Q1) Which of the following is not a method of estimating costs?
A)Scattergraphs
B)The high-low method
C)Regression analysis
D)All of these ans choices are methods of estimating costs.
Answer: D
Q2) A 10 percent decrease in sales volume will result in
A)A 10 percent decrease in total variable cost.
B)A 10 percent decrease in per unit variable cost.
C)A 10 percent increase in total variable cost.
D)A 10 percent increase in per unit variable cost.
Answer: A
Q3) An example of a committed fixed cost is
A)Advertising.
B)Lease on warehouse space.
C)Sales commissions.
D)All of these ans choices are correct.
Answer: B
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) The formula for converting desired net income into operating income is
A)Desired net income times the income tax rate.
B)Desire net income divided by the income tax rate.
C)Desired net income divided by 1- tax rate.
D)Desired net income divided by 1+ tax rate.
Answer: C
Q2) Cost-volume-profit analysis helps managers assess the
A)Impact of a change in variable costs on profit.
B)Impact of a change in sales price on profit.
C)Impact of a change in fixed costs on profit.
D)Impact of changes in sales price,variable costs and fixed costs on profit.
Answer: D
Q3) To adhere to the sales mix ratio,a company should split fixed costs between the multiple products and come up with individual product breakeven points or target income points.
A)True
B)False
Answer: False
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Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) The following information relates to the 2014 operations of Adler's Company.
Finished goods inventory,beginning $ 90,000
Finished goods inventory,ending $ 83,000
Cost of goods available for sale $230,000
a.What is Adler's cost of goods manufactured for the period?
b.What was Adler's cost of goods sold for the period?
Q2) River Rafters produces side imaging sonar devices. The company uses a job order costing system. During the period, the company incurred the following costs to complete job #SIS423: direct materials, $110,000 and direct labor, $128,000. The company also incurred $14,000 of administrative costs and $18,000 of selling costs to complete this job. Job #SIS423 required 10,600 machine hours. Factory overhead was applied to the job at a rate of $20 per machine hour. If job #SIS423 resulted in 1,800 sonar devices, what was the unit cost of goods sold?
Q3) Finished Goods represents products that are
A)In the process of being completed.
B)Ready to be sold.
C)Sold.
D)None of these ans choices are correct.
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Page 6
Chapter 5: Planning and Forecasting
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Sample Questions
Q1) The amounts to be included in the standard price of direct labor is generally provided by
A)Each employee's supervisor.
B)The human resources department.
C)The plant manager.
D)The controller.
Q2) In a manufacturing setting,practical standards do \(\textbf{ not }\) allow for A)Machine breakdowns.
B)Employee fatigue.
C)Vacations.
D)Excess employee idleness.
Q3) Brand,Inc.makes portable generators.Budgeted sales are 20,000 for July,25,000 for August,28,000 for September,and 31,000 for October.Brand maintains an ending inventory equal to 10% of the following month's sales.Ending inventory at June 30<sup>th</sup> was 2,000.
Required
Prepare a production budget for the 3<sup>rd</sup> quarter ending September 30.
Q4) The standard price of a product is comprised of several components including cost and quantity.
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Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) The direct labor rate variance is part of the direct labor flexible budget variance that arises when the actual wage rate differs from the standard wage rate.
A)True
B)False
Q2) Academy Awards makes plaques and trophies.Last year the company's direct labor payroll totaled $140,000 for 17,300 direct labor hours.The standard wage rate is $7.75 per direct labor hour.
Required:
Calculate Academy Awards direct labor rate variance for the period.
Q3) Variances have very important meanings,even before their causes are identified.
A)True
B)False
Q4) Purchasing a higher quality of materials than is specified by the standard will likely result in
A)A favorable price variance
B)An unfavorable quantity variance
C)An unfavorable price variance
D)A favorable price variance and an unfavorable quantity variance
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Chapter 7: Activity-Based Costing and Activity Based Management
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Sample Questions
Q1) In implementing an activity-based costing system,after all the activities have been identified and the appropriate level of detail selected,the activities are combined into activity cost pools based on their
A)Behavior
B)Function
C)Cost drivers
D)Cost levels
Q2) In the activity identification stage of implementing an activity-based costing system,the greater the level of detail
A)The less likely the company will be to have a net loss.
B)The greater the chance of misclassifying some costs and activities
C)The less likely to misclassify some costs and activities
D)None of these ans choices are correct.
Q3) Which of the following would be considered a batch-level activity?
A)Machine set-up
B)Preparing the annual budget
C)Direct labor
D)None of these ans choices are correct.
Q4) What is an activity cost pool and how are activity cost pool rates calculated?
Page 9
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) Suppose you are trying to decide whether to rent an apartment across the street from campus or a nicer apartment one mile from campus in either case,you plan to keep your car for social outings.Indicate whether the following pieces of information are relevant or irrelevant to your decision. \[\begin{array} { | l | l | l | }
\hline & \textbf { Relevant } & \textbf { Irrelevant } \\
\hline \text { Cost of apartment } & & \\
\hline \text { Car insurance } & & \\
\hline \text { Renter's insurance } & & \\
\hline \text { Cost of gasoline } & & \\
\hline \text { Cost of campus parking permit } & & \\
\hline \text { Cost of car wash } & & \\
\hline \text { Cost of shoes } & & \\
\hline \text { Original cost of your car } & & \\
\hline \text { Amount of utility expense } & & \\
\hline \end{array}\]
Q2) What is an What is an opportunity cost and what is the impact of opportunity cost on a decision to outsource the production of an item?
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Chapter 9: Capital Budgeting
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Sample Questions
Q1) Any return a company receives over and above the original investment is referred to as
A)Return on investment.
B)Return of investment.
C)Return of contribution.
D)None of these ans choices are correct.
Q2) Mauldin Welding Shop is considering the purchase of new high-tech welding equipment.If the equipment is purchased,Mauldin will have to incur $2,000 to install the equipment and pay a technician to adjust the computer settings.In determining the cash flows associated with the new equipment,the $2,000 payment will be
A)A cash outflow
B)A cash inflow
C)An opport
D)Not relevant
Q3) The process of determining how much an amount of money to be received in the future is worth today is called future value.
A)True
B)False
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11
Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) In preparing a segment margin income statement,instead of looking for a certain phrase that describes the cost,look for the reason the cost was incurred.
A)True
B)False
Q2) If a cost is incurred specifically for a segment of an organization,it is referred to as a A)Common cost.
B)Traceable cost.
C)Allocated cost.
D)Unavoidable cost.
Q3) Any part of an organization that management wishes to evaluate is referred to as a A)Department.
B)Segment.
C)Factory.
D)Center.
Q4) What is the minimum acceptable transfer price for a division that has excess operating capacity?
Q5) What is a transfer price? List the four ways of determining a transfer price.
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Page 12
Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) Because the organizations vision and strategy lie at the heart of the balanced scorecard, the first step in developing the scorecard is to clarify the strategic focus. As part of this process, organizations may develop a strategy map.
Required:
a. What is a strategy map?
b. Discuss the process of building a balance scorecard.
Q2) Benchmarking is the practice of using data from other organizations to identify the processes and practices associated with world-class performance.
A)True
B)False
Q3) Delivery cycle time is the difference between
A)The start of production of a product and its delivery.
B)The start of production of a product and its shipment.
C)An order's placement and its delivery.
D)An order's placement and its shipment.
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) Earnings per share represents
A)How much of a company's current net income has been distributed for each share of stock held by an investor.
B)How much of a company's current net income could be distributed for each share of stock held by an investor.
C)How much of a company's contribution margin is available to be distributed to each stockholder.
D)How much gross profit of a company could be distributed for each share of stock held by an investor.
Q2) The quality of assets is assessed through A)Turnover ratios.
B)Working capital.
C)Current ratio.
D)Profitability ratios.
Q3) A firm's ability to pay its obligations as they come due and to meet any unforeseen needs for cash is referred to as liquidity.
A)True
B)False
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14
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) For the past two years,Monroe Corporation's statement of cash flows has shown net cash provided by financing activities.Which of the following choices could explain this result?
A)Collection of accounts receivable balances
B)Sales of factory equipment
C)Receipt of cash dividends from investments in other company's stock
D)Issuance of long-term debt
Q2) On January 1st of the current year Bratton Manufacturing borrowed $1,000,000 from the First National Bank.On June 30<sup>st</sup> and December 31<sup>st</sup> Bratton made payments of $10,000 each.How will these transactions be reported in the statement of cash flows?
A)$1,000,000 source of cash and $20,000 use of cash,both shown in the financing section
B)$1,000,000 source of cash in the financing section and $20,000 use of cash in the operating section as a use of cash
C)$1,000,000 source of cash in the investing section and $20,000 use of cash in the operating section
D)$1,000,000 source of cash and $20,000 use of cash,both shown in the investing section
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Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) In a process costing system,labor and overhead costs are typically combined and referred to as conversion costs.
A)True
B)False
Q2) Which of the following is a difference between job order costing and process costing systems?
A)Companies that use a process costing system accumulate product costs throughout the production process while companies that use a job order costing system accumulate product cost only at the end of the production process.
B)Companies that use a process costing system accumulate direct material and direct labor,but not manufacturing overhead while companies that use a job order costing systems accumulate direct material,direct labor and manufacturing overhead.
C)Companies that use a process costing system accumulate product costs on the departmental production report while companies that use a job order costing system accumulate product costs on the job cost sheet.
D)All of these ans choices are differences between process costing and job order costing systems.
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Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) Describe the format for a variable costing income statement.
Q2) Variable costing is acceptable for which of the following purposes?
A)GAAP reporting
B)Internal reporting
C)Reporting to the IRS
D)All of these ans choices are correct
Q3) When using variable costing,fixed manufacturing overhead is treated as which of the following types of costs?
A)Product
B)Mixed
C)Period
D)Variable
Q4) Based on the matching principle,all product cost flow through
A)Raw Material Inventory,Work in Process Inventory and Finished Goods until the goods are sold.
B)Raw Material Inventory,Work in Process Inventory and Manufacturing Overhead until the goods are sold.
C)Raw Material Inventory,Direct Materials and Conversion,and Work in Process.
D)Raw Material Inventory,Conversion,and Finished Goods until the goods are sold.
Q5) What managerial behavior does variable costing render ineffective?
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Chapter 16: Topic Focus Standard Costing Systems
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Sample Questions
Q1) A costing system where direct material and direct labor are recorded at actual cost and overhead is applied to products using a predetermined overhead rate is referred to as
A)Normal costing
B)Variable costing
C)Full costing
D)Standard costing
Q2) What is the difference between a normal costing system and a standard costing system?
Q3) Using a normal costing system,direct materials and direct labor are recorded at standard cost,and overhead is applied to products using a predetermined overhead rate.
A)True
B)False
Q4) A costing system where all product costs are recorded at standard cost while the products are being made is referred to as
A)Normal costing
B)Variable costing
C)Full costing
D)Standard costing
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Chapter 17: Topic Focus Customer Profitability
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Sample Questions
Q1) If the sales revenue a customer generates exceeds the cost of goods sold,the customer is considered
A)Profitable
B)Not profitable
C)A "best customer"
D)Cannot determine from the information given
Q2) Which of the following is \(\textbf{ not }\) a step in using activity-based costing to estimate customer profitability?
A)Calculate earnings per share
B)Calculate activity cost pool rates
C)Allocate selling costs to customers
D)Calculate customer profitability
Q3) Which of the following would \(\textbf{ not }\) be a selling expense?
A)Rent on warehouse space
B)Advertising on local TV station
C)Indirect labor
D)Depreciation on delivery truck
Q4) Customer net profit divides customer net profit by customer revenues.
A)True
B)False
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