Financial Management Exam Solutions
Course Introduction
Financial Management is a comprehensive course that explores the fundamental principles and practices related to the financial operations of organizations. It covers essential topics such as financial statement analysis, time value of money, capital budgeting, risk and return trade-offs, cost of capital, working capital management, and the process of financial planning and control. Through real-world case studies and practical applications, students learn how to make informed financial decisions that enhance organizational value, efficiently allocate resources, and manage financial risks in a dynamic business environment. This course prepares students to understand and address the financial challenges faced by businesses and equips them with analytical tools for sound financial decision-making.
Recommended Textbook
Introduction to Managerial Accounting 4th Canadian Edition by Peter C. Brewer
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14 Chapters
1654 Verified Questions
1654 Flashcards
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Page 2
Chapter 1: An Introduction to Managerial Accounting and Cost Concepts
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50 Verified Questions
50 Flashcards
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Sample Questions
Q1) Activities that do not add value to a product or service that customers are willing to pay for are considered to be:
A) normal business activities.
B) non-value-added activities.
C) part of the overhead costs of a business.
D) a constraint.
Answer: B
Q2) Among other things,companies using the just-in-time (JIT)approach,produce only in response to a customer order meaning that workers will not be idle whenever demand falls below the company's production capacity.
A)True
B)False
Answer: False
Q3) Many Canadian organizations have successfully implemented quality management principles and have received recognition from Excellence Canada (formerly the National Quality Institute)whose mission is to inspire excellence in Canada.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Systems Design: Job-Order Costing
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) Prime cost consists of direct materials combined with:
A) direct labour.
B) manufacturing overhead.
C) indirect materials.
D) cost of goods manufactured.
Answer: A
Q2) Cost of goods manufactured for the year was:
A) $160,000.
B) $171,000.
C) $243,000.
D) $244,000.
Answer: C
Q3) Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?
A) Sheet steel in a file cabinet made by the company.
B) Manufacturing equipment depreciation.
C) Idle time for direct labour.
D) Taxes on a factory building.
Answer: A
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Page 4
Chapter 3: Systems Design: Activity-Based Costing
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) The best estimate of the total expected costs at the 19,000 unit level of activity for Maxwell Company is?
A) $37,050.
B) $37,370.
C) $38,000.
D) $39,830.
Answer: B
Q2) A business sells a product with variable costs per unit of $30.Fixed costs are $10,000 per period.The selling price per unit is $100.Assuming 1,000 units are sold in a period,what is the contribution margin for the period?
A) $30,000.
B) $60,000.
C) $70,000.
D) $100,000.
Answer: C
Q3) The concept of the relevant range does not apply to fixed costs. A)True
B)False
Answer: False
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Page 5
Chapter 4: Systems Design: Process Costing
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Gilford,Inc.uses a job order costing system.Costs going through the company's work in process account during June are given below.Manufacturing overhead is applied to production using a predetermined overhead rate based on direct labour cost.
Q2) For the current year,Paxman Company incurred $150,000 in actual manufacturing overhead cost.The Manufacturing Overhead account showed that overhead was overapplied in the amount of $6,000 for the year.If the predetermined overhead rate was $8.00 per direct labour hour,how many hours were worked during the year?
A) 17,750 hours.
B) 18,000 hours.
C) 18,750 hours.
D) 19,500 hours.
Q3) The amount of direct labour cost in the November 30 Work in Process inventory was:
A) $2,800.
B) $3,300.
C) $3,500.
D) $6,300.
Q4) What was the amount of manufacturing overhead allocated to jobs during 2014?
Q5) What was the cost of jobs completed during 2014?
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Chapter 5: Cost Behavior: Analysis and Use
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) Strap Company uses the weighted-average method in its process costing system.The company has only one processing department.The ending work in process inventory consists of 10,000 units,60% complete with respect to materials.The total dollar value of this inventory is $38,000.The costs per equivalent unit are $5.00 for materials and $4.00 for conversion costs for the period.With respect to conversion costs,the ending work in process inventory is?
A) 10% complete.
B) 20% complete.
C) 30% complete.
D) 38% complete.
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) Miller Company manufactures a product for which materials are added at the beginning of the manufacturing process.A review of the company's inventory and cost records for the most recently completed year revealed the following information:
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Chapter 6: Cost-Volume-Profit Relationships
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98 Verified Questions
98 Flashcards
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Sample Questions
Q1) Which of the following would not be considered categories of quality costs?
A) Prevention costs.
B) External failure costs.
C) Direct material costs.
D) Appraisal costs.
Q2) The overhead cost per unit of Product B under the traditional costing system is closest to:
A) $5.49.
B) $11.45.
C) $26.09.
D) $50.66.
Q3) The predetermined overhead rate (i.e. ,activity rate)for Activity 2 under the activity-based costing system is closest to:
A) $9.15.
B) $10.23.
C) $51.99.
D) $86.93.
Q4) The activity rate for Grinding is?
Q5) The unit cost for Dept.F,using direct labour hours to assign overhead is?
Q6) The activity rate for setting up equipment is?
Page 8
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Chapter 7: Profit Planning
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) What is the predetermined overhead rate per DLH for the year (rounded to nearest cent)?
A) $5.27.
B) $5.00.
C) $5.73.
D) $6.00.
Q2) On a budgeted balance sheet,the cash number is the ending cash balance as projected by the cash budget.
A)True
B)False
Q3) The collections from customers during the first quarter (item a in thousands)are:
A) $50.
B) $57.
C) $60.
D) $73.
Q4) One of the distinct advantages of a budget is that it can help to uncover potential bottlenecks before they occur.
A)True
B)False
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Chapter 8: Standard Costs
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Sample Questions
Q1) Seco Corp. ,a wholesale supply company,uses independent sales agents to market the company's products.These agents currently receive a commission of 20% of sales,but are demanding an increase to 25% of sales.Seco had already prepared its budget for next year before learning of the sales agents' demand for an increase in commissions.That budgeted income statement appears below:
Q2) The following monthly budgeted data is available for the International Company:
Q3) How many units would the company have to sell to attain target profits of $120,000?
A) 10,400 units.
B) 10,800 units.
C) 11,200 units.
D) 12,000 units.
Q4) What are target sales in necklaces to generate after-tax income of $3,080?
Q5) What is the company's contribution margin ratio?
A) 30%.
B) 70%.
C) 150%.
D) 250%.
Q6) Based on the information above,What are the break-even sales in units?
Q7) Given the above data,how many families can receive a box of food?
Page 10
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Chapter 9: Flexible Budgets and Overhead Analysis
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145 Flashcards
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Sample Questions
Q1) Assume that discontinuing the manufacture and sale of Tams will have no effect on the sale of other product lines.If the company discontinues the Tam product line,the change in annual operating income (or loss)should be:
A) $55,000 decrease.
B) $65,000 decrease.
C) $90,000 decrease.
D) $70,000 increase.
Q2) To maximize total contribution margin,a firm faced with a production constraint should:
A) promote those products having the highest unit contribution margins.
B) promote those products having the highest contribution margin ratios.
C) promote those products having the highest contribution margin per unit of constrained resource.
D) promote those products having the highest contribution margins and contribution margin ratios.
Q3) Glocker Company makes three products in a single facility.These products have the following unit product costs:
Q4) Holt Company makes three products in a single facility.Data concerning these products follow:
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Chapter 10: Decentralization
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113 Verified Questions
113 Flashcards
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Sample Questions
Q1) Trimaine and Marjorie Manufacturing is considering the replacement of some old machinery with new machinery due to technology advancement that should save them $16,000 in net cash operating costs.The estimated life of the new equipment is 8 years and it will cost $50,000.What is the payback period?
Q2) Vernon Company has been offered a 7-year contract to supply a part for the military.After careful study,the company has developed the following estimated data relating to the contract:
Q3) The net present value of this investment would be?
A) ($14,350).
B) $77,200.
C) $107,250.
D) $200,000.
Q4) Jimbob Co.wishes to incorporate the consideration of the impact of inflation in its capital budgeting.The following estimates pertain to a project:
Q5) Kelcom Consultancy is considering an investment that requires an outlay of $200,000 and promises $231,023 of cash inflow one year from now.The company's cost of capital is 10%.
Compute the NPV of the investment.
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Chapter 11: Relevant Costs for Decision Making
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163 Verified Questions
163 Flashcards
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Sample Questions
Q1) The materials price variance for January is:
A) $1,300 U.
B) $1,640 U.
C) $1,640 F.
D) $1,700 F.
Q2) What is the labour efficiency variance for the month?
A) $7,230 U.
B) $7,230 F.
C) $9,150 F.
D) $9,150 U.
Q3) One cause of an unfavourable overhead volume variance would be increases in cost for fixed overhead items.
A)True
B)False
Q4) The fixed overhead volume variance is due to:
A) inefficient or efficient use of whatever the denominator activity is.
B) inefficient or efficient use of overhead resources.
C) a difference between the denominator activity and the standard hours allowed for the actual output of the period.
D) a shift in the amount of hours required to produce the actual output.
Page 13
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Chapter 12: Capital Budgeting Decisions
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96 Verified Questions
96 Flashcards
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Sample Questions
Q1) For the past year,the margin was?
A) 15.75%.
B) 20.50%.
C) 25.00%.
D) 33.33%.
Q2) Which of the following is not an operating asset?
A) Cash.
B) Inventory.
C) Plant equipment.
D) Common stock.
Q3) How much is the residual income?
A) $10,000.
B) $40,000.
C) $50,000.
D) $80,000.
Q4) Since the sales figure is neutral in the return on investment (ROI)formula ROI = Margin × Turnover,a change in total sales will not affect ROI.
A)True
B)False
Q5) Financial data for Beaker Company for last year appear below:
Page 14
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Chapter 13: How Well Am I Doing Statement of Cash Flows
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223 Verified Questions
223 Flashcards
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Sample Questions
Q1) Orantes Company's accounts receivable turnover for 20 × 6 was closest to:
A) 10.3 times.
B) 13.5 times.
C) 14.8 times.
D) 19.3 times.
Q2) Frabine Company had $150,000 in sales on account last year.The beginning accounts receivable balance was $14,000 and the ending accounts receivable balance was $18,000.The company's accounts receivable turnover was closest to:
A) 4.69 times.
B) 8.33 times.
C) 9.38 times.
D) 10.71 times.
Q3) The times interest earned ratio of McHugh Company is 4.5 times.The interest expense for the year was $20,000,and the company's tax rate is 40%.The company's net income is:
A) $22,000.
B) $42,000.
C) $54,000.
D) $66,000.
Q4) Calculate the return on common shareholders' equity for 20 × 4
Page 15
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Chapter 14: How Well Am I Doing Financial Statement Analysis
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34 Verified Questions
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Sample Questions
Q1) The total of wage expense to employees for the year was $600,000.Wages payable to employees at the beginning of the year were $15,000 and at the end of the year $10,000.Wage expense resulted in cash outflows of?
A) $595,000
B) $600,000
C) $605,000
D) $610,000
Q2) During the year sales to customers were $300,000.Accounts receivable from customers at the beginning of the year were $25,000 and at the end of the year $50,000.As a result cash inflows from sales to customers totalled?
A) $275,000
B) $300,000
C) $325,000
D) $350,000
Q3) Since depreciation expense is added back to net income in the operating section of an indirect method cash flow statement,if depreciation expense increases cash flows will similarly increase.
A)True
B)False
Page 16
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