Financial Planning and Analysis Exam Review
Course Introduction
Financial Planning and Analysis introduces students to the essential concepts and tools used in developing, managing, and interpreting an organizations financial strategies. The course covers budgeting techniques, forecasting methods, financial modeling, variance analysis, and performance measurement. Students will learn to assess financial data, develop and evaluate financial plans, and make data-driven decisions that support organizational objectives. Emphasis is placed on integrating strategic business planning with financial management to enhance organizational value and ensure long-term sustainability. Through case studies and practical exercises, students gain hands-on experience in analyzing financial statements, identifying trends, and presenting actionable insights to stakeholders.
Recommended Textbook
Managerial Accounting Decision Making and Motivating Performance
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16 Chapters
1755 Verified Questions
1755 Flashcards
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Page 2
1st Edition by Srikant M. Datar
Chapter 1: The Manager and Management Accounting
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) Financial accounting:
A)focuses on reporting financial information to managers of the organization.
B)financial statements must comply with Generally Accepted Accounting Principles (GAAP).
C)focus and emphasis is on future-oriented reports.
D)rules of measurement are internal measures and reports do not have to follow GAAP,but are based on cost-benefit analysis.
E)behavioral implications are designed primarily to influence the behavior of managers and other employees.
Answer: B
Q2) Although modern controllers have line authority over only their own departments,the modern concept of controllership maintains that the controller affects the entire company.
A)True
B)False
Answer: True
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Chapter 2: An Introduction to Cost Terms and Purposes
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134 Flashcards
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Sample Questions
Q1) We define cost tracing as:
A)the assignment of direct costs to a chosen cost object.
B)a function of cost allocation.
C)the process of tracking both direct and indirect costs associated with a cost object.
D)the process of determining the actual cost of the cost object.
E)the process of tracking only the direct and indirect costs.
Answer: A
Q2) Outside the relevant range,variable costs,such as direct materials,may not change proportionately with changes in production volume.
A)True
B)False
Answer: True
Q3) In government contracts,product costs include:
A)manufacturing costs only.
B)design costs plus manufacturing costs.
C)all costs incurred along the value chain.
D)distribution costs only.
E)production costs only.
Answer: B
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Page 4
Chapter 3: Cost-Volume-Profit Analysis
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Dr.Hill reported breakeven revenues of $7,000 and budgeted revenues of $5,000.
Required:
Compute the margin of safety.
A)$1,000.
B)$2,000.
C)$3,000.
D)$4,000.
E)$5,000. Answer: B
Q2) The graph method is useful to managers because it helps them visualize the relationships between total revenues and total costs.
A)True
B)False Answer: True
Q3) Managers understand that uncertainty is known as the possibility that an actual amount will deviate from an expected amount.
A)True
B)False Answer: True
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Page 5
Chapter 4: Job Costing
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127 Flashcards
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Sample Questions
Q1) The process costing system is useful to managers when there are masses of identical or similar units of a product or service.
A)True
B)False
Q2) Managers compute the plant administration cost-allocation rate as:
A)total plant administration costs - total supervision costs.
B)total plant administration costs × total supervision salaries.
C)total plant administration costs + total supervision salaries.
D)total plant administration costs - total supervision salaries.
E)total plant administration costs / total supervision salaries.
Q3) The assignment of indirect costs is:
A)cost allocation.
B)cost tracing.
C)cost assignment.
D)job-costing system.
E)cost allocation base.
Q4) Which method is the most accurate method of allocating actual manufacturing overhead costs to the general ledger accounts?
Q5) What are the differences of job-costing compared to process-costing systems?
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Chapter 5: Process Costing and Cost Allocation
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Sample Questions
Q1) Costs are averaged in service organizations that implement process-costing system with no beginning or ending work-in-process inventory.
A)True
B)False
Q2) The manager at Puppet and Doll Factory reported 50,000 units of direct materials in the processing division.All direct materials are placed in the processing at the beginning of the process and conversion costs occur evenly during the process.The managerial accountant uses the weighted-average costing method and their first goal was to have 10,000 left in processing and 20% converted to factory and labor overhead.
Required
a.Determine the total equivalent units in process and transferred out for direct materials and conversion costs,assuming there is no beginning inventory.
b.With the installation of a new sewing machine,the forecast for the end of the month was to have 2,000 left in process and 80 % converted as to labor and factory overhead.Compute the equivalent units in process and transferred out for direct materials and conversion costs,assuming there was no beginning inventory.
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Chapter 6: Activity-Based Costing and Activity-Based Management
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Sample Questions
Q1) Why do managers refine costing systems?
Q2) Managers set cost reduction targets in terms of reducing the cost per unit of the cost-allocation base in different activity areas.
A)True
B)False
Q3) In indirect cost pools,design costs are ________.
A)batch-level costs
B)output unit-level costs
C)product-sustaining costs
D)direct costs
E)facility-sustaining costs
Q4) In indirect cost pools,machine operations costs are ________.
A)direct costs
B)batch-level costs
C)output unit-level costs
D)product-sustaining costs
E)facility-sustaining costs
Q5) Why do some managers in organizations deduct facility-sustaining costs as a separate lump-sum amount from operating income rather than allocate them to products?
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Chapter 7: Pricing Decisions, customer Profitability, and Cost Management
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Sample Questions
Q1) Insensitivity of demand to price changes is called:
A)price discrimination.
B)demand inelasticity.
C)predatory pricing.
D)peak-load pricing.
E)collusive pricing.
Q2) Sales-order costs are:
A)output unit-level costs.
B)batch-level costs.
C)customer-sustaining costs.
D)distribution-channel costs.
E)corporate-sustaining costs.
Q3) Under U.S.laws,________ occurs when a non-U.S.company sells a product in the United States at a price below the market value in the country where it is produced.
A)job costing
B)product costing
C)price discrimination
D)dumping
E)collusive pricing
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Chapter 8: Determining How Costs Behave
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Sample Questions
Q1) Why are learning curves important to managers?
Q2) In a/an ________,the graph of total costs is not a straight line within the relevant range.
A)cost object
B)learning curve
C)experience curve
D)step cost function
E)nonlinear cost function
Q3) Why are a stable economy and technology important to managers?
Q4) What is the impact of price breaks on direct material costs?
Q5) In the fuel service retail industry,two economically plausible cost drivers are gasoline and convenience store sales.
A)True
B)False
Q6) What does a managerial accountant do when he or she can't classify costs into a fixed or variable cost?
Q7) What is r<sup>2</sup>,the coefficient of determination?
Q8) How can managers avoid ethical or legal problems with cost estimates and obtain accurate cost data?
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Chapter 9: Decision Making and Relevant Information
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Sample Questions
Q1) Why do managers use decision models?
Q2) How do managers determine the most profitable production schedule and the most profitable product mix?
Q3) Which of the following is not an annual operating cost?
A)Energy.
B)Repairs.
C)Coolant.
D)Maintenance.
E)Revenues.
Q4) The ________ is the juncture in a joint production process when two or more products become separately identifiable.
A)joint cost
B)single cost
C)splitoff point
D)separable cost
E)throughput margin
Q5) Depreciation on equipment that a company has already acquired is a past cost and therefore irrelevant.
A)True
B)False
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Chapter 10: Quality, inventory Management, and Time
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Which of the following is not an advantage of COQ measures?
A)The measure focuses on managers' attention on how poor quality affects operating income.
B)Helps manager aggregate costs to evaluate tradeoffs among prevention costs.
C)Helps manager aggregate costs to evaluate tradeoffs among
D)Does not help manager to compare any costs and benefits of other quality programs.
E)Compares costs and benefits of different quality improvement programs.
Q2) The EOQ model is solved using calculus,but the key is that relevant total costs are minimized when relevant ordering costs equal relevant carrying costs.
A)True
B)False
Q3) Stockout costs arise when a company runs out of a particular item for which there is customer demand.
A)True
B)False
Q4) What is the economic-order-quantity decision model?
Q5) Why does the cost of placing a purchase order decrease?
Q6) How do companies calculate inventory carrying costs?
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Chapter 11: Capital Investments
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Sample Questions
Q1) The ________ method calculates return using after-tax cash flows and the time value of money.
A)IR
B)IRR
C)AARR
D)hurdle rate
E)cost of capital
Q2) To encourage optimistic estimates,companies such as DuPont do not maintain records comparing actual results to the estimates individual managers make when seeking capital investment projects.
A)True
B)False
Q3) The ________ calculates the amount of time required for the discounted expected future cash flows to recoup the net initial investment in a project.
A)internal rate of return
B)discounted payback method
C)opportunity cost of capital
D)net present value method
E)accrual accounting rate-or-return
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Page 13
Chapter 12: Master Budget and Responsibility Accounting
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Sample Questions
Q1) What is the benefit of the Kaizen technique to cash-strapped states and agencies in the United States?
Q2) Which of the following is not true about variances?
A)Variances alert managers to events not easily or immediately evident.
B)Variances permit managers can take corrective actions or exploit available opportunities.
C)Variances prompt managers to probe how well the company has performed in implementing its strategies.
D)Variances sometimes signal managers that their strategies are ineffective.
E)Variances never provide a signal to managers that their strategies are ineffective.
Q3) The only new information managers need to prepare in the production budget is the level of finished goods inventory the company wants to maintain.
A)True
B)False
Q4) Why do managers want to use a cash budget since they already have an operating income budget?
Q5) Describe the advantages of budgets.
Q6) What is the concept of the bottom-up perspective of budgeting?
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Chapter 13: Flexible Budgets, cost Variances, and Management Control
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Sample Questions
Q1) Variance analysis is not subject to the same cost-benefit test as all other phases of a management control system.
A)True
B)False
Q2) Managers use actual input data from past periods because this historical data can be analyzed for trends or patterns to obtain estimates of budgeted prices.
A)True
B)False
Q3) Possible operational causes of a direct materials efficiency unfavorable variance include all of the following except:
A)poor work on the production line.
B)efficient design of products or processes.
C)congestion due to overscheduling of orders.
D)inappropriate assignment of labor and machines to specific jobs.
E)suppliers not manufacturing materials of uniformly high quality.
Q4) How does the planning of fixed overhead costs differ from the planning of variable overhead costs?
Q5) When should managers investigate the cause of variances?
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Chapter 14: Strategy, Balanced Scorecard, and Strategic
Profitability Analysis
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Sample Questions
Q1) What happens after the manager identifies unused capacity?
Q2) Which of the following is not one of the four perspectives of the balanced scorecard?
A)Financial perspective.
B)Customer perspective.
C)External control perspective.
D)Learning and growth perspective.
E)Internal business process perspective.
Q3) Which of the following is not a feature of a good balanced scorecard?
A)It tells the story of a company's strategy.
B)The balanced scorecard helps to communicate strategy to all members of the organization.
C)In for-profit companies,the balanced scorecard must motivate managers to take actions that eventually result in improvements in financial performance.
D)The balanced scorecard increases the number of measures,identifying smaller measures.
E)The balanced scorecard highlights less-than-optimal tradeoffs that managers may make when they fail to consider operational and financial measures together.
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Page 16
Chapter 15: Transfer Pricing
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Sample Questions
Q1) Which of the following methods includes a markup,or profit margin,that represents a return on subunit investment?
A)Market-based transfer prices.
B)Cost-based transfer prices.
C)Hybrid transfer prices.
D)Segment-based transfer prices.
E)Demographic-based transfer prices.
Q2) What are the concerns associated with dual-pricing methods?
Q3) Which of the following is an organizational structure in which power is concentrated at the top and there is relatively little freedom for managers at the lower levels to make decisions?
A)Profit.
B)Revenue.
C)Autonomy.
D)Centralization.
E)Decentralization.
Q4) How can managers informally adjust transfer prices to satisfy the tradeoff between tax minimization and incentive provision?
Q5) Why are multinational companies often decentralized?
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Chapter 16: Performance Measurement and Compensation
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Sample Questions
Q1) Hospitality Inns use balanced-scorecard measures to evaluate and reward the performance of its managers.
A)True
B)False
Q2) Candy's Chocolate Company's financial management is compiling data in order to assess the favorability of the company's investments.The Boise faction of the company calculates a total investment of $2,000,000 and the operating income is computed to be $380,000 while the required rate of return is 15%.The Butte faction of the company has tallied a total investment of $1,500,000 and an operating income of $230,000 while the Butte faction also has a 15% required rate of return.
Required
Compute the residual income at the Boise faction and the residual income at the company's Butte faction.
A)$80,000
B)$5,000
C)$15,000
D)$25,000
E)$120,000
Q3) Why should managers evaluate subunits over multiple years?
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Page 18