Intermediate Managerial Accounting
Exam Answer Key
Course Introduction
Intermediate Managerial Accounting builds upon foundational accounting concepts to equip students with advanced skills in planning, controlling, and decision-making within organizations. The course explores topics such as budgeting, cost-volume-profit analysis, performance measurement, variance analysis, and activity-based costing. Special emphasis is given to interpreting and applying managerial accounting information for internal management purposes, enhancing strategic planning and operational efficiency. Through case studies and practical exercises, students develop the ability to analyze financial data and contribute to managerial decision processes in real-world business settings.
Recommended Textbook Managerial Accounting 11th Canadian Edition by Ray Garrison
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14 Chapters
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2025 Flashcards
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Page 2
Chapter 1: Managerial Accounting and the Business Environment
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49 Verified Questions
49 Flashcards
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Sample Questions
Q1) Which of the following would be an example of a performance report?
A) An income statement reporting actual results for the past month.
B) An income statement showing the amounts budgeted for the past month.
C) A balance sheet showing the actual financial position at the end of the past month.
D) A production report showing budgeted and actual production for the past month.
Answer: D
Q2) Day-to-day decision making is most common to which of the following activities managers are expected to carry on in organizations?
A) Strategy formulation.
B) Directing and motivating.
C) Planning.
D) Budgeting.
Answer: B
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Page 3
Chapter 2: Cost Terms,concepts,and Classifications
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105 Flashcards
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Sample Questions
Q1) The following information was provided by Wilson Company for the year just ended: \(\begin{array}{|l|l|}
\hline \text { Beginning finished goods inventory } & \$ 150,750 \\
\hline \text { Ending finished goods inventory } & \$ 140,475 \\
\hline \text { Sales } & \$ 475,000 \\
\hline \text { Gross margin } & \$ 150,000 \\
\hline
\end{array}\)
What was the cost of goods manufactured for the year?
A) $314,725.
B) $335,275.
C) $325,000.
D) $464,725.
Answer: A
Q2) On a per unit basis,a fixed cost varies inversely with the level of activity.
A)True
B)False
Answer: True
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4
Chapter 3: Cost Behaviour: Analysis and Use
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Sample Questions
Q1) If 110,000 machine hours of activity are projected for next period,what would be total expected overhead cost?
A) $242,500.
B) $256,000.
C) $263,500.
D) $306,625.
Answer: C
Q2) If sales are projected to be 8,000 units in September,what would be total operating expenses?
A) $41,600.
B) $44,750.
C) $46,600.
D) $49,300.
Answer: C
Q3) R<sup>2</sup> is a measure of goodness of fit.
A)True
B)False
Answer: True
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Chapter 4: Cost-Volume-Profit Relationships
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Sample Questions
Q1) Curtis Company anticipates selling 10,000 units next year.The company wants to earn an operating income equal to 10% of sales.If variable expenses are $12 per unit,and fixed expenses total $78,000 per year,what selling price must be established to achieve the desired level of operating income?
A) $19.80 per unit.
B) $18.00 per unit.
C) $21.78 per unit.
D) $22.00 per unit.
Q2) A product sells for $20 per unit,and has a contribution margin ratio of 40%.Fixed expenses total $120,000 annually.The company that makes and sells the product has an income tax rate of 40%.How many units must be sold to yield an after-tax operating profit of $30,000?
A) 21,250 units.
B) 18,750 units.
C) 24,375 units.
D) 14,167 units.
Q3) If sales are zero,the company's operating loss equals its fixed expenses.
A)True B)False
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Page 6
Chapter 5: Systems Design: Job-Order Costing
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Sample Questions
Q1) If the estimated manufacturing overhead for the year was $24,000,and the applied overhead was $26,500,what was the actual manufacturing overhead cost for the year?
A) $19,500.
B) $22,000.
C) $28,500.
D) $31,000.
Q2) The balances in White Company's Work in Process inventory account were $15,000 on August 1 and $18,000 on August 31.The company incurred $30,000 in direct labour cost during August and requisitioned $25,000 in raw materials (all direct material).The sum of the debits to the Manufacturing Overhead account totalled $28,000 for the month while the sum of the credits totalled $30,000.Which of the following statements is correct?
A) Finished Goods was debited for $82,000 during the month.
B) Finished Goods was debited for $52,000 during the month.
C) Manufacturing Overhead was underapplied by $2,000 at the end of the month
D) Finished Goods was credited for $82,000 during the month
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Chapter 6: Systems Design: Process Costing
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Sample Questions
Q1) (Appendix 6A)If a company uses two different unit cost figures to cost transfers from one department to another under a process costing system,then which of the following statements is reasonable to assume?
A) There was no beginning work-in-process inventory.
B) Processing centres are arranged in a sequential pattern.
C) The FIFO cost method is being used.
D) The weighted-average cost method is being used.
Q2) Assuming normal losses are charged to good output the production report will account for lost units but not assigned a value in equivalent units.
A)True
B)False
Q3) Assuming that the company uses the FIFO cost method,what is the cost per equivalent unit for conversion costs for June,rounded to the nearest cent?
A) $1.80.
B) $1.40.
C) $1.64.
D) $1.35.
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8
Chapter 7: Activity-Based Costing: A Tool to Aid Decision Making
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Sample Questions
Q1) Which of the following would be classified as a product-level activity?
A) Machine setup for a batch of a standard product.
B) Cafeteria facilities available to and used by all employees.
C) Human resource management.
D) Advertising a product.
Q2) Which of the following statements about overhead allocation based on volume alone is correct?
A) It is a key aspect of the activity-based costing model.
B) It will systematically overcost high-volume products and undercost low-volume products.
C) It will systematically overcost low-volume products and undercost high-volume products.
D) It must be used for external financial reporting.
Q3) Unit-level activities arise as a result of the total volume of production and are performed each time a unit is produced.
A)True
B)False
Q4) Transaction drivers usually take more effort to record than duration drivers.
A)True B)False
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Chapter 8: Variable Costing: A Tool for Management
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Sample Questions
Q1) What was the total period cost for the month under the variable costing approach?
A) $140,300.
B) $140,800.
C) $232,300.
D) $281,100.
Q2) What was the unit product cost for the month under absorption costing?
A) $74.
B) $81.
C) $83.
D) $90.
Q3) Under the absorption costing method,what was the dollar value of the company's inventory on August 31?
A) $27,000.
B) $36,000.
C) $42,000.
D) $47,000.
Q4) Sales volume is the only driver of operating income under absorption costing.
A)True
B)False
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Chapter 9: Budgeting
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Sample Questions
Q1) Which of the following best describes a method of budgeting in which the cost of each program must be justified every year?
A) Operational budgeting.
B) Zero-based budgeting.
C) Continuous budgeting.
D) Responsibility accounting.
Q2) The direct materials to be purchased for a period can be obtained by subtracting the desired ending inventory of direct materials from the total direct materials needed for the period.
A)True
B)False
Q3) What is the variance for laundry costs in the flexible budget performance report for the month?
A) $5,080 F
B) $5,080 U
C) $5,800 U
D) $5,800 F
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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Sample Questions
Q1) What was the total standard cost for variable overhead for May?
A) $40,000.
B) $50,000.
C) $56,000.
D) $60,000.
Q2) What was the variable overhead efficiency variance for the month?
A) $567 favourable.
B) $1,144 unfavourable.
C) $1,172 favourable.
D) $1,172 unfavourable.
Q3) To record the use of direct materials in production,the general ledger would include what entry to the Materials Quantity Variance account?
A) $900 debit.
B) $900 credit.
C) $3,600 debit.
D) $3,600 credit.
Q4) Standard costs can be used in conjunction with job-order costing but NOT with process costing.
A)True
B)False
Page 12
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Chapter 11: Reporting for Control
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Sample Questions
Q1) Which of the following would be classified as a prevention cost on a quality cost report?
A) Re-entering data because of keying errors.
B) Rework labour and overhead.
C) Net cost of scrap.
D) Technical support provided to suppliers.
Q2) For the past year,what was the margin?
A) 12.50%.
B) 13.00%.
C) 14.75%.
D) 15.00%.
Q3) What will be the total internal failure cost appearing on the quality cost report?
A) $85,000.
B) $127,000.
C) $146,000.
D) $217,000.
Q4) Describe the balanced scorecard concept and explain the reasoning behind it.
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Chapter 12: Relevant Costs for Decision Making
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Sample Questions
Q1) How many minutes of grinding machine time would be required to satisfy demand for all four products?
A) 10,500 minutes.
B) 10,700 minutes.
C) 10,800 minutes.
D) 11,000 minutes.
Q2) The Wyeth Company produces three products-A,B,and C-from a single raw material input.Product A can be sold at the split-off point for $40,000,or it can be processed further at a total cost of $15,000 and then sold for $58,000.Joint product costs total $60,000 annually.What is the correct course of action regarding Product A?
A) It should be discontinued since revenues after further processing are less than total joint product costs.
B) It should be sold at the split-off point.
C) It should be processed further and then sold.
D) It should be processed further only if its share of the total joint product costs is less than the incremental revenues from further processing.
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14
Chapter 13: Capital Budgeting Decisions
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Sample Questions
Q1) A company needs an increase in working capital of $20,000 in a project that will last four years.The company's tax rate is 30%,and its discount rate is 10%.What is the approximate present value of the working capital to be released at the end of the project? (Do not round your intermediate calculations and round the final answer to the nearest whole dollar.)
A) $6,000.
B) $9,562.
C) $13,660.
D) $14,000.
Q2) A piece of equipment is in Class 7 with a maximum CCA rate of 15%.The income tax rate is 40%.The tax savings from the CCA tax shield on this equipment for the first year was $1,500.What must have been the original capital cost of the equipment?
A) $3,750.
B) $25,000.
C) $33,333.
D) $50,000.
Q3) The present value of a cash flow decreases as it moves further into the future.
A)True
B)False
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Page 15
Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) The following account balances have been provided for the end of the most recent year: \(\begin{array}{|l|r|}
\hline \text { Total Assets } & \$ 150,000 \\
\hline \text { Total Shareholders' Equity } & \$ 120,000 \\
\hline \text { Total Common Shares } & \$ 50,000(5,000 \text { shares) } \\
\hline \text { Total Preferred Shares } & \$ 10,000(1,000 \text { shares }) \\ \hline \end{array}\)
What is the book value per common share?
A) $20.
B) $22.
C) $25.
D) $28.
Q2) Orantes Company's times interest earned for Year 2 was closest to which of the following?
A) 10.0 times.
B) 14.3 times.
C) 15.3 times.
D) 25.3 times.
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Page 16