Introduction to Management Accounting Exam Review
Course Introduction
Introduction to Management Accounting explores the fundamental principles and practices used in the internal management of organizations. This course covers cost behavior, cost allocation, budgeting, performance evaluation, and decision-making processes, providing students with the skills to analyze and interpret financial information for planning, control, and strategic decision-making. Emphasis is placed on how accounting information supports managers in resource allocation, operational efficiency, and achieving organizational objectives.
Recommended Textbook Managerial Accounting 5th Edition by Karen
W. Braun
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Not disclosing sensitive information is an example of which ethical standard?
A)Credibility
B)Integrity
C)Competence
D)Confidentiality
Answer: D
Q2) The primary goal of financial accounting is to provide information to
A)government regulators.
B)creditors.
C)potential investors.
D)all of the above.
Answer: D
Q3) Company initiatives to address sustainability and corporate responsibility not only "do the right thing," but also can lead to economic profits by increasing demand for the company's products and services.
A)True
B)False
Answer: True
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3
Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) When manufacturing products, direct labor and direct materials are classified as
A)period costs and expensed when incurred.
B)product costs and expensed when the goods are sold.
C)product costs and expensed when incurred.
D)period costs and expensed when the goods are sold.
Answer: B
Q2) All of the following are considered variable costs except
A)cost of sugar used to produce chocolate candy bars.
B)salary of the factory supervisor.
C)shipping costs of an online retailer.
D)cost of chicken nuggets used at a fast food chain.
Answer: B
Q3) Plowin' Supply plans to make 15,000 tractors at its plant. Fixed costs are $540,000 and variable costs are $200 per tractor. What is the average cost per tractor?
A)$200
B)$2700
C)$236
D)$36
Answer: C
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Chapter 3: Job Costing
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Sample Questions
Q1) The quantities of incoming shipments of raw materials are counted and recorded on a purchase order.
A)True
B)False
Answer: False
Q2) Shirley Enterprises uses job costing. Actual overhead for the year was $494,800. The allocated overhead was $524,000. What is the balance in the manufacturing overhead account?
A)$1,018,800 overallocated
B)$29,200 underallocated
C)$29,200 overallocated
D)$494,800 underallocated
Answer: C
Q3) Which product costing system would be better for custom-order products?
A)Product costing system
B)Company costing system
C)Job costing system
D)Overhead costing system
Answer: C
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Page 5
Chapter 4: Activity-Based Costing, Lean Operations, and the Costs of Quality
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Sample Questions
Q1) Which term listed below describes a system where companies purchase raw materials when needed in production and complete finished goods when needed by customers?
A)Internal failure costs
B)Backflush costing
C)Just-in-time
D)External failure costs
Q2) Lean companies typically emphasize quality.
A)True
B)False
Q3) Machine set-up would most likely be classified as a ________ cost.
A)batch-level
B)unit-level
C)product-level
D)facility-level
Q4) Only manufacturers can use refined costing systems to allocate manufacturing overhead.
A)True
B)False
Page 6
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Chapter 5: Process Costing
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Sample Questions
Q1) The last step of the 5-step process costing procedure is to assign total costs to units completed and to units in ending Work In Process Inventory.
A)True
B)False
Q2) When units are transferred from Processing Department #1 to Processing Department #2, a credit is made to WIP-Processing Department #2 to reflect the transferred-in costs.
A)True
B)False
Q3) The "total physical units accounted for" is the sum of the units completed and transferred out during the period plus the units in ending WIP Inventory.
A)True
B)False
Q4) The existence of ending Work In Process Inventory necessitates how much of the total manufacturing cost should be assigned to units still in ending WIP Inventory, and how much of the cost should be assigned to units completed during the period.
A)True
B)False
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7
Chapter 6: Cost Behavior
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Sample Questions
Q1) Which method are managers using when they plot all the data points to see if there is a linear relationship among the data?
A)Scatterplot
B)Account analysis
C)Regression analysis
D)Low-high method
Q2) Total fixed costs for Randolph Manufacturing are $804,000. Total costs, including both fixed and variable, are $1,040,000 if 160,000 units are produced. The fixed cost per unit at 188,500 units would be closest to
A)$1.25/unit.
B)$5.52/unit.
C)$4.27/unit.
D)$5.03/unit.
Q3) What term represents the fixed cost component in the equation: y = vx + f? A)y
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8
Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) To find the sales revenue needed to breakeven, the formula used could be
A)fixed expenses ÷ contribution margin ratio.
B)contribution margin per unit ÷ fixed expenses.
C)contribution margin ratio ÷ fixed expenses.
D)fixed expenses ÷ contribution margin per unit.
Q2) The line that begins at the origin on a CVP graph represents
A)total fixed expenses.
B)total sales revenues.
C)total expenses.
D)both the total expenses and the total sales revenues.
Q3) CVP analysis assumes that the only factor that affects costs is a change in sale price.
A)True
B)False
Q4) A product is sold at $40 per unit, the variable expense per unit is $20, and total fixed expenses are $200,000, what are the breakeven sales in dollars?
A)$5000
B)$100,000
C)$105,000
D)$400,000
Page 9
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Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) In a special sales order decision, the special price must exceed the variable cost of filling the order. In other words, the special order must have A)sunk costs.
B)a positive contribution margin.
C)opportunity costs.
D)a negative contribution margin.
Q2) Variable costs are irrelevant to a special decision when those variable costs differ between alternatives.
A)True
B)False
Q3) One key to analyzing short-term business decisions is to use a contribution margin approach that separates variable costs from fixed costs.
A)True
B)False
Q4) Fixed costs that will continue to exist if a product is discontinued are relevant. A)True
B)False
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Chapter 9: The Master Budget
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Sample Questions
Q1) Define operating budgets and financial budgets. List the specific budgets which are operating budgets. List the specific budgets which are financial budgets.
Q2) All of the following budgets are prepared by merchandising companies except
A)manufacturing overhead.
B)capital expenditures.
C)budgeted income statement.
D)cash.
Q3) The ________ budget starts with the number of units to be produced.
A)direct materials
B)manufacturing overhead
C)direct labor
D)All of these choices start with the number of units to be produced.
Q4) Dallas Corporation had beginning inventory of 18,700 units and expects sales of 80,000 units during the year. Desired ending inventory is 19,500 units. How many units should Dallas Corporation produce?
A)80,800 units
B)41,800 units
C)79,200 units
D)118,200 units
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Chapter 10: Performance Evalulation
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Sample Questions
Q1) The ________ is the optimum budget to managers that plan revenues and expenses at different sales volumes.
A)flexible budget
B)capital budget
C)static budget
D)master budget
Q2) The Pasta Division of Whole Grain Corporation had sales of $5,500,000 and operating income of $1,375,000 last year. The total assets of the Pasta Division were $2,750,000, while current liabilities were $280,000. Whole Grain Corporation's target rate of return is 15%, while its weighted average cost of capital is 7%. The effective tax rate for the company is 20%. What is the Pasta Division's Residual Income (RI)?
A)$962,500
B)$1,100,000
C)$1,182,500
D)$412,500
Q3) A product line is generally considered a profit center.
A)True
B)False
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Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) If a company produces many different products, it will develop a standard cost for each type of product.
A)True
B)False
Q2) What may cause a sales volume variance for fixed expenses?
A)Insurance costs on the factory rise unexpectedly during the year due to a crisis in the insurance industry.
B)The union calls for a strike of factory workers and temporary workers are hired to fill in for the striking employees.
C)The lease on the manufacturing facility is renegotiated and the lease payments increase during the year.
D)The number of units actually sold falls within a different relevant range than the static budget sales volume.
Q3) Standard costs for production inputs are used to develop flexible budgets.
A)True
B)False
Q4) Identify four advantages of standard costs and variances.
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Chapter 12: Capital Investment Decisions and the Time Value of Money
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Sample Questions
Q1) The three factors that affect the time value of money are principal, number of periods, and the interest rate.
A)True
B)False
Q2) The present value of an investment is affected by all of the following except?
A)The interest rate
B)The number of time periods (length of the investment)
C)The type of investment (annuity versus lump sum)
D)The value of a past investment
Q3) If the accounting rate of return exceeds the required accounting rate of return,
A)invest in the capital asset.
B)do not invest in the capital asset.
C)only invest if the payback period is also greater than the required rate of return.
D)only invest if the payback period is also less than the required rate of return.
Q4) All four of the methods for analyzing capital investments use accrual basis accounting.
A)True
B)False
Page 14
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Which of the following statements is true about information in a statement of cash flows?
A)The statement of cash flows is one of the required financial statements for publicly-held companies.
B)The statement of cash flows is prepared at the option of management.
C)The statement of cash flows is combined with the income statement.
D)The statement of cash flows is not completed when an income statement is prepared.
Q2) If a corporation shows a net loss on its income statement, which of the following is true?
A)The company may not be able to sell stock.
B)The company may continue to have a net increase in cash.
C)The company may not be able to pay dividends.
D)The company may continue to have an increase in retained earnings.
Q3) Which of the following would be considered an operating activity on the statement of cash flows?
A)Dividends paid to stockholders
B)Purchase of land
C)The sale of inventory
D)The receipt of stock dividends from investment stock
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Page 15
Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) The common size statement percentages are different from those that appear in vertical analysis.
A)True
B)False
Q2) In vertical analysis, the base used for comparison on the balance sheet is
A)total stockholders' equity.
B)total liabilities.
C)total assets.
D)none of the above
Q3) The ________ balance sheets displays only percentages.
A)comparative
B)account form
C)report form
D)common-size
Q4) Trend analysis is the same thing as a vertical analysis.
A)True
B)False
Q5) Managers use a variety of financial ratios to evaluate a company's performance.
A)True
B)False
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Chapter 15: Sustainability
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Sample Questions
Q1) The system used for the identification, collection, analysis, and use of monetary and physical information is known as?
A)Environmental management accounting (EMA)
B)Materials flow accounting (MFA)
C)Triple bottom line
D)Sustainability
Q2) There are several reasons an organization might pursue sustainable initiatives. "Increasing pressure from customers has pushed a utility company to maintain average rates for electricity that are lower than the national average." This situation is an example of which type of reason to implement sustainable initiatives?
A)Cost reduction
B)Regulatory compliance
C)Stakeholder influence
D)Competitive strategy
Q3) Sustainability reporting is now a required practice in the United States.
A)True
B)False
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