Introduction to Management Accounting Final Exam - 1457 Verified Questions

Introduction to Management Accounting Final Exam

Course Introduction

This course provides a foundational understanding of management accounting, focusing on its essential role in effective organizational decision-making. Students will explore key concepts such as cost behavior, cost allocation, budgeting, performance evaluation, and variance analysis. Emphasis is placed on the use of accounting information for planning, controlling operations, and informing strategic decisions. By analyzing real-world scenarios and case studies, students will learn to interpret financial data and support business objectives, equipping them with the skills necessary to contribute to managerial processes in diverse organizational settings.

Recommended Textbook Management Accounting 6th Canadian Edition by Charles T. Horngren

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14 Chapters

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Page 2

Chapter 1: Management Accounting and Management Decisions

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Sample Questions

Q1) Identify current trends in management accounting.

Answer: Many factors have caused changes in accounting systems in recent years. Most significant are globalization, technology, and a shift from a manufacturing-based to a service-based economy. Without continuous adaptation and improvement, accounting systems would be obsolete.

Q2) ________ concentrate(s) on areas that deviate from the plan and ignore(s) areas that are presumed to be running smoothly.

A) A budget

B) Performance reports

C) Variances

D) Management by exception

Answer: D

Q3) A significant unfavourable variance

A) should be ignored because of materiality.

B) could not result from careless budgeting.

C) is the result of proper planning.

D) should be analyzed, and measures should be taken to correct the situation.

Answer: D

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Chapter 2: Cost Behaviour and Cost-Volume Relationships

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Sample Questions

Q1) If fixed expenses were doubled and contribution margin per unit was cut in half, then the break-even point would

A) be cut in half.

B) double.

C) triple.

D) quadruple.

Answer: D

Q2) If total fixed costs are $213,000, then the break-even volume in sales dollars is

A) $710,000.

B) $304,288.

C) $370,432.

D) $177,500.

Answer: A

Q3) What is the break-even point in units?

A) 36,000

B) 90,000

C) 60,000

D) 54,000

Answer: B

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Page 4

Chapter 3: Measurement of Cost Behaviour

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Sample Questions

Q1) Measuring cost behaviour involves understanding and quantifying how activities of an organization affect levels of costs.

A)True

B)False

Answer: True

Q2) Costs determined by management as part of the periodic planning process in order to meet the organization's goals.

Answer: Discretionary fixed costs

Q3) The process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service is called

A) cost prediction.

B) cost measurement.

C) activity analysis.

D) budgeting.

Answer: C

Q4) The high-low method is a reliable method of cost estimation.

A)True

B)False

Answer: False

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Chapter 4: Cost Management Systems

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Sample Questions

Q1) All costs other than direct material or direct labour that are associated with the manufacturing process.

Q2) Fixed manufacturing overhead assigned to production using a predetermined fixed overhead rate.

Q3) The gross profit under absorption costing would be

A) $26,600.

B) $18,200.

C) $ -0-.

D) $ 7,000.

Q4) Which of the following would NOT be an example of a cost objective?

A) A department

B) A product

C) A territory

D) A parcel of land

Q5) Costs identified with goods produced or purchased for resale.

Q6) Which format does the CICA Handbook advocate for reporting income?

A) Direct costing

B) Variable costing

C) Indirect costing

D) Full costing

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Chapter 5: Cost Allocation and Activity-Based Costing Systems

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Sample Questions

Q1) If Department D uses direct labour hours to allocate overhead to units of product, the overhead rate per direct labour hour for Department D would be

A) $22.93.

B) $18.13.

C) $16.80.

D) $16.00.

Q2) If activity-based costing is used, then the total amount of overhead allocated to the standard model would be

A) $297,320.

B) $480,000.

C) $160,000.

D) $182,680.

Q3) A system that first accumulates overhead costs for each of the activities of an organization, and then assigns the costs of activities to the products, services, or other cost objects that caused that activity.

Q4) The goal of a just-in-time production system is to have zero inventory.

A)True

B)False

Q5) The time from initiating production to delivering the goods to the customer.

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Chapter 6: Job-Costing Systems

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Sample Questions

Q1) The journal entry to record the application of the factory overhead would include a

A) debit to Factory Department Overhead Control for $143,000.

B) debit to WIP Inventory for $143,000.

C) credit to Factory Department Overhead Control for $146,000.

D) credit to WIP Inventory for $146,000.

Q2) The most widely used approach in disposing of an overhead variance is proration.

A)True

B)False

Q3) Two extremes of product costing are job-order costing and normal costing.

A)True

B)False

Q4) The journal entry to record the materials placed into production would include a

A) credit to Direct-Materials Inventory for $82,000.

B) debit to Direct-Materials Inventory for $148,000.

C) credit to WIP Inventory for $82,000.

D) debit to WIP Inventory for $148,000.

Q5) A rate that is calculated by dividing budgeted overhead by budgeted cost-driver activity.

Q6) A cost accumulation method that accumulates costs by processes or departments.

Page 8

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Chapter 7: Process-Costing Systems

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Sample Questions

Q1) The total cost of units completed and transferred to Finishing is

A) $2,112,000.

B) $2,140,000.

C) $1,848,000.

D) $352,000.

Q2) The equivalent units for materials are A) 164,000.

B) 194,000.

C) 200,000.

D) 206,000.

Q3) The unit cost for conversion costs is A) $4.23.

B) $5.94.

C) $6.26.

D) $6.47.

Q4) The equivalent units for conversion costs are A) 200,000.

B) 168,000.

C) 192,000. D) 32,000.

Page 9

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Chapter 8: Relevant Information and Decision Making: Marketing Decisions

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Sample Questions

Q1) If only 5,000 units of each product, A and B can be sold, it would be best to

A) discontinue A as it results in a net loss of $2.00 per unit, and continue producing B.

B) produce only 2,500 units of A and 5,000 units of B to maximize profits.

C) produce 5,000 units of both A and B.

D) discontinue the production of both A and B.

Q2) Eagan is thinking of dropping product line B since it is losing money. Assuming Eagan drops line B and does NOT replace it, the operating income will

A) increase $ 2,000.

B) decrease $ 4,000.

C) decrease $10,500.

D) not change.

Q3) Predatory pricing is establishing prices so low that competitors are driven out of the market so that the surviving company then has no significant competition and can A) sell as much as it produces.

B) lower prices to stimulate the economy.

C) raise prices dramatically.

D) discriminate against certain customers.

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Page 10

Chapter 9: Relevant Information and Decision Making: Production

Decisions

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Sample Questions

Q1) Once X is produced, processing it further will cause profits to A) increase by $120,000.

B) stay the same.

C) decrease by $120,000.

D) increase by $24 per unit.

Q2) The incremental cost per unit associated with the special order is A) $8.00.

B) $9.25.

C) $9.50.

D) $10.00.

Q3) The periodic cost of equipment which is spread over the future periods in which the equipment is expected to be used.

Q4) Product L

A) should be processed further to increase profits by $130,000.

B) should be sold at split-off since processing further would only reduce profits by $130,000.

C) should be processed further to increase profits by $380,000.

D) can be processed further or sold at split-off. There is no difference in profit.

Q5) Future costs that differ between alternatives.

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Chapter 10: Capital Budgeting Decisions

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Sample Questions

Q1) When no revenue is involved, organizations try to choose projects with the least cost for any given set of objectives.

A)True

B)False

Q2) Using the cost capital as the discount rate, the net present value of the project is

A) $89,360.

B) $108,480.

C) $114,680.

D) $228,180.

Q3) The cash outflow for the purchase of equipment is an example of an operating cash flow.

A)True

B)False

Q4) What is (e)?

A) Below 6 percent

B) Between 6 and 8 percent

C) Between 8 and 10 percent

D) Between 10 and 12 percent

Q5) The process of determining which long-term capital assets to acquire.

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Chapter 11: The Master Budget

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Sample Questions

Q1) Mathematical models of the master budget that can react to any set of assumptions about sales, costs, or product mix.

Q2) A budget that describes expected sales in units and dollars for the coming period.

Q3) ________ includes the capital budget, cash budget, and budgeted balance sheet.

A) Operating budget

B) Financial budget

C) Continuous budget

D) Strategic plan

Q4) The budgeted number of total direct labour hours needed would be

A) 30,000.

B) 40,000.

C) 46,000.

D) 60,000.

Q5) Cash disbursements can be made for all of the following EXCEPT

A) merchandise.

B) payroll.

C) sales.

D) fixed assets.

Q6) Producing forecasted financial statements for five- or ten-year periods.

Page 13

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Chapter 12: Flexible Budgets and Variance Analysis

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Sample Questions

Q1) When actual volume is less than expected volume, the fixed overhead volume variance is

A) favourable.

B) overapplied.

C) unfavourable.

D) indeterminable.

Q2) In most companies, variances are investigated only if they exceed a minimum dollar or percentage deviation from budgeted amounts.

A)True

B)False

Q3) The direct-labour price variance for the month of October is

A) $600 unfavourable.

B) $600 favourable.

C) $590 unfavourable.

D) $590 favourable.

Q4) For Product Y, the usage variance was

A) $3,300 unfavourable.

B) $3,300 favourable.

C) $2,400 unfavourable.

D) $2,400 favourable.

Page 14

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Chapter 13: Management Control Systems, the Balanced

Scorecard, and Responsibility Accounting

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Sample Questions

Q1) Once a management control system is designed for an organization, it will meet the organization's goals indefinitely.

A)True

B)False

Q2) To create a management control system that meets the organization's needs, designers need to consider all of the following EXCEPT

A) existing constraints.

B) external reporting requirements.

C) internal controls.

D) costs versus benefits.

Q3) Who is responsible for developing, maintaining and evaluating internal control systems?

A) Managers

B) Stockholders

C) Accountants

D) Both managers and accountants

Q4) A logical integration of management accounting tools to gather and report data and to evaluate performance.

Q5) A responsibility centre for which costs are accumulated.

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Chapter 14: Management Control in Decentralized Organizations

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Sample Questions

Q1) Return on investment is a better test of profitability than just the amount of income generated by the investment.

A)True

B)False

Q2) If invested capital is defined as stockholders' equity, a project earning an ROI of 10 percent should be

A) accepted.

B) rejected.

C) accepted if the desired rate of return is less than 10 percent.

D) rejected if the cost of capital is greater than 10 percent.

Q3) The result of the calculation, which divides income by revenue is called

A) income percentage of revenue.

B) residual income.

C) capital turnover.

D) return on investment.

Q4) One way to determine ROI is to multiply income percentage of revenue by A) income percentage of revenue.

B) capital turnover.

C) residual income.

D) cost of capital.

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