Introduction to Managerial Accounting Solved Exam Questions
Course Introduction
Introduction to Managerial Accounting provides students with a comprehensive understanding of how accounting information is used by managers to make informed business decisions. The course covers key topics such as cost behavior, budgeting, performance evaluation, and variance analysis, emphasizing the use of accounting data for planning, controlling, and decision-making within organizations. Through case studies and practical examples, students learn techniques for analyzing financial data, preparing managerial reports, and supporting strategic business objectives in various organizational settings.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 10th Edition by Tracie L. Miller Nobles
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Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Which of the following would be classified as a prime cost?
A) Cost of raw materials
B) Depreciation on factory equipment
C) Salary of sales personnel
D) Depreciation on office furniture
Answer: A
Q2) Service companies include companies that provide health care, communication, banking, and other important benefits to society.
A)True
B)False
Answer: True
Q3) Nurix Inc. is a business consulting firm. During the month of February, Nurix earned $55,400 of revenues by providing services to 45 clients. Operating expenses for February were $8,500 and non-operating expenses were $4,500. What is the cost per service?
A) $100.00
B) $188.88
C) $942.22
D) $288.00
Answer: B
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Page 3
Chapter 2: Job Order Costing
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Sample Questions
Q1) Zephyros Corporation had estimated manufacturing overhead costs for the coming year to be $316,000. The total estimated direct labor hours and machine hours for the coming year are 6,000 and 10,000, respectively. Manufacturing overhead costs are allocated based on direct labor hours. What is the predetermined overhead allocation rate?
A) $31.60 per machine hour
B) $19.75 per direct labor hour
C) $52.67 per direct labor hour
D) $39.50 per machine hour
Answer: C
Q2) Job order costing is well suited for the service industry.
A)True
B)False
Answer: True
Q3) Cost accounting systems are used:
A) to accumulate product cost information.
B) to accumulate and assign period costs to products.
C) by manufacturing companies, not service companies.
D) by stockholders for decision-making purposes.
Answer: A
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Chapter 3: Process Costing
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Sample Questions
Q1) Under process costing, the costs incurred by each department are recorded in a separate production cost report for each department.
A)True
B)False
Answer: True
Q2) The Raw Materials Inventory account is debited when direct materials are issued for production.
A)True
B)False
Answer: False
Q3) Which of the following statements is true of process costing?
A) It uses one Work in Process Inventory account.
B) It tracks and assigns both period costs and product costs to units produced.
C) It accumulates product costs by production departments.
D) It assigns manufacturing overhead costs to products only in the last production process.
Answer: C
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Page 5
Chapter 4: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Variable cost per unit, within the relevant range, will:
A) increase as production decreases.
B) decrease as production decreases.
C) remain the same as production levels change.
D) decrease as production increases.
Q2) If the number of units sold is more than number of units produced, the income under both variable and absorption costing would be the same.
A)True
B)False
Q3) When the variable cost per unit decreases, the contribution margin on each unit sold also decreases.
A)True
B)False
Q4) What is the fixed portion of the total cost?
A) $1,850
B) $2,225
C) $2,425
D) $2,625
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Chapter 5: Master Budgets
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Sample Questions
Q1) Calculate balance of Accounts payable at the end of October.
A) $77,680
B) $91,760
C) $69,330
D) $74,290
Q2) Based on the above data, calculate the shortfall the company is projected to have at the end of August.
A) $32,000
B) $43,000
C) $37,000
D) $16,000
Q3) If the cost of indirect materials needed for production is insignificant, it should not be included in the budgeting process.
A)True
B)False
Q4) All organizations use one standardized budgeting process.
A)True
B)False
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Chapter 6: Flexible Budgets and Standard Cost Systems
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Sample Questions
Q1) Which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?
A) decrease in price per unit
B) increase in variable cost per unit
C) increase in sales volume
D) increase in fixed costs
Q2) A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the previous month, the actual selling price was higher than the expected price as per the static budget. This difference results in a(n):
A) favorable flexible budget variance for sales revenues.
B) favorable sales volume variance for sales revenues.
C) unfavorable flexible budget variance for sales revenues.
D) unfavorable sales volume variance for sales revenues.
Q3) The fixed overhead volume variance is essentially a cost variance.
A)True
B)False
Q4) A standard cost system helps management set performance standards.
A)True
B)False
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Chapter 7: Cost Allocation and Responsibility Accounting
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Sample Questions
Q1) The payroll department of a manufacturing company is most likely to be a(n):
A) cost center.
B) revenue center.
C) investment center.
D) profit center.
Q2) A unique factor of responsibility accounting performance reports is the focus on responsibility and controllability.
A)True
B)False
Q3) The balanced scorecard is a performance evaluation system that requires management to consider financial performance measures of performance, but not nonfinancial measures.
A)True
B)False
Q4) What is the cost per letter for the correspondence activity?
A) $10.00
B) $30.50
C) $25.00
D) $0.75
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Chapter 8: Short-Term Business Decisions
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Sample Questions
Q1) Seven Seas Company manufactures 100 luxury yachts per month. Included in each yacht is a compact media center. Seven Seas manufactures media center in-house, but is considering the possibility of outsourcing that function. At present, the variable cost per unit is $275, and the fixed costs are $39,000 per month. If they outsource, fixed costs could be reduced by half, and the vacant facilities could be rented out to earn $1,000 per month of rental income. At what contract rate would outsourcing pay off for Seven Seas?
A) $480 per unit
B) $499 per unit
C) $388 per unit
D) $295 per unit
Q2) Enthusiastic Products is deciding whether to outsource production of a certain component that is included in all of its products. It currently costs Enthusiastic Products $1.20 to make each component in-house. If Enthusiastic Products outsources, it can buy the component ready-made for $0.90 each, and can shut down the production facilities it is currently using to manufacture the component, and save $20,000 a year in fixed costs. Annual requirement for the component is 12,000 units. What is the effect of outsourcing?
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Chapter 9: Capital Investment Decisions
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Sample Questions
Q1) Calculate the payback period for Proposal X.
A) 5 years
B) 4 years
C) 8 years
D) 10 years
Q2) Which of the following is a capital budgeting method that ignores the time value of money?
A) payback
B) internal rate of return
C) return on assets
D) net present value
Q3) Which of the following best describes a post-audit in capital budgeting?
A) an audit of an operating unit of a company
B) an audit performed after financial statements have been issued
C) an analysis of an investment's cash flows prior to committing to the initial investment
D) a comparison of actual results of capital investments with projected results
Q4) An operational asset used for a long period of time is known as a capital asset.
A)True
B)False
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