Introduction to Managerial Accounting Test Preparation
Course Introduction
Introduction to Managerial Accounting provides students with a foundational understanding of accounting concepts and techniques used by managers to make informed business decisions. The course explores topics such as cost behavior, budgeting, performance evaluation, and decision-making processes relevant to planning, controlling, and directing organizational resources. Emphasizing the role of accounting information in strategic management, students will learn how to analyze financial data, assess business operations, and communicate insights that enhance organizational effectiveness. This course is essential for those seeking to understand the internal accounting methods that drive managerial planning and corporate strategy.
Recommended Textbook
Managerial Accounting 9th Canadian Edition by Ray Garrison
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14 Chapters
1982 Verified Questions
1982 Flashcards
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Page 2
Chapter 1: Managerial Accounting and the Business Environment
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48 Verified Questions
48 Flashcards
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Sample Questions
Q1) The lean thinking model is a five step management approach that organizes resources such as people and machines around the flow of business processes and that pulls units through these processes in response to customer orders.
A)True
B)False
Answer: True
Q2) Informal relationships and channels of communication often develop that do not appear on the organization chart.
A)True
B)False
Answer: True
Q3) What 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
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Page 3
Chapter 2: Cost Terms, Concepts, and Classifications
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93 Verified Questions
93 Flashcards
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Sample Questions
Q1) How would the wages of factory maintenance personnel usually be classified?
A) Direct labour and manufacturing overhead.
B) Indirect labour and manufacturing overhead.
C) Direct labour and period cost.
D) Indirect labour and period cost
Answer: B
Q2) The gross margin for Cushing Company for the first quarter of last year was $325,000 when sales were $700,000.The beginning inventory of finished goods was $60,000,and the ending inventory of finished goods was $85,000.What was the cost of goods manufactured for the first quarter?
A) $375,000.
B) $350,000.
C) $400,000.
D) $385,000.
Answer: C
Q3) If the ending inventory of finished goods is understated,net income will be overstated.
A)True
B)False
Answer: False
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Chapter 3: Systems Design: Job-Order Costing
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Job-order costing is more likely to be used than process costing in situations where many different products or services are produced each period to customer specifications.
A)True
B)False
Answer: True
Q2) What was the cost of raw materials purchased during the year?
A) $411,000.
B) $360,000.
C) $316,000.
D) $336,000.
Answer: D
Q3) Indirect materials are NOT charged to a specific job but rather are included in manufacturing overhead.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Systems Design: Process Costing
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162 Verified Questions
162 Flashcards
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Sample Questions
Q1) (Appendix 4B)What allocation method recognizes that service departments often provide each other with interdepartmental services,and it is therefore considered to be the most accurate method for allocating service department costs to operating departments?
A) The direct method.
B) The step-down method.
C) The reciprocal method.
D) The allocation by cost behaviour method.
Q2) Using the weighted-average method,the total cost of the units in ending work-in-process inventory is closest to which of the following?
A) $156,960.
B) $86,400.
C) $153,960.
D) $154,800.
Q3) (Appendix 4B)The step method usually provides results that are a reasonable approximation of the results that the reciprocal method provide.
A)True
B)False
Q4) $112,000 ÷ 28,000 EUs = $4 per EU
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Chapter 5: Activity-Based Costing: A Tool to Aid Decision Making
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) What would be the total overhead cost per customer according to the activity-based costing system,rounded to the nearest whole dollar? In other words,what would be the overall activity rate for the Customer Support activity cost pool?
A) $11,700.
B) $12,350.
C) $12,667.
D) $13,000.
Q2) Activity-based costing is a costing method that is designed to provide managers with cost information for strategic and other decisions that potentially affect only variable costs.
A)True
B)False
Q3) Activity rates in activity-based costing are computed by dividing costs from the first-stage allocations by the activity measure for each activity cost pool.
A)True
B)False
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Chapter 6: Cost Behaviour: Analysis and Use
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107 Verified Questions
107 Flashcards
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Sample Questions
Q1) Suppose the sales for the third quarter was the equivalent of 1,000 units and that the fixed manufacturing and non-manufacturing costs were valid between the relevant range of 800 and 1,200 units.If Sorter Company had sold 100 additional units,it would have reported what amount of additional operating income?
A) $9,150.
B) $23,725.
C) $50,000.
D) $100,650.
Q2) The "goodness of fit" statistic (that is,R-squared)associated with the least-squares regression method indicates the proportion of a mixed cost that is variable.
A)True
B)False
Q3) What is the expected operating income next month?
A) $2,700.
B) $5,100.
C) $7,500.
D) $11,200.
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8
Chapter 7: Cost-Volume-Profit Relationships
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141 Verified Questions
141 Flashcards
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Sample Questions
Q1) Carver Company produces a product that sells for $30.Variable manufacturing costs are $15 per unit.Fixed manufacturing costs are $5 per unit based on the current level of activity,and fixed selling and administrative costs are $4 per unit.A selling commission of 10% of the selling price is paid on each unit sold.What is the contribution margin per unit?
A) $3.
B) $15.
C) $8.
D) $12.
Q2) If the company wants to increase its total contribution margin by 40% in the next year,all other factors remaining the same,by how much will it need to increase its sales?
A) $96,000.
B) $50,400.
C) $67,200.
D) $72,000.
Q3) The break-even point in units can be obtained by dividing total fixed expenses by the contribution margin ratio.
A)True
B)False
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Chapter 8: Variable Costing: A Tool for Management
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) Absorption costing operating income is closer to the operating cash flow of a period than is variable costing operating income.
A)True
B)False
Q2) Under variable costing,it may be possible to report a positive operating income even if the company sells less than the break-even volume of sales.
A)True B)False
Q3) What was the company's operating income under variable costing?
A) $407,500.
B) $417,500.
C) $421,250.
D) $431,250.
Q4) Direct labour is always considered to be a product cost under variable costing. A)True B)False
Q5) 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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134 Verified Questions
134 Flashcards
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Sample Questions
Q1) In a budgeted income statement for the month of February,what would be the net income?
A) $0.
B) $1,800.
C) $4,200.
D) $9,000.
Q2) What were the total flexible budget expenses for January?
A) $383,750.
B) $371,000.
C) $387,000.
D) $365,500.
Q3) What is the budgeted net income for December?
A) $42,500.
B) $77,500.
C) $107,500.
D) $137,500.
Q4) The usual starting point in budgeting is to make a forecast of cash receipts and cash disbursements.
A)True
B)False
Page 11
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Chapter 10: Standard Costs and Overhead Analysis
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211 Verified Questions
211 Flashcards
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Sample Questions
Q1) Which department is usually held responsible for an unfavourable materials quantity variance?
A) Marketing.
B) Purchasing.
C) Engineering.
D) Production.
Q2) Waste or excessive usage of overhead items will show up as part of the variable overhead efficiency variance.
A)True
B)False
Q3) Purchase of poor quality materials will generally result in a favourable materials price variance and an unfavourable labour rate variance.
A)True
B)False
Q4) What was the variable overhead efficiency variance?
A) $430 unfavourable.
B) $740 favourable.
C) $950 unfavourable.
D) $1,120 favourable.
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Chapter 11: Reporting for Control
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200 Verified Questions
200 Flashcards
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Sample Questions
Q1) (Appendix 11A)The sales quantity variance is calculated by holding constant which of the following?
A) The budgeted sales mix percentages.
B) The actual sales mix percentages.
C) The budgeted contribution margin per unit.
D) Both the budgeted sales mix percentages and the budgeted contribution margin per unit.
Q2) Many firms tend to adopt a focus or a niche strategy instead of either a cost leadership or a differentiation strategy.
A)True
B)False
Q3) What will be the total prevention cost appearing on the quality cost report?
A) $103,000.
B) $145,000.
C) $151,000.
D) $155,000.
Q4) Internal failure costs result when a defective product is used within the company.
A)True
B)False
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Chapter 12: Relevant Costs for Decision Making
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Sample Questions
Q1) A study has been conducted to determine if one of the departments in Parry Company should be discontinued.The contribution margin in the department is $50,000 per year.Fixed expenses charged to the department are $65,000 per year.It is estimated that $40,000 of these fixed expenses could be eliminated if the department is discontinued.These data indicate that if the department were discontinued,the company's overall operating income per year would change by how much?
A) An increase of $10,000.
B) A decrease of $10,000.
C) An increase of $25,000.
D) A decrease of $25,000.
Q2) Assume the company has 50 units left over from last year that have small defects and which will have to be sold at a reduced price as scrap.This would have no effect on the company's other sales.What cost is relevant as a guide for setting a minimum price on these defective units?
A) $1.50.
B) $3.50.
C) $5.00.
D) $6.50.
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Page 14
Chapter 13: Capital Budgeting Decisions
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180 Flashcards
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Sample Questions
Q1) What is the net present value of the alternative of purchasing the new system?
A) ($1,236,495).
B) ($1,169,895).
C) ($1,076,495).
D) ($969,895).
Q2) Arthur operates a part-time auto repair service.He estimates that a new diagnostic computer system will result in increased cash inflows of $2,100 in Year 1,$3,200 in Year 2,and $4,000 in Year 3.If Arthur's discount rate is 10%,what would be the maximum amount he should be willing to pay for the new computer system? (Ignore income taxes in this problem.)
A) $6,652.
B) $6,984.
C) $7,556.
D) $7,747.
Q3) When the net present value method is used,the internal rate of return is the discount rate used to compute the net present value of a project.
A)True
B)False
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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: \(\begin{array} { l r }
\text { Total Assets } & \$ 150,000 \\
\text { Total Shareholders" Equity } & \$ 120,000 \\
\text { Total Common Shares } & \$ 50,000 ( 5,000 \text { shares) } \\
\text { Total Preferred Shares } & \$ 10,000 ( 1,000 \text { shares) } \end{array}\) What is the book value per common share?
A) $20.
B) $22.
C) $25.
D) $28.
Q2) A positive fully diluted earnings per share can sometimes exceed basic (undiluted)earnings per share.
A)True
B)False
Q3) Financial statements for Qiang Company appear below:
Q4) Financial statements for Rarig Company appear below:
Q5) Financial statements for Raridan Company appear below:
Q6) Financial statements for Quade Company appear below:
Q7) Financial statements for Lowe Company appear below:
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