Management Accounting and Decision Making Practice Exam
Course Introduction
Management Accounting and Decision Making explores the pivotal role of accounting information in the planning, controlling, and decision-making processes within organizations. The course examines tools and techniques such as cost-volume-profit analysis, budgeting, variance analysis, relevant costing, and performance measurement. Students will learn how management accountants provide actionable insights to enhance strategic and operational decisions, optimize resources, and drive organizational value. Emphasis is placed on real-world applications and ethical considerations in managerial accounting practices.
Recommended Textbook
Cornerstones of Managerial Accounting 3rd Canadian Edition by Maryanne Mowen
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14 Chapters
2190 Verified Questions
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) Management accounting information is important for both for-profit and not-for-profit organizations.
A)True
B)False
Answer: True
Q2) Another name for management accounting could be internal accounting.
A)True
B)False
Answer: True
Q3) What does the Triple Bottom Line include?
A)measures of revenues generated by the company
B)measures of activities not simply related to increasing profits
C)measures of activities related to the costs incurred by the company
D)measures of activities related to increasing profits
Answer: B
Q4) The controller is the Chief Executive Officer of a company.
A)True
B)False Answer: False
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Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) What is the formula to calculate gross margin percent?
A)gross margin/cost of goods sold
B)operating income/sales revenue
C)gross margin/sales revenue
D)sales revenue/gross margin
Answer: C
Q2) The difference between sales revenue and cost of goods sold
A)Income statement
B)Cost of goods manufactured
C)Work in process
D)Gross margin
E)Operating income
Answer: D
Q3) A variable cost is one that decreases in total as output increases and increases in total as output decreases.
A)True
B)False
Answer: False
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4
Chapter 3: Cost Behaviour
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Sample Questions
Q1) Must be purchased in chunks
A)Committed fixed cost
B)Discretionary fixed cost
C)Mixed cost
D)Step cost
Answer: D
Q2) Sales commissions
A)Variable
B)Fixed
Answer: A
Q3) Refer to the Figure.What does "number of tax returns" represent?
A)the independent variable
B)the dependant variable
C)the intercept
D)the variable rate
Answer: A
Q4) Factory supervisor's salary
A)Variable
B)Fixed Answer: B
Page 5
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Chapter 4: Costvolumeprofit Analysis: a Managerial Planning Tool
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Sample Questions
Q1) The contribution margin ratio is equal to the 1 minus the variable cost ratio.
A)True
B)False
Q2) If a multi-product company simply wants to know the overall break-even point,it is easiest to use the break-even in sales revenue approach.
A)True
B)False
Q3) Refer to the Figure.What is the break-even point in units?
A)6,667
B)10,000
C)13,333
D)20,000
Q4) Which of the following is a characteristic of the cost-volume-profit graph?
A)It is hard to interpret.
B)It reveals how costs change as sales volume remains the same.
C)It cannot be plotted if the break-even point is known.
D)It shows the relationship among cost, volume, and profits.
Q5) If variable costs per unit increase,the break-even point will increase.
A)True
B)False
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Chapter 5: Job-Order Costing
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177 Flashcards
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Sample Questions
Q1) When is the predetermined overhead rate usually calculated?
A)at the end of each month
B)at the beginning of each month
C)at the beginning of the year
D)at the end of the year
Q2) Which of the following is NOT on a time ticket?
A)employee's name
B)employee's wage rate
C)hours worked on each job
D)cost of materials
Q3) Using a time ticket,the cost accounting department can enter the cost of direct materials onto the correct job-order cost sheet.
A)True
B)False
Q4) Refer to Rally Point,Inc.What is the balance in the work-in-process account on January 31?
A)$0
B)$16,100
C)$23,600
D)$212,390
Page 7
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Chapter 6: Process Costing
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Sample Questions
Q1) Under the FIFO method,for the beginning work-in-process units,the total associated manufacturing costs are the sum of the prior-period costs plus the costs incurred in the current period to finish the units.
A)True
B)False
Q2) Similar percentage completion figures for manufacturing inputs pose a problem for the calculation of equivalent units,unit cost,and valuation of ending work in process.
A)True
B)False
Q3) Beginning inventory for the month contained 3,000 units that were 60% complete with respect to materials.During the month,50,000 units were completed and transferred out.Ending inventory contained 5,000 units that were 30% complete with respect to materials.What would be the weighted average equivalent units of production for materials for the month?
A)49,500
B)50,000
C)50,300
D)51,500
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8
Chapter 7: Activity-Based Costing and Management
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Sample Questions
Q1) What costs are incurred to determine whether products and services are conforming to their requirements or customer needs?
A)prevention costs
B)appraisal costs
C)internal failure costs
D)external failure costs
Q2) Last year,Tevia Inc.shipped 6,000,000 kg of goods to customers at a cost of $4,800,000.Suppose an individual customer orders 40,000 kg and produces $400,000 of revenue.(The total revenue is $40 million.)What amount of shipping cost would be assigned to the customer when using activity-based costing?
A)$4,000
B)$8,000
C)$32,000
D)$40,000
Q3) Which of the following is NOT a supplier-driven activity?
A)receiving
B)purchasing
C)efficiency
D)inspection of incoming components
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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Sample Questions
Q1) What are the traditional reasons for carrying inventory?
Q2) Refer to the Figure.What is the June ending inventory for Theele Corporation when using the variable costing method?
A)$15,000
B)$116,000
C)$120,000
D)$260,000
Q3) What is the economic order quantity (EOQ)?
A)the quantity that minimizes total ordering cost
B)the quantity that maximizes total profit
C)the quantity that minimizes total inventory-related costs
D)the quantity that maximizes carrying costs
Q4) Gross margin is to absorption costing as which of the following is to variable costing?
A)gross profit
B)contribution margin
C)net income
D)territory margin
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Q5) What is the difference between absorption-costing income and variable-costing income?
Chapter 9: Budgeting, production, cash, and Master Budget
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Sample Questions
Q1) A company plans to sell 450 units.The selling price per unit is $5.The company has 45 units in beginning inventory and would like to have 100 units in ending inventory.How many units should be produced for the coming period?
A)365
B)400
C)505
D)2,000
Q2) Which budget is the first one that must be done in the master budgeting process,and why?
Q3) The cash budget includes the beginning balance of cash,cash receipts,cash disbursements,and the ending balance of cash.
A)True
B)False
Q4) Communication and coordination are served by budgets. A)True B)False
Q5) The cash is directly used in the development of the production budget. A)True B)False
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Chapter 10: Standard Costing: a Managerial Control Tool
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Sample Questions
Q1) Actual costs
A)Actual quantity × actual price
B)(Actual hours × actual rate) (standard hours × standard rate)
C)(Actual quantity × actual price) (standard quantity × standard price)
D)(Actual hours standard hours) × standard rate
E)(Actual price standard price) × actual quantity
F)Standard quantity × standard price
G)(Actual rate standard rate) × actual hours
H)(Actual quantity standard quantity) × standard price
Q2) Explain the kaizen approach to costing.
Q3) The actual quantity of input at the actual price less the actual quantity of input at the standard price is the price variance.
A)True
B)False
Q4) The standard cost per unit of output for a particular input is calculated by multiplying the standard price per unit by the standard number of units produced.
A)True
B)False
Q5) How are standards developed?
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) Shoppers Pharmacy operates a home delivery service for more than 2,000 home-bound clients.Shoppers has a fleet of vehicles and has invested in a sophisticated computerized communications system to coordinate its deliveries.Shoppers has gathered the following data on last year's operations: Shoppers uses a standard costing system.During the year,the following variable overhead rate was used: $8.25 per delivery hour.The labour standard requires 0.80 hour per delivery.
Compute the variable overhead spending variance and the variable overhead efficiency variance.
\(\begin{array}{ll}
\text { Deliveries made: } & 22,000 \\
\text { Direct labour: } & 15,500 \text { delivery hours at } \$ 8 \text { per } \\ & \text { hour } \\
\text { Actual variable overhead: } & \$ 150,000 \end{array}\)
Q2) Activity-based budgeting focuses on cost items required by organizational units.
A)True
B)False
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) Which of the following is NOT an advantage of ROI?
A)It encourages managers of departments with high ROIs to invest in average ROI projects.
B)It encourages managers to pay careful attention to the relationships among sales, expenses, and investment.
C)It encourages cost efficiency.
D)It discourages excessive investment in operating assets.
Q2) Refer to the Figure.Assume that Giga-Stuff allows negotiated transfer pricing.What is the ceiling of the bargaining range,and which division sets it?
A)$2.15; Sophistosand
B)$2.15; Videostuff
C)$2.50; Sophistosand
D)$2.50; Videostuff
Q3) Which of the following statements is characteristic of Manufacturing Cycle Efficiency (MCE)?
A)MCE takes on values between 0 and 100.
B)The lower the MCE, the more efficient the firm.
C)MCE is used by manufacturing firms only.
D)As MCE improves, cycle time decreases.
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Page 14
Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) Refer to the Figure.Assume that the cost of logs falls by half.Should Donder sell the sawdust at split-off or process it further,and what is the effect on income?
A)Process further; the reduction in the cost of logs makes that option more profitable than it was before.
B)Sell at split-off; the decrease in the cost of the logs makes that option more profitable than it was before.
C)Sell at split-off; the reduction in the cost of the logs is irrelevant.
D)Process further; the reduction in the cost of the logs will lower further processing costs.
Q2) Travers Company sets prices equal to cost plus 55%.Recently,Travers charged a customer a price of $60 for an item.What was the cost of the item to Travers?
A)$25.20
B)$38.71
C)$40.32
D)$42.00
Q3) A segment margin is always greater than or equal to zero.
A)True
B)False
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Page 15
Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) What is the definition of the internal rate of return?
A)a blend of the costs of capital from all sources
B)the minimal acceptable interest rate on investments
C)the difference between the present value of the cash inflows and outflows associated with a project
D)the interest rate that sets the present value of a project's cash inflows equal to the present value of a project's cost
Q2) What is the difference between NPV and IRR?
A)NPV measures profitability in absolute terms, whereas the IRR method measures profitability in relative terms.
B)NPV is used on one project only and IRR is used when choosing among competing, mutually exclusive projects.
C)NPV considers the time value of money, and IRR does not.
D)Both NPV and IRR will generate the same decisions.
Q3) What are the limitations of Accounting Rate of Return?
Q4) An external auditor is usually the best choice for performing a postaudit of a capital investment.
A)True
B)False
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