Management Control Systems
Test Preparation
Course Introduction
Management Control Systems is a course designed to provide students with a comprehensive understanding of how organizations plan, monitor, and assess their strategies to achieve organizational objectives. The course explores the key components of management control, including planning, budgeting, performance measurement, and incentive systems. Students will examine various control frameworks, both financial and non-financial, and learn how to align organizational goals with operational activities. Through case studies and real-world examples, students will develop the analytical skills required to design effective control systems, evaluate performance, and ensure organizational efficiency and effectiveness in dynamic business environments.
Recommended Textbook
Fundamental Managerial Accounting Concepts 9th Edition by Thomas P Edmonds
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14 Chapters
2127 Verified Questions
2127 Flashcards
Source URL: https://quizplus.com/study-set/3705 Page 2
Chapter 1: Management Accounting and Corporate Governance
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146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/73780
Sample Questions
Q1) The following information relates to the operations of Cruz Manufacturing during the current year: \(\begin{array}{lrr}
\text { Raw materials used } &\$20,000\\
\text { Direct labor wages } &60,000\\
\text {Sales salaries and commissions } &50,000\\
\text { Depreciation on production equipment} &4,000\\
\text { Rent on manufacturing facilities } &30,000\\
\text {Packaging and shipping supplies } &6,000\\
\text { Sales revenue} &190,000\\
\text { Units produced and sold} &10,000\\
\text { Selling price per unit } &\$20.00\\
\end{array}\)
Based on this information,what is the company's cost of goods sold?
A) $86,000
B) $120,000
C) $114,000
D) $170,000
Answer: C
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Page 3
Chapter 2: Cost Behavior, operating Leverage, and Profitability Analysis
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) For a mixed cost,total cost increases in direct proportion to volume.
A)True
B)False
Answer: False
Q2) Rock Creek Bottling Company pays its production manager a salary of $6,000 per month.Salespersons are paid strictly on commission,at $1.50 for each case of product sold. For Rock Creek Bottling Company,the production manager's salary is an example of:
A) a variable cost.
B) a mixed cost.
C) a fixed cost.
D) None of these
Answer: C
Q3) One way that computing an average cost per unit facilitates management decision making is that managers are provided more timely and more relevant cost information. A)True
B)False Answer: True
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Chapter 3: Analysis of Cost, volume, and Pricing to Increase Profitability
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) How can contribution margin per unit be used to find the break-even point in units?
Answer: The break-even point in units equals total fixed costs divided by the contribution margin per unit.
Q2) Phan Company has not reported a profit in five years.This year the company would like to narrow its loss to $7,500.Assuming its selling price is $36.50 per unit and its variable costs per unit are $24,how many units must be sold to achieve its target given that total fixed costs are $60,000? (Do not round intermediate calculations.)
A) 2,188
B) 1,439
C) 4,200
D) 1,600
Answer: C
Q3) Sensitivity analysis is performed in order to determine optimal sales mix.
A)True
B)False
Answer: False
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5
Chapter 4: Cost Accumulation,tracing,and Allocation
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158 Verified Questions
158 Flashcards
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Sample Questions
Q1) The accuracy of managerial accounting information usually is more important than timeliness.
A)True
B)False
Q2) A chair manufacturer makes custom chairs using hand tools,wood,glue,and varnish.Which of the following statements is true?
A) The costs of wood and glue would be treated as direct costs.
B) Wood, glue, and varnish would all be direct materials.
C) Wood would be accounted for as a direct cost, and glue and varnish as indirect costs.
D) The concepts of direct and indirect costs are not applicable here.
Q3) Custom Quilters makes decorative comforters,quilted garments,and other products in a small sewing factory.During the upcoming year,the company expects to make 2,000 comforters.With respect to the comforters,how would the fabric used to make the comforters be classified?
A) Direct and variable
B) Direct and fixed
C) Indirect and variable
D) Indirect and fixed
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6
Chapter 5: Cost Management in an Automated Business
Environment: ABC, ABM, and TQM
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) Hazel Company allocates overhead based on direct labor hours.It allocates overhead costs of $8,000 to two different jobs as follows: Job 1: (10 hours)= $4,000; Job 2: (10 hours)= $4,000
The production process for Job 2 was then automated.Now Job 2 requires only two hours of direct labor but four hours of mechanical processing.As a result,total overhead increases to $12,000.Select the incorrect statement from the following.
A) While the actual processing of Job 1 was not affected by automation, it received an increase of $6,000 in its overhead allocation.
B) The use of machine hours as the allocation base would significantly improve the overhead cost allocations.
C) Automation and the costing system used by the company cause the cost of Job 1 to be significantly overstated.
D) The increased overhead costs associated with automation should be allocated to both jobs.
Q2) Inspection of products may sometimes be considered a batch-level activity.
A)True
B)False
Q3) Discuss how an increase in one or more quality cost(s)can decrease others.
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Chapter 6: Relevant Information for Special Decisions
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151 Verified Questions
151 Flashcards
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Sample Questions
Q1) Gibbs Corporation makes indoor gas fireplaces.A standard fireplace includes unit-level materials,labor,and overhead costs.In addition,the company incurs product-level engineering and advertising costs.The sales staff is paid a 5% commission on each fireplace sold.A sales representative has been in contact with a building developer who wants to buy 20 fireplaces only if he can buy them at amount lower than Gibbs's selling price.Which of the following costs would be relevant to this special order decision?
A) The sales commissions
B) The product-level engineering and advertising costs
C) The unit-level materials, labor, and overhead
D) All of these answers are correct.
Q2) When evaluating alternatives,what type of costs should be considered?
A) Relevant costs
B) Sunk costs
C) Prevention costs
D) Fixed costs
Q3) For many managerial decisions (such as outsourcing and special order decisions),unit-level costs are avoidable costs.
A)True
B)False
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Chapter 7: Planning for Profit and Cost Control
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150 Verified Questions
150 Flashcards
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Sample Questions
Q1) The following budget information is available for Crescent Company for January Year 2: \[\begin{array} { l c }
\text { Sales } & \$ 800,000 \\
\text { Cost of goods sold } & 540,000 \\
\text { Utilities expense } & 2,500 \\
\text { Administrative salaries } & 100,000 \\
\text { Sales commisissions } & 5 \% \text { of sales } \\
\text { Advertising } & 20,000 \\
\text { Depreciation on store equipment } & 50,000 \\
\text { Rent on administration building } & 60,000 \\
\text { Miscellaneous administrative expenses } & 10,000 \\
\text { Percentage of sales on credit } & 80 \%
\end{array}\] All operating expenses are paid in cash in the month incurred.The amount of expected cash outflow for selling and administrative expenses would be:
A) $262,500.
B) $247,500.
C) $232,500.
D) $312,500.
Q2) How do budget expectations influence a company's employees?
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Page 9
Chapter 8: Performance Evaluation
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156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/73773
Sample Questions
Q1) Multiplying the difference between actual materials price per unit and the standard materials price per unit by actual quantity of materials used is known as the:
A) Sales volume variance.
B) Materials price variance.
C) Labor price variance.
D) Materials usage variance.
Q2) \[\begin{array} { l r c }
\text { Item to Classify } & \text { Starddard } & \text { Actual } \\
\text { Sales Reveruse } & 820,000 & 835,000 \\
\text { Wages } & 125,000 & 128,000 \\
\text { S\&A Expenses } & 400,000 & 408,000 \\
\text { Cost of Goods Sold } & 608,000 & 600,000
\end{array}\] The sales revenue flexible budget variance was:
A) $15,000 unfavorable.
B) $7,000 favorable.
C) $15,000 favorable.
D) $7,000 unfavorable.
Q3) How does the use of standard costs fit with the philosophy of management by exception?
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Page 10
Chapter 9: Responsibility Accounting
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145 Verified Questions
145 Flashcards
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Sample
Questions
Q1) Joseph Company reported the following information for the current year:
\[\begin{array} { l c c }
\text { Sales } & \$ 787,000 \\
\text { Average Operating Assets } & \$ 375,000 \\
\text { Desired ROI } & 12 \% \\
\text { Residual Incone } & \$ 11,250 \end{array}\] The company's operating income was:
A) $94,440.
B) $56,250.
C) $45,000.
D) $33,750.
Q2) The Perez Company had a 12.5% return on a $100,000 investment in new equipment.The investment resulted in increased sales,and the resultant increase in income amounted to 5% of sales.The turnover (asset utilization)was:
A) 1.
B) 17.5.
C) 2.5.
D) 7.5.
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Chapter 10: Planning for Capital Investments
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) Jiminez Company has two investment opportunities.Both investments cost $5,000 and will provide the following net cash flows: \[\begin{array} { l r r }
\text { Year } & \text { Irvestrnent A } & \text { Irvestrnent B } \\
1 & \mathbf {\$ 3 , 0 0 0 } & \mathbf {\$ 3 , 0 0 0 } \\
2 & \mathbf { 3 , 0 0 0 } & 4,000 \\
3 & \mathbf { 3 , 0 0 0 } & 2,000 \\
4 & \mathbf { 3 } , 000 & 1,000
\end{array}\] What is the total present value of Investment A's cash flows assuming an 8% minimum rate of return? (PV of $1 and PVA of $1)(Use appropriate factor(s)from the tables provided.Do not round your intermediate calculations.Round your answer to the nearest whole dollar.)
A) $14,936.
B) $4,936.
C) $7,000.
D) $12,000.
Q2) The payback method shows how long will be required to recover the cost of an investment in a capital asset.
A)True
B)False
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Chapter 11: Product Costing in Service and Manufacturing
Entities
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) Ting Company started the accounting period with the following beginning balances: Raw Materials Inventory,$21,000; Work in Process Inventory,$45,000; and Finished Goods Inventory,$10,000.During the accounting period,the company purchased $30,000 of raw materials and ended the period with $8,000 in raw material inventory.Direct labor costs for the period were $60,000,and $63,000 of manufacturing overhead costs were allocated to work in process.There was no over- or underapplied overhead.Ending work in process was $41,000 and ending finished goods was $17,500.Goods were sold during the period for $162,500.The amount of cost of goods manufactured (i.e.,amount transferred from work in process to finished goods)would be:
A) $117,500.
B) $170,000.
C) $221,000.
D) $166,000.
Q2) Which is required for preparation of a company's external financial statements: absorption costing or variable costing? Which is frequently used for internal decision making?
Q3) Under variable costing,all variable production costs are expensed when incurred. A)True
B)False
Page 13
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Chapter 12: Job-Order, process, and Hybrid Costing Systems
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147 Flashcards
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Sample Questions
Q1) Which of the following statements regarding a process costing system is false?
A) Use of a process costing system would be appropriate for a company that manufactures luxury yachts.
B) Unit costs are computed for each department.
C) The number of equivalent units for a period takes into account the stage of completion of ending work in process inventory.
D) Unit cost is determined for a designated period of time.
Q2) The use of raw materials in production is:
A) An asset source transaction.
B) An asset use transaction.
C) An asset exchange transaction.
D) A claims exchange transaction.
Q3) Generally accepted accounting principles (GAAP)prohibit the use of a hybrid costing system.
A)True
B)False
Q4) What are materials requisition forms,and how are they used in a job-order costing system?
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Q5) What are job cost sheets,and how are they used in a job-order costing system?
Chapter 13: Financial Statement Analysis
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153 Flashcards
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Sample Questions
Q1) On December 31,Year 1,Houston Company's total current assets were $560,000 and its total current liabilities were $420,000.On January 1,Year 2,Houston issued a long-term note to a bank for $30,000 cash.
Required:
(a)Compute Houston's working capital before and after issuing the note payable.
(b)Compute Houston's current ratio before and after issuing the note payable.(Round your answer to two decimal places.)
Q2) Which ratios measure a company's long-term debt-paying ability and its financing structure?
A) Solvency
B) Liquidity
C) Profitability
D) None of these answers are correct.
Q3) Which of the following statements regarding the quick ratio is incorrect?
A) The quick ratio is also known as the acid-test ratio.
B) The quick ratio ignores some current assets that are less liquid than others.
C) The quick ratio is a conservative variation of the current ratio.
D) The quick ratio equals quick assets divided by total liabilities.
Q4) Describe the factors involved in communicating useful financial information.
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Chapter 14: Statement of Cash Flows
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) The following information was drawn from the year-end balance sheets of White,Inc.
\[\begin{array} { l r r }
& \text { Year } 2 & \text { Year } 1 \\
\text { Bonds payable }& \$ 200,000 & \$275,000 \\
\text { Common stock } & 112,500 & 87,500 \\
\text { Treasury stock } & 17,500 & 12,500 \\
\text { Retained earnings }& 35,000 & 27,500
\end{array}\]
White,Inc.,uses the cost method to account for treasury stock.No treasury stock was sold during the year.What is the amount of cash outflows for the purchase of treasury stock?
A) $7,500
B) $17,500
C) $25,000
D) None of these answers are correct.
Q2) In preparing the statement of cash flows by the indirect method,a decrease in a long-term investment account would be added to net income.
A)True
B)False
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