Managerial Accounting Exam Solutions
Course Introduction
Managerial Accounting focuses on the use of accounting information by managers within organizations to aid decision-making, planning, and control. This course covers key topics such as cost behavior, budgeting, performance evaluation, variance analysis, and the use of accounting data in strategic planning. Students will learn how to prepare and interpret various internal reports, assess financial and non-financial performance measures, and support managerial decisions with relevant data analysis. The course is designed to develop analytical skills and provide practical knowledge essential for effective management and operational efficiency in both manufacturing and service environments.
Recommended Textbook
Cornerstones of Managerial Accounting 3rd Canadian Edition by Maryanne Mowen
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14 Chapters
2190 Verified Questions
2190 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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66 Verified Questions
66 Flashcards
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Sample Questions
Q1) What is the name of the newly formed professional accounting body?
A)CA Canada
B)CFA Canada
C)CPA Canada
D)CMA Canada
Answer: C
Q2) With which of the following do virtually all managerial accounting practices assist managers?
A)maximizing profits
B)determining costs
C)creating annual reports
D)generating tax reports
Answer: A
Q3) Developing a company strategy for responding to anticipated new markets is an example of which of the following?
A)delegating
B)controlling
C)decision making
D)planning
Answer: D
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Chapter 2: Basic Managerial Accounting Concepts
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222 Verified Questions
222 Flashcards
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Sample Questions
Q1) Research and development costs would be classified as nonproduction costs.
A)True
B)False
Answer: True
Q2) Which of the following is an example of a direct materials cost?
A)wood used to make furniture
B)nails used to construct furniture
C)glue used to build furniture
D)screws used to manufacture furniture
Answer: A
Q3) When do materials in the raw materials account become direct materials?
A)when they are withdrawn from inventory for use in production
B)when they are returned to the supplier
C)when they are spoiled
D)when they are put into production
Answer: D
Q4) A&W Restaurant
A)Tangible
B)Intangible
Answer: A
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Chapter 3: Cost Behaviour
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222 Verified Questions
222 Flashcards
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Sample Questions
Q1) Refer to the Figure.What is the total variable utility cost for the month of May?
A)$1,400
B)$5,440
C)$8,080
D)$9,480
Answer: C
Q2) Depreciation on equipment
A)Discretionary
B)Committed
Answer: B
Q3) What is a committed fixed cost for a coffee shop?
A)property taxes
B)coffee cups
C)coffee beans
D)barista wages
Answer: A
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Page 5
Chapter 4: Costvolumeprofit Analysis: a Managerial Planning Tool
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) Smart Inc.expects to produce and sell 4,000 units next month.Data on costs follows:
\(\begin{array}{l}
\text { Per unit costs: }\\
\text { Selling price } & \$ 80 \\
\text { Variable manufacturing costs } & \$ 20 \\
\text { Variable selling costs } & \$ 12\\\\
\text { Total costs: }\\
\text { Fixed manufacturing costs } & \$ 32,000 \\
\text { Fixed selling costs } & \$ 16,000
\end{array}\) A. What is the variable cost per unit?
B. What is contribution margin per unit?
C. What is the variable cost ratio?
D. What is the contribution margin ratio?
Q2) The selling price per unit
A)horizontal-axis of CVP graph
B)vertical-axis of CVP graph
C)slope of revenue line
D)slope of cost line
E)point where the total revenue line and the total cost line intersect
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Chapter 5: Job-Order Costing
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177 Verified Questions
177 Flashcards
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Sample Questions
Q1) Refer to the Figure.Suppose that instead of departmental rates,Blackfoot uses a plantwide overhead rate that is based on direct labour hours.What is the predetermined overhead rate rounded to the nearest cent?
A)$0.52 per direct labour hour
B)$2.57 per direct labour hour
C)$4.00 per direct labour hour
D)$5.00 per direct labour hour
Q2) A costing system that accumulates production costs by process by department for a given period of time
A)Actual cost system
B)Job-order cost system
C)Normal cost system
D)Process-costing system
Q3) Refer to the Figure.What is the journal entry to record applied overhead for the month?
A)Work in Process 35,700Overhead Control 35,700
B)Various Payables 35,700Overhead Control 35,700
C)Overhead Control 35,700Work in Process 35,700
D)Overhead Control 35,700Various Payables 35,700
Q4) What are the three steps of overhead application?
Page 7
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Chapter 6: Process Costing
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157 Verified Questions
157 Flashcards
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Sample Questions
Q1) A production report contains information on costs transferred in from prior departments as well as costs added in the department such as direct materials,direct labour,and overhead.
A)True
B)False
Q2) For which process costing method is simplicity the main advantage?
A)LIFO
B)FIFO
C)weighted average
D)exact cost method
Q3) Refer to the Figure.How many units were started during the period?
A)95,000
B)100,000
C)105,000
D)115,000
Q4) Costing system used by a home builder
A)Process costing
B)Job order costing
Q5) List the five steps in preparing a production report.
Q6) Explain how nonuniform inputs and multiple departments affect process costing.
Page 8
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Chapter 7: Activity-Based Costing and Management
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) Which of the following must be determined to calculate an activity rate?
A)practical capacity of each activity
B)expenditure level of each activity
C)processing ratio of each activity
D)value of each activity
Q2) A company takes 10,000 hours to produce 20,000 units of a product.What is the cycle time?
A)0.50 hour
B)0.75 hour
C)1.00 hour
D)2.00 hours
Q3) Consider the following two activities: performing warranty work and purchasing components.The warranty work costs $60,000,and the warranty cost of the most efficient competitor is $10,000.Purchasing components costs $100,000 (5,000 purchase orders).A study reveals that the most efficient level would use 2,500 purchase orders and entail a cost of $55,000. What is the non-value-added cost?
A)$45,000
B)$55,000
C)$60,000
D)$105,000
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) Which of the following best defines variable costing?
A)a good way to value inventories for the balance sheet
B)a useful tool for external reporting purposes
C)not a useful tool for companies with multiple segments
D)a useful tool for management decision making
Q2) Suppose monthly production volume is constant and sales volume is less than production.How will net income react when using variable-costing procedures?
A)It will be greater than net income determined using absorption costing.
B)It will be less than net income determined using absorption costing.
C)It will be equal to net income determined using absorption costing.
D)It will be equal to contribution margin per unit times units sold.
Q3) Just-in-time
A)The costs of not having a product available when demanded by a customer
B)The costs of carrying inventory
C)Approach that maintains goods should be pulled through the system by present demand
D)The number of units in the order quantity that minimizes the total cost
E)The costs of placing and receiving an order
Q4) What are the traditional reasons for carrying inventory?
Page 10
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Chapter 9: Budgeting, production, cash, and Master Budget
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165 Flashcards
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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) Pseudoparticipation
A)Advantage
B)Disadvantage
Q3) Budgeted sales in dollars
A)Production budget
B)Direct materials purchases budget
C)Sales budget
Q4) What budget shows a company's planned borrowings and repayments?
A)the production budget
B)the selling and administrative expense budget
C)the interest income budget
D)the cash budget
Q5) What are the advantages of budgeting?
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Chapter 10: Standard Costing: a Managerial Control Tool
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173 Verified Questions
173 Flashcards
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Sample Questions
Q1) Which variance is the difference between the actual cost of the input and its planned cost?
A)the total budget variance
B)the usage variance
C)the price variance
D)the efficiency variance
Q2) How are standards developed?
Q3) To determine whether variances are significant,managers set control limits,which represent the acceptable range,plus or minus an allowable deviation.
A)True
B)False
Q4) The standard cost sheet provides the input standards needed to compute the total amount of inputs allowed for the actual output,an essential component in computing efficiency variances.
A)True
B)False
Q5) Operating personnel can easily achieve standards set by engineering studies. A)True
B)False
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Chapter 11: Flexible Budgets and Overhead Analysis
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) Which of the following is NOT one of the three steps in building an activity-based budget?
A)identifying activities
B)classifying activities as value-added or non-value-added
C)estimating the demand for each activity's output
D)estimating the cost of producing the output demanded by each activity
Q2) Refer to the Figure.What is the flexible budget variance for the first quarter?
A)$1,000 U
B)$1,000 F
C)$23,000 U
D)$23,000 F
Q3) What is the formula for fixed overhead volume variance?
A)AFOH SFOR × SH
B)(AFOH SFOR) × AH
C)AFOH (SH × SFOR)
D)(AFOH SFOR) × SH
Q4) Activity-based budgeting focuses on cost items required by organizational units.
A)True
B)False
Q5) What is a performance report?
Page 13
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Chapter 12: Performance Evaluation and Decentralization
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145 Flashcards
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Sample Questions
Q1) The net income reduced by the total annual cost of capital is equal to the economic value added.
A)True
B)False
Q2) Refer to the Figure.Assume that Corrugated,Inc.allows division managers to negotiate the transfer price.The Box Division is producing 400,000 boxes.Suppose the Box Division and the Candy Division agree to transfer boxes.What would be the floor of the bargaining range and which division sets it?
A)$1.00; Box Division
B)$1.00; Candy Division
C)$1.40; Box Division
D)$1.40; Candy Division
Q3) What is the best transfer price when the transferred product has a competitive outside market?
A)the cost-based price
B)the negotiated price
C)the market price
D)the price set by central management
Q4) What are the advantages and disadvantages of return on investment (ROI)?
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Chapter 13: Short-Run Decision Making: Relevant Costing
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) Refer to the Figure.Assume Victor's Detailing uses target costing to set price on each job.The company requires a 40% profit on each job.What price should Victor's Detailing quote to a new customer?
A)$24
B)$30
C)$54
D)$57
Q2) Shredder Inc.produces paper shredders.Shredder is considering a new shredder design for home offices.The marketing vice president believes that a basic unit in a variety of attractive colours could be sold for $100.Shredder requires that all new products yield 35% profit.What is the target cost of the new shredder?
A)$21
B)$35
C)$65
D)$135
Q3) In short-run decision making,the alternative with the lowest overall cost is always chosen.
A)True
B)False
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Chapter 14: Capital Investment Decisions
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153 Verified Questions
153 Flashcards
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Sample Questions
Q1) Charlotte Company invests in a new piece of equipment costing $80,000.The equipment is expected to yield the following amounts per year for the equipment's four-year useful life: What is the net present value of this investment in equipment?
\(\begin{array} { l r } \text { Cash revenues } & \$ 120,000 \\ \text { Cash expenses } & ( 64,000 ) \\ \text { Depreciation expenses (straight-line) } & ( 20,000 ) \\ \text { Income provided from equipment } & \$ 36,000\\\text { Cost of capital }&14\% \end{array}\)
A)($4,480)
B)$41,592
C)$52,452
D)$83,184
Q2) What is the formula for the accounting rate of return?
A)average income/initial investment
B)initial investment/annual cash flow
C)annual cash flow/initial investment
D)initial investment/average income
Q3) Taxes are NOT an important consideration in forecasting cash flows.
A)True
B)False
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Page 16