Managerial Accounting Final Test Solutions
Course Introduction
Managerial Accounting focuses on the use of financial and non-financial information by managers for decision-making, planning, and control within organizations. This course introduces students to key concepts such as cost behavior, budgeting, performance evaluation, and variance analysis, emphasizing how managerial accounting information supports operational and strategic decisions. Topics also include cost-volume-profit relationships, activity-based costing, and the impact of ethical considerations in managerial reporting. Students will develop analytical skills necessary to interpret accounting data and apply it to real-world business scenarios, enhancing their ability to contribute effectively to organizational management and strategy.
Recommended Textbook
Managerial Accounting 3rd Edition by Charles E. Davis
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17 Chapters
2529 Verified Questions
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Chapter 1: Accounting As a Tool for Management
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162 Verified Questions
162 Flashcards
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Sample Questions
Q1) In monitoring product differentiation strategy and low-cost production strategy,a difference is that
A)for the product differentiation strategy,information on quality is emphasized while for low-cost production managers are more interested in the production process.
B)for the product differentiation strategy,information on the production process is emphasized while for low-cost production managers are more interested in maintaining quality.
C)for the product differentiation strategy,information on design is emphasized while for low-cost production managers are more interested in quality.
D)for the product differentiation strategy,information on quality is emphasized while for low-cost production managers are more interested in design.
Answer: A
Q2) The goal of an ERP system is to integrate all data from the company's many business processes into a single information system.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Cost Behavior and Cost Estimation
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Sample Questions
Q1) The relevant range is the normal level of operating activity.
A)True
B)False
Answer: False
Q2) Assume a scattergraph shows $500 at no activity and $2,500 at an activity level of 1,000
A)$2.00.
B)$1.40.
C)$2.50.
D)$5.00.
Answer: A
Q3) Suppose your cell phone company offers a plan under which you pay $15 for a 100-minute block.For each minute over 100 minutes you have to pay $0.10 per minute.This is an example of a
A)variable cost
B)mixed cost.
C)fixed cost.
D)step cost.
Answer: A
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Chapter 3: Cost-Volume-Profit Analysis and Pricing
Decisions
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Sample Questions
Q1) Net income divided by 1 - tax rate = Operating income
A)True
B)False Answer: True
Q2) A company with a high operating leverage will experience a large percentage change in operating income as a result of a small percentage change in sales.
A)True
B)False Answer: True
Q3) Fixed costs are $600,000 and the variable costs are 75% of the
A)$1,400,000
B)$1,800,000
C)$2,400,000
D)$800,000
Answer: C
Q4) At the breakeven point,the total contribution margin equals total fixed costs. A)True
B)False Answer: True
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Chapter 4: Product Costs and Job Order Costing
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Sample Questions
Q1) Raw Materials Inventory decreases when
A)materials are purchased.
B)materials are used.
C)materials are transferred to Finished Goods Inventory.
D)goods are sold.
Q2) A zero balance in the manufacturing overhead account indicates that actual overhead and applied overhead cost are equal,so that all inventory is reflected at actual cost.
A)True
B)False
Q3) A category of costs that include all the costs associated with the general management of the company is referred to as
A)indirect costs.
B)general and administrative costs.
C)selling costs.
D)product costs.
Q4) The production costs of completed products are recorded in the finished goods inventory account.
A)True
B)False
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Chapter 5: Planning and Forecasting
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Sample Questions
Q1) The first section of the cash budget reconciles the cash available to the borrowing required to meet the minimum cash balance.
A)True
B)False
Q2) Which of the following is not a criticism of ideal standards?
A)Product quality may decline if standards are not met.
B)Employee morale will suffer if standards are not met.
C)Employees may take shortcuts in order to meet the standards.
D)All of these answer choices are criticisms of ideal standards.
Q3) The predetermined overhead rate is calculated by
A)dividing the budgeted activity level of application base by the budgeted total manufacturing overhead.
B)multiplying the budgeted activity level of application base by the budgeted total manufacturing overhead.
C)dividing the budgeted total manufacturing overhead by the budgeted activity level.
D)multiplying the budgeted total manufacturing overhead by the budgeted activity level.
Q4) What is budgetary slack and why is it an issue in budget preparation?
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Page 7
Chapter 6: Performance Evaluation: Variance Analysis
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Sample Questions
Q1) Melrose Manufacturing produces gourmet blackberry preserves.Melrose based its current year budget on a production level of 540,000 jars of preserves using ½ hour direct labor time for each jar which includes hand-sorting and trimming the berries.Total budgeted variable overhead for the year was $1,242,000.During the year,Melrose used 280,000 direct labor hours to produce 550,000 jars of blackberry preserves.Actual variable overhead for the year was $1,246,000.What is Melrose's variable overhead spending variance?
A)$42,000 favorable
B)$42,000 unfavorable
C)$23,000 favorable
D)$23,000 unfavorable
Q2) The variance that captures the effect of efficient use of the activity base on the cost of variable overhead is the
A)variable overhead spending variance. B)variable overhead efficiency variance.
C)variable overhead volume variance. D)variable overhead rate variance.
Q3) Luckett Company's standards call for two feet of direct material for each
Q4) Amos,Inc.uses a standard cost system with the following labor standards for one
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Chapter 7: Activity-Based Costing and Activity Based Management
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178 Flashcards
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Sample Questions
Q1) Which of the following is not a way a company can use information about activities to manage its operations?
A)Activity-based budgeting
B)Activity-based resource reduction
C)Activity-based costing
D)Activity-based budgeting,activity-based resource reduction,and activity-based costing.
Q2) The second step in the preparation of activity-based costing data is to
A)calculate activity cost pool rates.
B)develop activity cost pools.
C)allocate costs to products.
D)calculate the
Q3) Customer-level activities are also referred to as customer-sustaining activities.
A)True
B)False
Q4) Organizational-level activities provide identifiable benefits to specific products or services.
A)True
B)False
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Chapter 8: Using Accounting Information to Make Managerial Decisions
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Sample Questions
Q1) Relevant information meets two criteria: 1 it differs between the alternatives and 2 the differences have occurred in the past.
A)True
B)False
Q2) Which of the following is not a reason a company would be willing to accept new business at a loss?
A)The company has the expectation that it will make up for it in later years.
B)The company has the expectation that certain customers can influence other potential customers.
C)The company has the expectation that its estimates will prove incorrect and that the business will result in a profit.
D)The company has the expectation that it will make up for it in later years and has the expectation that certain customers can influence other potential customers.
Q3) What is an opportunity cost and what is the impact of opportunity cost on a decision to outsource the production of an item?
Q4) Why would a movie theater with some seats still available not sell tickets at a reduced price to moviegoers that show up at the last minute?
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Chapter 9: Capital Budgeting
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Sample Questions
Q1) The process of determining how much an amount of money to be received in the future is worth today is called
A)Present value
B)Hurdling
C)Discounting
D)None of these answer choices are correct
Q2) Lorman Manufacturing purchases equipment with an expected life of 10 years for $50,000.The equipment has an estimated salvage value of $2,000.Lorman expects the new equipment to generate cost savings of $8,000.What is the payback period for the equipment?
A)6 years
B)6.25 years
C)6.50 years
D)10 years
Q3) Like net present value,the internal rate of return considers the amount and timing of future cash flows.
A)True
B)False
Q4) What are the three factors needed to determine the present value of any future amount?
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Chapter 10: Decentralizing and Performance Evaluation
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Sample Questions
Q1) If a cost is a traceable fixed cost at one level,it will remain a traceable cost at a lower level.
A)True
B)False
Q2) In the Dupont Model for calculating ROI,which of the following components appears on both the margin side of the expression and the asset turnover side?
A)Operating income
B)Sales revenue
C)Average operating assets
D)Segment margin
Q3) The formula for calculating ROI is
A)Operating Income divided by average operating assets.
B)Segment margin divided by average operating assets.
C)Either operating Income divided by average operating assets or segment margin divided by average operating assets.
D)Neither operating Income divided by average operating assets nor segment margin divided by average operating assets.
Q4) What is EVA and how is it calculated?
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Chapter 11: Performance Evaluation Revisited: a Balanced Approach
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Sample Questions
Q1) Which of the following is not a main barrier to the effective use of nonfinancial performance measures by organizations?
A)Skepticism that the measures are directly related to the bottom line
B)Lack of management skill needed to implement the measures
C)Lack of familiarity with the measures on the part of the board members
D)Undeveloped tools for analyzing the measures
Q2) Although executives recognize the importance of nonfinancial performance measures,companies are not particularly good at using them.
A)True
B)False
Q3) A balanced scorecard
A)integrates performance measures across four different perspectives.
B)assists in communicating the corporate strategy throughout the organization.
C)helps managers understand the interrelationships between various areas of an organization.
D)All of these answer choices are correct.
Q4) Explain the difference between a leading indicator and a lagging indicator and give one example of each relating to your performance in this class.
Page 13
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) The formula for calculating the debt ratio is
A)Total liabilities divided by total assets.
B)Long-term liabilities divided by total assets.
C)Total liabilities divided by total liabilities and stockholders' equity.
D)Total debt divided by total stockholders' equity.
Q2) The calculations are the easy part of a horizontal analysis,the challenge is
A)gathering the data.
B)interpreting the results.
C)both gathering the data and interpreting the results.
D)Neither gathering the data nor interpreting the results.
Q3) In preparing a common-size income statement,you express all revenue and expense accounts as a percentage of net income.
A)True
B)False
Q4) The current ratio is calculated as
A)Current assets divided by current liabilities.
B)Current assets divided by total assets.
C)Current liabilities divided by current assets.
D)Current liabilities divided by total liabilities.
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Using the direct method of preparing the statement of cash flows,which of the following is not an activity generating operating cash flows?
A)Payments to employees
B)Payments to suppliers
C)Repayment of debt
D)Payments for operating expenses
Q2) Which of the following is a use of cash?
A)Exchanging old auto for new auto and taking a note for balance due
B)Paying employees monthly payroll
C)Issuing long-term bonds
D)All of these answer choices uses of cash
Q3) Michael's Industries purchased some land in exchange for 1,000 shares of Michael's voting common stock with a market value of $15 each.How will this transaction be reported on the statement of cash flows?
A)As a non-cash investing and financing transaction
B)As a non-cash financing transaction
C)As a non-cash investing transaction
D)As a use of cash in the investing section and a source of financing in the financing section
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Page 15
Chapter 14: Topic Focus: Process Costing
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Sample Questions
Q1) In March,Connor's,Inc.completed 150,000
a.How many equivalent units were in Connor's ending work in process inventory?
b.How many equivalent units will be used to calculate the cost per equivalent unit?
Q2) Which of the following is not a step in calculating the
A)Calculate the physical unit flow
B)Calculate the equivalent units of production
C)Calculate the cost per equivalent unit
D)Multiply the physical
Q3) What types of costs are incurred in a process costing system?
A)Direct material and direct labor
B)Direct labor and manufacturing overhead
C)Manufacturing overhead and direct material
D)Direct material,direct labor and manufacturing overhead
Q4) In process costing,direct materials may be added at different points of a department's production process.
A)True
B)False
Q5) When using a process costing system,explain the steps you use in assigning costs to
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Page 16
Chapter 15: Topic Focus Variable and Absorption Costing
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Sample Questions
Q1) The following table shows Jackson Company's inventory balances,in
Q2) The matching principle states that expenses should be matched with the revenues they generate.
A)True
B)False
Q3) The only difference between absorption costing and variable costing is the treatment of
A)all variable costs.
B)variable overhead costs.
C)all fixed costs.
D)fixed overhead costs.
Q4) When using variable costing,fixed manufacturing overhead is treated as which of the following types of costs?
A)Product
B)Mixed
C)Period
D)Variable
Q5) Absorption costing is also referred to as variable costing.
A)True
B)False
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Chapter 16: Topic Focus Standard Costing Systems
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Sample Questions
Q1) When using a standard costing system,which of the following should be recorded when variable overhead is applied during the period?
A)Debit manufacturing overhead for the actual overhead costs and credit work in process inventory using a predetermined variable overhead rate
B)Debit work in process inventory for the actual overhead costs and credit manufacturing overhead using a predetermined variable overhead rate
C)Credit manufacturing overhead using the standard quantity of the application base and debit work in process inventory using a predetermined variable overhead rate
D)Credit manufacturing overhead using the actual quantity of the application base and debit work in process inventory using a predetermined variable overhead rate
Q2) Suggest one reason for each of the following variances.
a.Unfavorable direct material quantity variance
b.Favorable direct labor rate variance
c.Favorable variable overhead spending variance
d.Unfavorable fixed overhead volume variance
Q3) Haven Industries purchased 1,000
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18
Chapter 17: Topic Focus Customer Profitability
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Sample Questions
Q1) Some companies believe that as long as the sales revenue a customer generates exceeds the cost of goods sold,that the customer is profitable.However,companies incur product costs,selling costs,and administrative costs.
Required:
a.List three items that would be classified as product costs.
b.List three items that would be classified as selling costs.
c.List three items that would be classified as administrative costs.
Q2) Revenues a customer generates less cost of goods associated with those revenues and the selling expenses allocated based on the customer-specific selling activities is referred to as
A)Customer revenue margin,
B)Times revenue earned per customer.
C)Customer profit margin.
D)Customer net profit,
Q3) Selling expenses include which of the following?
A)Storage of products
B)Sale of products
C)Delivery of products to customers
D)Storage of products,sale of products,and delivery of products to customers.
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