MBA Managerial Accounting
Test Preparation
Course Introduction
MBA Managerial Accounting is designed to equip students with the skills necessary to interpret and utilize financial information for strategic decision-making within organizations. The course emphasizes the application of accounting concepts and techniques to evaluate business performance, manage costs, and support planning and control functions. Topics include budgeting, variance analysis, performance measurement, cost-volume-profit analysis, and the use of accounting data in both operational and strategic contexts. Through case studies and real-world examples, students learn how managerial accounting supports effective management and drives organizational success.
Recommended Textbook Managerial Accounting 5th Edition by
Karen W. Braun
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) The IMA is the professional association for management accountants.
A)True
B)False
Answer: True
Q2) The SEC requires an independent certified public accountant (CPA)to audit reports generated by managerial accounting systems.
A)True
B)False
Answer: False
Q3) The Sarbanes-Oxley Act was enacted
A)to prevent accounting scandals like Enron.
B)to restore trust in publicly traded companies.
C)to hire better qualified managerial accountants.
D)none of the above
Answer: A
Q4) Managerial accountants are now considered to be similar to internal consultants and business advisors.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) How are average cost and marginal cost computed?
Answer: The average cost is the total cost divided by the number of units produced. Marginal cost is the cost of making one more unit.
Q2) The income statement of a retailer would include which of the following?
A)Cost of goods sold
B)Value of inventory
C)Accounts payable
D)Accounts receivable
Answer: A
Q3) Manufacturers consider selling and administrative costs to be A)period costs.
B)conversion costs.
C)inventoriable costs.
D)prime costs.
Answer: A
Q4) Decision making is guided only by differential costs.
A)True
B)False Answer: False
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Chapter 3: Job Costing
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Sample Questions
Q1) At a service company, the indirect costs of serving the client include manufacturing overhead.
A)True
B)False
Answer: False
Q2) The Manufacturing Overhead account is credited for actual manufacturing overhead costs incurred during the period.
A)True
B)False
Answer: False
Q3) Manufacturing overhead is underallocated if the amount
A)estimated for the period is greater than the actual amount incurred.
B)estimated for the period is less than the actual amount incurred.
C)allocated during the period is less than the actual amount incurred.
D)allocated during the period is greater than the actual amount incurred.
Answer: C
Q4) An equal amount of manufacturing overhead should be allocated to each job.
A)True
B)False
Answer: False
Page 5
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Chapter 4: Activity-Based Costing, Lean Operations, and the Costs of Quality
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Sample Questions
Q1) Which of the following condition(s)favors using departmental overhead rates in place of a plantwide overhead rate?
A)Different departments incur different amounts and types of manufacturing overhead.
B)Different jobs or products use the departments to a different extent.
C)Both of the above.
D)Neither of the above.
Q2) The benefits of using the ABC costing system are higher if the company
A)has high indirect costs.
B)produces many different products that use differing amounts of resources.
C)has high indirect costs and produces many different products that use differing amounts of resources.
D)produces only one product.
Q3) The cost of warranty work is an example of what type of cost?
A)Prevention cost
B)Appraisal cost
C)External failure cost
D)Internal failure cost
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Page 6
Chapter 5: Process Costing
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Sample Questions
Q1) Fun Stuff Manufacturing produces ping pong balls using a three-step sequential process that includes molding, coloring and finishing. When the balls and associated costs are transferred from the coloring process to the finishing process, which account is credited?
A)WIP Inventory-Coloring
B)WIP Inventory-Molding
C)Raw Materials Inventory
D)WIP Inventory-Finishing
Q2) Which of the following is the fourth step of the 5-step process costing procedure?
A)Compute output in terms of equivalent units
B)Summarize total costs to account for
C)Summarize the flow of physical units
D)Compute the cost per equivalent unit
Q3) Which of the following is the third step of the 5-step process costing procedure?
A)Compute output in terms of equivalent units
B)Summarize total costs to account for
C)Summarize the flow of physical units
D)Compute the cost per equivalent unit
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Chapter 6: Cost Behavior
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Sample Questions
Q1) Which of the following represents the total mixed cost equation?
A)y = vx + f
B)y = vx - f
C)= vx - y
D)= vx + y
Q2) Mixed costs per unit decrease as volume increases because of the variable cost component.
A)True
B)False
Q3) Mixed costs are purely fixed.
A)True
B)False
Q4) Total fixed costs for Toys and Trinkets Incorporated are $85,000. Total costs, including both fixed and variable, are $205,000 if 271,000 units are produced. The total variable costs at a level of 280,000 units would be
A)$123,985
B)$211,808
C)$87,823
D)$299,631
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Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) ________ should be subtracted from the sales price per unit to compute the unit contribution margin.
A)All variable costs
B)Only variable inventoriable product costs
C)Only variable period costs
D)All fixed costs
Q2) If total fixed costs decrease while the selling price per unit and variable costs per unit remain constant, which of the following statements is true?
A)Contribution margin increases.
B)Contribution margin decreases.
C)Breakeven point in units increases.
D)Breakeven point in units decreases.
Q3) Which of the following statements is true if the sales price per unit decreases while the variable cost per unit and total fixed costs remain constant?
A)The contribution margin increases and the breakeven point decreases.
B)The contribution margin decreases and the breakeven point decreases.
C)The contribution margin increases and the breakeven point increases.
D)The contribution margin decreases and the breakeven point increases.
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Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) Variable costs are irrelevant to a special decision when those variable costs differ between alternatives.
A)True
B)False
Q2) All of the following are considerations for discontinuing a product or product line, except
A)whether the product has a positive or negative contribution margin.
B)not having any free capacity.
C)if discontinuing the product or product line will affect sales of remaining products.
D)determining if direct fixed costs could be avoided if the product or product line is discontinued.
Q3) Big-box retailers such as Lowe's are considered price-takers because A)their products are not unique.
B)there is less competition in the home improvement retail sector.
C)their products are unique.
D)they emphasize cost-plus pricing.
Q4) Define the term constraints and give an example. What product should be made first when resource constraints exist?
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Chapter 9: The Master Budget
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Sample Questions
Q1) The ________ budget is a component in an operating budget.
A)capital expenditure
B)budgeted balance sheet
C)production
D)cash
Q2) The financial budget that a manager prepares at a manufacturing company is different compared to the financial budget that a manager prepares at a merchandising and a service company.
A)True
B)False
Q3) Budgeting includes planning for ending inventory.
A)True
B)False
Q4) Managers may intentionally build slack into the budget
A)to gain the resources they need in the event of budget cuts.
B)to make their performance look worse.
C)because they are certain about the future.
D)to accomplish all of the above.
Q5) List and describe three reasons why a company and its managers could benefit from the use of budgeting.
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Chapter 10: Performance Evalulation
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Sample Questions
Q1) The duties of an investment center manager are similar to those of a CFO of an entire company.
A)True
B)False
Q2) The price charged for the internal sale of a product between two different divisions of the same company is known as the ________________
A)transfer price.
B)sales price.
C)transfer cost.
D)margin price.
Q3) The balanced scorecard considers only financial performance measures.
A)True
B)False
Q4) All of the following are responsibility centers except A)cost center.
B)profit center.
C)investment center.
D)equity center.
Q5) List and describe reasons why a company might choose to decentralize its operations.
Page 12
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Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) A debit balance means that a variance is favorable since it decreases income (just like a expense).
A)True
B)False
Q2) The ________ "tells managers how much of the total direct materials variance is due to using more or less materials than anticipated the by standards."
A)production volume variance
B)overhead flexible budget variance
C)price variance
D)quantity variance
Q3) Just as in job costing, the manufacturing costs flow through the inventory accounts in the following order: raw materials work in process cost of goods sold finished goods.
A)True
B)False
Q4) Closing the variances to Cost of Goods Sold corrects the account balance.
A)True
B)False
Q5) Identify four advantages of standard costs and variances.
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Chapter 12: Capital Investment Decisions and the Time Value of Money
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Sample Questions
Q1) Matthew Corporation is adding a new product line that will require an investment of $218,000. The product line is estimated to generate cash inflows of $32,000 the first year, $18,000 the second year, and $21,000 each year thereafter for ten more years. What is the payback period?
A)11.17 years
B)8)56 years
C)10.00 years
D)10.42 years
Q2) What is an attribute of the internal rate of return?
A)It is the interest rate that makes the NPV of the investment equal to zero.
B)It is the interest rate that makes the cost of the investment equal to the present value of the investment's net cash inflows.
C)It is used in the capital rationing process.
D)All of the above are attributes of the internal rate of return.
Q3) In calculating the net present value of an investment in equipment, the required investment and its residual value should be subtracted from the present value of all future cash inflows.
A)True
B)False
Page 14
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) A company reported beginning plant assets, net of depreciation, of $734,550; and, an ending amount of $658,000. Depreciation expense of $50,400 and a loss on the sale of equipment of $5600 were reported on the income statement. The company acquired $215,800 of plant assets during the year. How much will be reported as cash received from the sale of equipment in the investing activities section of the statement of cash flows?
A)The cash received upon the sale of the equipment was $241,950.
B)The cash received upon the sale of the equipment was $236,350.
C)The cash received upon the sale of the equipment was $247,550.
D)The cash received upon the sale of the equipment was $286,750.
Q2) The ________ is the most important section on the statement of cash flows because it reflects the day-to-day operations that determine the future of an organization.
A)operating section
B)financing section
C)investing section
D)None of the above
Q3) How can a company that has shown net income in recent years be required to declare bankruptcy? How can the statement of cash flows provide an advanced warning about this possibility?
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) A table that lists items of a balance sheet in dollars and percentages for two companies would be
A)used for vertical analysis.
B)a common-size balance sheet.
C)used for benchmarking.
D)used for horizontal analysis.
Q2) The inventory turnover ratio is the ratio of cost of goods sold to average inventory.
A)True
B)False
Q3) Which type of analysis includes the computation of the percentage change in total assets between two balance sheet dates?
A)Profitability
B)Vertical
C)Horizontal
D)Capital
Q4) Working capital is current assets divided by current liabilities.
A)True
B)False
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Page 16
Chapter 15: Sustainability
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Sample Questions
Q1) Lester Manufacturing is conducting preliminary research into installing a geothermal heat pump to heat and cool its factories and offices. The initial cost of installing the new system is $265,000; however, Lester will save $65,000 annually on its heating and cooling costs. The system has an expected life of 35 years. What is the payback period, in years, for the geothermal heat pump?
A)4)08 years
B)30.92 years
C)35.00 years
D)39.08 years
Q2) A waste audit is best described by which of the following statements?
A)A study of operations to determine how to eliminate all waste a company produces.
B)A study of a company's waste to determine if it is really detrimental to the planet.
C)A study on how to turn a company into a paperless environment in order to reduce the amount of paper waste a company produces .
D)A study of the waste generated from operations and determining how the waste can be avoided as well as possible alternate uses for the waste.
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