Managerial Accounting MCQ Exam!

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Managerial Accounting MCQ Exam! - Quiz

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Questions and Answers
  • 1. 

    Which of the following is NOT true regarding ERP?

    • A.

      It integrates traditional accounting information systems with other information systems.

    • B.

      It can be customized to provide specific and relevant information to different types of users.

    • C.

      It has evolved in the past few years to address the shortcomings of traditional accounting information systems.

    • D.

      It captures quantitative but not qualitative information.

    Correct Answer
    D. It captures quantitative but not qualitative information.
    Explanation
    ERP (Enterprise Resource Planning) is a software system that integrates various business processes and information systems. It is designed to capture both quantitative and qualitative information to provide a holistic view of the organization's operations. The system allows customization to cater to the specific needs of different users and has evolved to address the limitations of traditional accounting information systems. Therefore, the statement that ERP captures quantitative but not qualitative information is not true.

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  • 2. 

    ERP systems capture:

    • A.

      Only qualitative data

    • B.

      Only quantitative data

    • C.

      Both qualitative and quantitative data

    • D.

      The same information as a traditional accounting system

    Correct Answer
    C. Both qualitative and quantitative data
    Explanation
    ERP systems capture both qualitative and quantitative data. Qualitative data refers to non-numerical information such as customer feedback, employee opinions, and market trends. Quantitative data, on the other hand, includes numerical information such as sales figures, production costs, and inventory levels. ERP systems are designed to integrate various departments and functions within an organization, allowing for the collection and analysis of both types of data. This comprehensive data capture enables organizations to make informed decisions based on a holistic view of their operations.

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  • 3. 

    An example of QUALITATIVE data is:

    • A.

      Product cost

    • B.

      Customer satisfaction

    • C.

      Net income

    • D.

      Operating costs

    Correct Answer
    B. Customer satisfaction
    Explanation
    Qualitative data refers to non-numerical information that cannot be measured or expressed in numbers. Customer satisfaction is an example of qualitative data because it is subjective and cannot be quantified. It involves gathering opinions, feedback, and perceptions from customers to assess their level of satisfaction with a product or service. Unlike product cost, net income, and operating costs, which are quantitative data that can be measured and expressed in numerical terms, customer satisfaction is based on qualitative factors such as emotions, experiences, and perceptions.

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  • 4. 

    Which of the following is NOT an example of an external user of accounting information.

    • A.

      Potential and existing stockholders

    • B.

      Government taxing agencies

    • C.

      Potential and existing creditors

    • D.

      Management

    Correct Answer
    D. Management
    Explanation
    Management is not an example of an external user of accounting information because they are internal to the organization and have direct access to financial information. External users, on the other hand, do not have direct access to the company's financial records and rely on the financial statements and reports provided by the company, such as potential and existing stockholders, government taxing agencies, and potential and existing creditors.

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  • 5. 

    ________ involves the development of short-term objectives and goals.

    • A.

      Controlling activities

    • B.

      Strategic planning

    • C.

      Operational Planning

    • D.

      Financial Activities

    Correct Answer
    C. Operational Planning
    Explanation
    Operational planning involves the development of short-term objectives and goals. This type of planning focuses on the day-to-day activities and tasks required to achieve these objectives. It includes determining the specific actions, resources, and timelines needed to accomplish the goals set by the organization. Operational planning is essential for effective execution and coordination of activities within a company, ensuring that everyone is working towards the same objectives and goals in the short term.

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  • 6. 

    Which type of business manager decides how much inventory should be kept on hand?

    • A.

      Finance manager

    • B.

      Operations/Production manager

    • C.

      Marketing Manager

    • D.

      Human resource manager

    Correct Answer
    B. Operations/Production manager
    Explanation
    The operations/production manager is responsible for overseeing the production process and ensuring that it runs smoothly. This includes making decisions about inventory management, such as determining how much inventory should be kept on hand. They need to consider factors such as customer demand, lead times, and production capacity to ensure that the right amount of inventory is available to meet customer needs while minimizing costs and avoiding stockouts.

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  • 7. 

    Which type of business manager decides whether a company should borrow money or issue stock as a way to raise money?

    • A.

      Human resource manager

    • B.

      Operations/production manager

    • C.

      Finance manager

    • D.

      Marketing manager

    Correct Answer
    C. Finance manager
    Explanation
    A finance manager is responsible for making financial decisions in a company, including determining whether the company should borrow money or issue stock to raise funds. They analyze the financial health of the company, evaluate the potential risks and benefits of different financing options, and make recommendations to the executive team. This decision is crucial as it directly impacts the company's capital structure and financial stability.

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  • 8. 

    Which type of business manager would most likely be in charge of deciding on the type of benefits package an employee receives?

    • A.

      Finance manager

    • B.

      Operations/production manager

    • C.

      Human resource manager

    • D.

      Marketing manager

    Correct Answer
    C. Human resource manager
    Explanation
    A human resource manager would most likely be in charge of deciding on the type of benefits package an employee receives because they are responsible for managing employee compensation, benefits, and overall employee well-being. They have the knowledge and expertise in understanding the needs and expectations of employees, as well as the company's budget and resources. They work closely with employees, management, and external vendors to design and implement a benefits package that aligns with the company's goals and supports employee satisfaction and retention.

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  • 9. 

    The primary role of a managerial accountant is to:

    • A.

      Enter data into the accounting system

    • B.

      Collect data

    • C.

      Analyze information and create knowledge

    • D.

      Prepare tax returns

    Correct Answer
    C. Analyze information and create knowledge
    Explanation
    The primary role of a managerial accountant is to analyze information and create knowledge. This involves examining financial data, identifying trends and patterns, and using this information to make informed decisions and recommendations. By analyzing data, managerial accountants can provide valuable insights to management, such as identifying cost-saving opportunities, improving operational efficiency, and evaluating the financial performance of the organization. This role goes beyond simply entering data into the accounting system or preparing tax returns, as it focuses on using data analysis to generate knowledge that can drive strategic decision-making.

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  • 10. 

    Decision-makers should consider:

    • A.

      Only qualitative factors

    • B.

      Only quantitative factors

    • C.

      Both quantitative and qualitative factors

    • D.

      Sunk costs as well as quantitative and qualitative factors

    Correct Answer
    C. Both quantitative and qualitative factors
    Explanation
    When making decisions, it is important for decision-makers to consider both quantitative and qualitative factors. Quantitative factors involve measurable data such as financial figures, market research, and statistical analysis. On the other hand, qualitative factors involve subjective information such as customer feedback, employee morale, and brand reputation. By considering both types of factors, decision-makers can gain a comprehensive understanding of the situation and make well-informed decisions that take into account both the numbers and the human aspects of the decision.

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  • 11. 

    When making a decision, which of the following should NOT be considered?

    • A.

      Relevant costs

    • B.

      Opportunity costs

    • C.

      Sunk costs

    • D.

      Risk

    Correct Answer
    C. Sunk costs
    Explanation
    Sunk costs should not be considered when making a decision because they are costs that have already been incurred and cannot be recovered. These costs are irrelevant to the decision-making process as they cannot be changed or influenced by the decision at hand. Instead, decision-makers should focus on relevant costs, which are future costs that will be affected by the decision, as well as opportunity costs and risks associated with each option.

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  • 12. 

    Under ideal conditions, companies operating in a _________ environment would reduce inventories of raw materials, work-in-process, and finish goods to very low levels or even zero.

    • A.

      Service

    • B.

      Just-in-time

    • C.

      Traditional manufacturing

    • D.

      Merchandising

    Correct Answer
    B. Just-in-time
    Explanation
    Under ideal conditions, companies operating in a just-in-time environment would reduce inventories of raw materials, work-in-process, and finish goods to very low levels or even zero. Just-in-time is a manufacturing approach that focuses on producing goods or delivering services at the exact time they are needed, minimizing the need for storing excess inventory. This allows companies to optimize their production processes, reduce costs associated with inventory holding, and improve overall efficiency. By implementing just-in-time, companies can achieve a lean and streamlined supply chain, ensuring that materials and products are available when needed, without the need for excessive stockpiling.

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  • 13. 

    In general, costs incurred in the factory that do not qualify as either direct or indirect labor are called:

    • A.

      Manufacturing costs

    • B.

      Manufacturing overhead

    • C.

      Non-manufacturing costs

    • D.

      Selling and administrative costs

    Correct Answer
    B. Manufacturing overhead
    Explanation
    Manufacturing overhead refers to the costs incurred in the factory that cannot be directly attributed to the production of a specific product or service. These costs include expenses like factory rent, utilities, depreciation of machinery, and indirect labor costs. Unlike direct labor costs, which can be easily traced to a specific product, manufacturing overhead costs are indirect and need to be allocated to products using predetermined rates or cost drivers. Therefore, manufacturing overhead is the correct term for costs that do not qualify as direct or indirect labor in a factory.

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  • 14. 

    Which of the following types of employees would most likely have their wage classified as direct labor?

    • A.

      Factory maintenance worker

    • B.

      Factory supervisor

    • C.

      Managerial accountant

    • D.

      Assembly-line factory worker

    Correct Answer
    D. Assembly-line factory worker
    Explanation
    The assembly-line factory worker would most likely have their wage classified as direct labor because they are directly involved in the production process. They are responsible for assembling products on the assembly line, which is a core part of the manufacturing process. Their wages directly contribute to the production of goods and can be easily traced to specific products or units of output. On the other hand, the factory maintenance worker, factory supervisor, and managerial accountant may have their wages classified differently as they are not directly involved in the production process.

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  • 15. 

    Which of the following types of employees would most likely have their wage classified as indirect labor?

    • A.

      Factory supervisor

    • B.

      Managerial accountant

    • C.

      Salesperson

    • D.

      Machine operator

    Correct Answer
    A. Factory supervisor
    Explanation
    A factory supervisor would most likely have their wage classified as indirect labor because they are not directly involved in the production process. Instead, their role is to oversee and manage the production activities, ensuring that everything runs smoothly. Indirect labor refers to the employees who support the production process indirectly, such as supervisors, maintenance staff, or quality control personnel.

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  • 16. 

    Which of the following typed of companies would LEAST likely have the following cost pattern? Raw Materials -> Work in process -> finished goods -> cost of goods sold

    • A.

      Tire manufacturer

    • B.

      Computer software manufacturer

    • C.

      Retailer/merchandiser

    • D.

      Construction company

    Correct Answer
    C. Retailer/merchandiser
    Explanation
    A retailer/merchandiser would least likely have the cost pattern of Raw Materials -> Work in process -> finished goods -> cost of goods sold because retailers typically do not engage in the manufacturing process. They purchase finished goods from suppliers and sell them directly to customers, so they do not have raw materials or work in process. Their cost of goods sold is directly related to the purchase price of the goods they sell.

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  • 17. 

    When manufacturing costs are subtracted from gross margin, the result is called:

    • A.

      Cost of goods sold

    • B.

      Net income

    • C.

      Sales

    • D.

      Nonmanufacturing income

    Correct Answer
    B. Net income
    Explanation
    When manufacturing costs are subtracted from gross margin, the result is called net income. Net income represents the final profit or earnings of a company after deducting all expenses, including manufacturing costs, from the total revenue. It is a measure of the company's profitability and reflects the amount of money the company has earned after covering all costs.

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  • 18. 

    The key to allocating overhead costs is the determination of the _________

    • A.

      Overhead

    • B.

      Cost driver

    • C.

      Direct labor

    • D.

      Product cost

    Correct Answer
    B. Cost driver
    Explanation
    The key to allocating overhead costs is the determination of the cost driver. A cost driver is a factor that causes a change in the cost of an activity or process. It is used to allocate overhead costs to different products, departments, or activities based on the level of usage or consumption. By identifying the cost driver, a company can accurately assign overhead costs to the appropriate cost objects, allowing for more accurate cost analysis and decision-making.

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  • 19. 

    Which of the following would probably NOT be a cost driver in a manufacturing environment?

    • A.

      Machine hours

    • B.

      Direct labor hours

    • C.

      Direct labor cost

    • D.

      Indirect labor hours

    Correct Answer
    D. Indirect labor hours
    Explanation
    Indirect labor hours would probably not be a cost driver in a manufacturing environment because it refers to the time spent by employees who are not directly involved in the production process, such as administrative or support staff. Cost drivers are factors that significantly influence the costs of production, and in a manufacturing environment, they are typically related to the actual production activities. Therefore, indirect labor hours, which are not directly tied to production, would not have a direct impact on the costs incurred.

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  • 20. 

    Which of the following statements regarding plantwide overhead rates is TRUE.

    • A.

      As the number of diverse products a company makes increases, the likleihood that a plantwide overhead rate will be accurate increases

    • B.

      Plantwide overhead rates must use machine hours as their cost driver

    • C.

      As the number of diverse products a company makes increases, the likelihood that a company will replace a plantwide overhead rate with a departmental overhead rate increases

    • D.

      Plantwide overhead rates are usually more costly to prepare than a departmental overhead rate

    Correct Answer
    D. Plantwide overhead rates are usually more costly to prepare than a departmental overhead rate

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  • Current Version
  • Nov 16, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Jun 28, 2007
    Quiz Created by
    Kelly61471
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