MANAGERIAL ACCOUNTING FOR DECISION
MAKERS HANLON KEY CONCEPTS AND
PRACTICE QUESTIONS
◉ They ensure that financial statement users are provided with
reliable information to use in decision making.
Answer: What is a significant role of the U.S. Securities and Exchange
Commission (SEC) in financial reporting?
◉ A better insight for management so a business can perform more
effectively
&
A competitive edge to a business by providing its managers with the
detailed data needed to make decisions.
Answer: What does management accounting provide?
◉ Management accounting is used primarily for internal planning,
control, and evaluation..
Answer: How does management accounting differ from financial
accounting?
◉ Inventory.
,Answer: Which account is seen on the balance sheet of a
manufacturing company but not on the balance sheet of a service-
oriented company?
◉ Differential cost.
Answer: What is a cost that will change in the future based upon the
decision made?
◉ Administrative expenses &
Selling expenses.
Answer: Which are examples are period costs?
◉ Salary cost of the receptionist
Advertising cost.
Answer: A company manufactures custom-built wooden
bookshelves.
Which two costs would the company classify as period costs?
Answer Choices: Wood cost, Salary cost of the craftsperson, Salary
cost of the receptionist, Advertising cost
◉ To guide the resolution to possible ethical dilemmas that the
managerial accountant may encounter.
,Answer: What role do ethical standards have in management
accounting?
◉ Direct labor costs
Overhead costs.
Answer: Which two costs are included when calculating inventory
costs?
◉ A company produces five different products. The products are
highly differentiated and have significantly different demands for
their use of overhead costs..
Answer: In which scenario would activity-based costing be more
appropriate than traditional costing?
◉ Batch-level activities.
Answer: Which category of ABC activities are machine setup and
material movement costs associated with?
◉ The number of race participants and spectators.
Answer: The director of a marathon race wants to assign the cost of
having police officers along the race route to manage crowd control.
Which consideration is an appropriate cost driver?
, ◉ The price of Product B should be increased..
Answer: Company A calculated the following information under
traditional and activity-based costing for the production and sale of
1,000 units of Product B:
Traditional ABC
Sales $100,000 $100,000
Cost of goods sold $70,000 $110,000
Gross margin $30,000 ($10,000)
Which decision should be made about the selling price of Product B?
◉ Profits
Cash.
Answer: Which two concepts are studied in cost-volume-profit
analysis?
◉ Total fixed costs will stay the same.
Fixed costs per unit will decrease..
Answer: What are two impacts on costs as sales volume increases?
◉ Credit limits were increased for all customers.
Answer: A company is experiencing an increase in their bad debt
expense.
MAKERS HANLON KEY CONCEPTS AND
PRACTICE QUESTIONS
◉ They ensure that financial statement users are provided with
reliable information to use in decision making.
Answer: What is a significant role of the U.S. Securities and Exchange
Commission (SEC) in financial reporting?
◉ A better insight for management so a business can perform more
effectively
&
A competitive edge to a business by providing its managers with the
detailed data needed to make decisions.
Answer: What does management accounting provide?
◉ Management accounting is used primarily for internal planning,
control, and evaluation..
Answer: How does management accounting differ from financial
accounting?
◉ Inventory.
,Answer: Which account is seen on the balance sheet of a
manufacturing company but not on the balance sheet of a service-
oriented company?
◉ Differential cost.
Answer: What is a cost that will change in the future based upon the
decision made?
◉ Administrative expenses &
Selling expenses.
Answer: Which are examples are period costs?
◉ Salary cost of the receptionist
Advertising cost.
Answer: A company manufactures custom-built wooden
bookshelves.
Which two costs would the company classify as period costs?
Answer Choices: Wood cost, Salary cost of the craftsperson, Salary
cost of the receptionist, Advertising cost
◉ To guide the resolution to possible ethical dilemmas that the
managerial accountant may encounter.
,Answer: What role do ethical standards have in management
accounting?
◉ Direct labor costs
Overhead costs.
Answer: Which two costs are included when calculating inventory
costs?
◉ A company produces five different products. The products are
highly differentiated and have significantly different demands for
their use of overhead costs..
Answer: In which scenario would activity-based costing be more
appropriate than traditional costing?
◉ Batch-level activities.
Answer: Which category of ABC activities are machine setup and
material movement costs associated with?
◉ The number of race participants and spectators.
Answer: The director of a marathon race wants to assign the cost of
having police officers along the race route to manage crowd control.
Which consideration is an appropriate cost driver?
, ◉ The price of Product B should be increased..
Answer: Company A calculated the following information under
traditional and activity-based costing for the production and sale of
1,000 units of Product B:
Traditional ABC
Sales $100,000 $100,000
Cost of goods sold $70,000 $110,000
Gross margin $30,000 ($10,000)
Which decision should be made about the selling price of Product B?
◉ Profits
Cash.
Answer: Which two concepts are studied in cost-volume-profit
analysis?
◉ Total fixed costs will stay the same.
Fixed costs per unit will decrease..
Answer: What are two impacts on costs as sales volume increases?
◉ Credit limits were increased for all customers.
Answer: A company is experiencing an increase in their bad debt
expense.
