Managerial Accounting Questions and Answers
All activities associated with providing a product or service is referred to as:
a) The value chain
b) Total quality management systems
c) Just-in-time inventory methods
d) Activity-based costing - ✔✔b) Total quality management systems
As before, Colonial heritage's supplier of hardwood will only be able to supply 2,000 board feet this
month. Assume the company follows the plan we have proposed. Up to how much should Colonial
heritage be willing to pay above the usual pride to obtain more hardwood?
a) $40 per board foot
b) $25 per board foot
c) $20 per board foot
d) Zero - ✔✔c) $20 per board foot
(The additional wood would be used to make tables. In this use, each board foot of additional wood will
allow the company to earn an additional $20 of contribution margin and profit)
As before, Colonial heritage's supplier of hardwood will only be able to supply 2,000 board feet this
month. Assume there is unlimited demand for chains. Up to how much should CH be willing to pay
above the usual price to obtain more hardwood?
a) $40 per board foot
b) $25 per board foot
c) $20 per board foot
d) Zero - ✔✔b) $25 per board foot
(Since there is unlimited demand for chains and chairs are a more valuable use of wood than tables, all
of the additional wood would presumably be used to produce chairs. In this use, each board foot of
additional wood will allow the company to earn an additional $25 of contribution margin and profit)
,Beginning finished goods inventory was $130,000. The cost of goods manufactured for the month was
$760,000. And the ending finished goods inventory was $150,000. What was the cost of goods sold for
the month?
a) $20,000
b) $740,000
c) $780,000
d) $760,000 - ✔✔b) $740,000
(130,000 + 760,000 = 890,000
890,000 - 150,000 = 740,000)
Beginning raw materials inventory was $32,000. During the month, $276,000 of raw material was
purchased. A count at the end of the month revealed that $28,000 of raw material was still present.
What is the cost of direct material used?
a) $276,000
b) $272,000
c) $289,000
d) $2,000 - ✔✔c) $289,000
Beginning work in process was $125,000. Manufacturing costs incurred for the month were $835,000.
There were $200,000 of partially finished goods remaining in work in process inventory at the end of the
month. What was the cost of goods manufactured during the month?
a) $1,160,000
b) $910,000
c) $760,000
d) Cannot be determined - ✔✔c) $760,000
Coffee Klatch is an espresso stand in a downtown office building. The average selling price of a cup of
coffee is $1.49 and the average variable expense per cup is $0.36. The average fixed expense per month
is $1,300. 2,100 cups are sold each month on average. What is the CM Ratio for Coffee Klatch?
a) 1.319
, b) 0.758
c) 0.242
d) 4.139 - ✔✔b) 0.758
Coffee Klatch is an espresso stand. The average selling price of a cup of coffee is $1.49 and the average
variable expense per cup is $0.36. The average fixed expense per month is $1,300. 2,100 cups are sold
each month on average. What is the break-even sales in dollars?
a) $1,300
b) $1,715
c) $1,788
d) $3,129 - ✔✔b) $1,715
Coffee Klatch is an espresso stand. The average selling price of a cup of coffee is $1.49 and the average
variable expense per cup is $0.36. The average fixed expense per month is $1,300. 2,100 cups are sold
each month on average. What is the break-even sales in units?
a) 872 cups
b) 3,611 cups
c) 1,200 cups
d) 1,150 cups - ✔✔d) 1,150 cups
Coffee Klatch is an espresso stand. The average selling price of a cup of coffee is $1.49 and the average
variable expense per cup is $0.36. The average fixed expense per month is $1,300. How many cups of
coffee would have to be sold to attain target profits of $2,500 per month?
a) 3,363 cups
b) 2,212 cups
c) 1,150 cups
d) 4,200 cups - ✔✔a) 3,363 cups
Coffee Klatch is an espresso stand. The average selling price of a cup of coffee is $1.49 and the average
variable expense per cup is $0.36. The average fixed expense per month is $1,300. The average fixed
expense per month is $1,300. 2,100 cups are sold each month on average. If sales increase by 20%, how
much should net income increase?
All activities associated with providing a product or service is referred to as:
a) The value chain
b) Total quality management systems
c) Just-in-time inventory methods
d) Activity-based costing - ✔✔b) Total quality management systems
As before, Colonial heritage's supplier of hardwood will only be able to supply 2,000 board feet this
month. Assume the company follows the plan we have proposed. Up to how much should Colonial
heritage be willing to pay above the usual pride to obtain more hardwood?
a) $40 per board foot
b) $25 per board foot
c) $20 per board foot
d) Zero - ✔✔c) $20 per board foot
(The additional wood would be used to make tables. In this use, each board foot of additional wood will
allow the company to earn an additional $20 of contribution margin and profit)
As before, Colonial heritage's supplier of hardwood will only be able to supply 2,000 board feet this
month. Assume there is unlimited demand for chains. Up to how much should CH be willing to pay
above the usual price to obtain more hardwood?
a) $40 per board foot
b) $25 per board foot
c) $20 per board foot
d) Zero - ✔✔b) $25 per board foot
(Since there is unlimited demand for chains and chairs are a more valuable use of wood than tables, all
of the additional wood would presumably be used to produce chairs. In this use, each board foot of
additional wood will allow the company to earn an additional $25 of contribution margin and profit)
,Beginning finished goods inventory was $130,000. The cost of goods manufactured for the month was
$760,000. And the ending finished goods inventory was $150,000. What was the cost of goods sold for
the month?
a) $20,000
b) $740,000
c) $780,000
d) $760,000 - ✔✔b) $740,000
(130,000 + 760,000 = 890,000
890,000 - 150,000 = 740,000)
Beginning raw materials inventory was $32,000. During the month, $276,000 of raw material was
purchased. A count at the end of the month revealed that $28,000 of raw material was still present.
What is the cost of direct material used?
a) $276,000
b) $272,000
c) $289,000
d) $2,000 - ✔✔c) $289,000
Beginning work in process was $125,000. Manufacturing costs incurred for the month were $835,000.
There were $200,000 of partially finished goods remaining in work in process inventory at the end of the
month. What was the cost of goods manufactured during the month?
a) $1,160,000
b) $910,000
c) $760,000
d) Cannot be determined - ✔✔c) $760,000
Coffee Klatch is an espresso stand in a downtown office building. The average selling price of a cup of
coffee is $1.49 and the average variable expense per cup is $0.36. The average fixed expense per month
is $1,300. 2,100 cups are sold each month on average. What is the CM Ratio for Coffee Klatch?
a) 1.319
, b) 0.758
c) 0.242
d) 4.139 - ✔✔b) 0.758
Coffee Klatch is an espresso stand. The average selling price of a cup of coffee is $1.49 and the average
variable expense per cup is $0.36. The average fixed expense per month is $1,300. 2,100 cups are sold
each month on average. What is the break-even sales in dollars?
a) $1,300
b) $1,715
c) $1,788
d) $3,129 - ✔✔b) $1,715
Coffee Klatch is an espresso stand. The average selling price of a cup of coffee is $1.49 and the average
variable expense per cup is $0.36. The average fixed expense per month is $1,300. 2,100 cups are sold
each month on average. What is the break-even sales in units?
a) 872 cups
b) 3,611 cups
c) 1,200 cups
d) 1,150 cups - ✔✔d) 1,150 cups
Coffee Klatch is an espresso stand. The average selling price of a cup of coffee is $1.49 and the average
variable expense per cup is $0.36. The average fixed expense per month is $1,300. How many cups of
coffee would have to be sold to attain target profits of $2,500 per month?
a) 3,363 cups
b) 2,212 cups
c) 1,150 cups
d) 4,200 cups - ✔✔a) 3,363 cups
Coffee Klatch is an espresso stand. The average selling price of a cup of coffee is $1.49 and the average
variable expense per cup is $0.36. The average fixed expense per month is $1,300. The average fixed
expense per month is $1,300. 2,100 cups are sold each month on average. If sales increase by 20%, how
much should net income increase?
