ACG MAIN EXAMINATION TEST 2025/2026 QUESTIONS
AND SOLUTION RATED A+
Which of the following is not an advantage of using standard costs? - ✔✔Standards can
cause unintended behavioral consequences.
✔✔The variable overhead rate variance can be defined as which of the following? -
✔✔Actual hours x (Actual rate - Standard rate)
✔✔Which of the following is not true about the fixed overhead budget variance? - ✔✔It
is the difference between the budgeted fixed overhead and the standard fixed overhead
allocated to production.
✔✔Which of the following methods of analyzing capital investments factors in the time
value of money? - ✔✔Internal Rate of Return
✔✔After identifying potential capital investments, the next step in the capital budgeting
process is which of the following? - ✔✔Estimating the future net cash inflows of the
investments
✔✔Which of the following is false with regards to the payback period? - ✔✔It is
computed as follows, regardless of whether cash flows are equal or unequal: Initial
investment / Expected annual net cash inflow.
✔✔Which of the following methods focuses on the operating income an asset generates
rather than the net cash inflows it generates? - ✔✔Accounting rate of return
✔✔In order to convert the average annual net cash inflow from the asset back to the
average annual operating income from the asset, one must - ✔✔subtract annual
depreciation expense.
✔✔The time value of money depends on which of the following factors? - ✔✔Number of
periods
Principal amount
Interest rate
All of the above
✔✔The internal rate of return is which of the following? - ✔✔The interest rate that
makes the NPV of an investment equal to zero
✔✔An investment's NPV is calculated as which of the following? - ✔✔The present value
of the investment minus the investment's initial investment
,✔✔When potential capital investments of different size are compared, management
should choose the one with the - ✔✔highest profitability index.
✔✔Which of the following methods calculates the investment's unique rate of return? -
✔✔internal rate of return
✔✔List Job Duties - ✔✔a.
Invest company funds
Treasurer
b.
Report to the audit committee of the board of directors and to a senior executive, such
as the CFO or CEO
Internal Auditing Department
c.
Prepares company tax returns
Controller
d.
Performing cash counts at branch offices
Controller
e.
Preparing journal entries for month-end closing
Controller
f.
Issue company stock
Treasurer
g.
Ensure that the company's internal controls are functioning properly
Internal Auditing Department
h.
Create an analysis about whether to lease or buy a delivery truck
Controller
i.
Calculate the cost of a product
Controller
j.
Issue company bonds
Treasurer
k.
Check to make sure that company risk management procedures are being followed
Internal Auditing Department
l.
Work with various departments in preparing operating budgets for the upcoming year
Controller
m.
Oversee accounts payable activities
Controller
,✔✔Snow Wonderful manufactures snowboards. Roger RomeR, the CEO, is trying to
decide whether to adopt a lean thinking model. He expects that adopting lean
production would save $95,000 in warehousing expenses and $39,200 in spoilage
costs. Adopting lean production will require several one-time up-front expenditures: $ 12
comma 750$12,750 for an employee training program, $ 55 comma 000$55,000 to
streamline the plant's production process, and $ 8 comma 750$8,750 to identify
suppliers that will guarantee zero defects and on-time delivery.
Requirements
1. What are the total costs of adopting lean production?
2. What are the total benefits of adopting lean production?
3. Should Snow WonderfulSnow Wonderful adopt lean production? Why or why not? -
✔✔Requirement 1. What are the total costs of adopting lean production?
The total costs of adopting lean production are $76500.
Requirement 2. What are the total benefits of adopting lean production?
The total benefits of adopting lean production are $134,200
Requirement 3. Should Snow WonderfulSnow Wonderful adopt lean production? Why
or why not?
Snow WonderfulSnow Wonderful
should adopt lean production because the expected benefits are greater than
the costs.
✔✔Managerial accounting differs from financial accounting in several areas. Specify
whether each of the following characteristics relates to managerial accounting or
financial accounting. - ✔✔a.
Main characteristic of data is that it must be reliable and objective
Financial accounting
b.
Reports are prepared as needed
Managerial accounting
c.
Not governed by legal requirements
Managerial accounting
d.
Primary users are external (i.e., creditors, investors)
Financial accounting
e.
Focused on the future
Managerial accounting
f.
, Reporting is based mainly on the company as a whole
Financial accounting
g.
Reports are usually prepared quarterly and annually
Financial accounting
h.
Information is verified by external auditors
Financial accounting
i.
Focused on the past
Financial accounting
j.
Main characteristic of data is that it must be relevant
Managerial accounting
k.
Reports tend to be prepared for the parts of the organization rather than the whole
organization
Managerial accounting
l.
Primary users are internal (i.e., company managers)
Managerial accounting
m.
Governed by Generally Accepted Accounting Principles (GAAP) or International
Financial Reporting Standards (IFRS)
Financial accounting
✔✔Categorize each of the following activities as to which management responsibility it
fulfills: planning, directing, or controlling. Some activities may fulfill more than one
responsibility. - ✔✔a. Management conducts variance analysis by comparing budget to
actual.
Responsibility:
Controlling
b. Management uses information on product costs to determine sales prices.
Responsibility:
Directing
c. Management decides to increase sales growth by 10% next year.
Responsibility:
Planning
AND SOLUTION RATED A+
Which of the following is not an advantage of using standard costs? - ✔✔Standards can
cause unintended behavioral consequences.
✔✔The variable overhead rate variance can be defined as which of the following? -
✔✔Actual hours x (Actual rate - Standard rate)
✔✔Which of the following is not true about the fixed overhead budget variance? - ✔✔It
is the difference between the budgeted fixed overhead and the standard fixed overhead
allocated to production.
✔✔Which of the following methods of analyzing capital investments factors in the time
value of money? - ✔✔Internal Rate of Return
✔✔After identifying potential capital investments, the next step in the capital budgeting
process is which of the following? - ✔✔Estimating the future net cash inflows of the
investments
✔✔Which of the following is false with regards to the payback period? - ✔✔It is
computed as follows, regardless of whether cash flows are equal or unequal: Initial
investment / Expected annual net cash inflow.
✔✔Which of the following methods focuses on the operating income an asset generates
rather than the net cash inflows it generates? - ✔✔Accounting rate of return
✔✔In order to convert the average annual net cash inflow from the asset back to the
average annual operating income from the asset, one must - ✔✔subtract annual
depreciation expense.
✔✔The time value of money depends on which of the following factors? - ✔✔Number of
periods
Principal amount
Interest rate
All of the above
✔✔The internal rate of return is which of the following? - ✔✔The interest rate that
makes the NPV of an investment equal to zero
✔✔An investment's NPV is calculated as which of the following? - ✔✔The present value
of the investment minus the investment's initial investment
,✔✔When potential capital investments of different size are compared, management
should choose the one with the - ✔✔highest profitability index.
✔✔Which of the following methods calculates the investment's unique rate of return? -
✔✔internal rate of return
✔✔List Job Duties - ✔✔a.
Invest company funds
Treasurer
b.
Report to the audit committee of the board of directors and to a senior executive, such
as the CFO or CEO
Internal Auditing Department
c.
Prepares company tax returns
Controller
d.
Performing cash counts at branch offices
Controller
e.
Preparing journal entries for month-end closing
Controller
f.
Issue company stock
Treasurer
g.
Ensure that the company's internal controls are functioning properly
Internal Auditing Department
h.
Create an analysis about whether to lease or buy a delivery truck
Controller
i.
Calculate the cost of a product
Controller
j.
Issue company bonds
Treasurer
k.
Check to make sure that company risk management procedures are being followed
Internal Auditing Department
l.
Work with various departments in preparing operating budgets for the upcoming year
Controller
m.
Oversee accounts payable activities
Controller
,✔✔Snow Wonderful manufactures snowboards. Roger RomeR, the CEO, is trying to
decide whether to adopt a lean thinking model. He expects that adopting lean
production would save $95,000 in warehousing expenses and $39,200 in spoilage
costs. Adopting lean production will require several one-time up-front expenditures: $ 12
comma 750$12,750 for an employee training program, $ 55 comma 000$55,000 to
streamline the plant's production process, and $ 8 comma 750$8,750 to identify
suppliers that will guarantee zero defects and on-time delivery.
Requirements
1. What are the total costs of adopting lean production?
2. What are the total benefits of adopting lean production?
3. Should Snow WonderfulSnow Wonderful adopt lean production? Why or why not? -
✔✔Requirement 1. What are the total costs of adopting lean production?
The total costs of adopting lean production are $76500.
Requirement 2. What are the total benefits of adopting lean production?
The total benefits of adopting lean production are $134,200
Requirement 3. Should Snow WonderfulSnow Wonderful adopt lean production? Why
or why not?
Snow WonderfulSnow Wonderful
should adopt lean production because the expected benefits are greater than
the costs.
✔✔Managerial accounting differs from financial accounting in several areas. Specify
whether each of the following characteristics relates to managerial accounting or
financial accounting. - ✔✔a.
Main characteristic of data is that it must be reliable and objective
Financial accounting
b.
Reports are prepared as needed
Managerial accounting
c.
Not governed by legal requirements
Managerial accounting
d.
Primary users are external (i.e., creditors, investors)
Financial accounting
e.
Focused on the future
Managerial accounting
f.
, Reporting is based mainly on the company as a whole
Financial accounting
g.
Reports are usually prepared quarterly and annually
Financial accounting
h.
Information is verified by external auditors
Financial accounting
i.
Focused on the past
Financial accounting
j.
Main characteristic of data is that it must be relevant
Managerial accounting
k.
Reports tend to be prepared for the parts of the organization rather than the whole
organization
Managerial accounting
l.
Primary users are internal (i.e., company managers)
Managerial accounting
m.
Governed by Generally Accepted Accounting Principles (GAAP) or International
Financial Reporting Standards (IFRS)
Financial accounting
✔✔Categorize each of the following activities as to which management responsibility it
fulfills: planning, directing, or controlling. Some activities may fulfill more than one
responsibility. - ✔✔a. Management conducts variance analysis by comparing budget to
actual.
Responsibility:
Controlling
b. Management uses information on product costs to determine sales prices.
Responsibility:
Directing
c. Management decides to increase sales growth by 10% next year.
Responsibility:
Planning
