Management Accounting: Questions and Problems on Incremental Analysis

7192 Words Oct 14th, 2013 29 Pages
INCREMENTAL ANALYSIS
TRUE-FALSE STATEMENTS
1. An important step in management's decision-making process is to determine and evaluate possible courses of action.
2. In making decisions, management ordinarily considers both financial and nonfinancial information. 3. In incremental analysis, total variable costs will always change under alternative courses of action, and total fixed costs will always remain constant.
4. Accountants are mainly involved in developing nonfinancial information for management's consideration in choosing among alternatives.
5. Decision-making involves choosing among alternative courses of action.
6. Financial data are developed for a course of action under an incremental basis and then it is compared to data
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d. decide which actions that management should consider.
27. Which of the following stages of the management decision-making process is improperly sequenced? a. Evaluate possible courses of action  Make decision.
b. Assign responsibility for decision  Identify the problem.
c. Identify the problem  Determine possible courses of action.
d. Assign responsibility for decision  Determine possible courses of action.
28. Internal reports that review the actual impact of decisions are prepared by
a. department heads.
b. the controller.
c. management accountants.
d. factory workers.
29. Which of the following steps in the management decision-making process does not generally involve the managerial accountant?
a. Determine possible courses of action.
b. Make the appropriate decision based on relevant data.
c. Prepare internal reports that review results of decisions.
d. None of these
30. The process of evaluating financial data that change under alternative courses of action is called a. double entry analysis.
b. contribution margin analysis.
c. incremental analysis.
d. cost-benefit analysis.
31. Nonfinancial information that management might evaluate in making a decision would not include a. employee turnover.
b. contribution margin.
c. the environment.
d. the corporate profile in the community.
32. Incremental analysis is synonymous with
a. difficult analysis.
b. differential analysis.
c. gross profit analysis.
d. derivative analysis.
Test

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