Jig-Jiga University
College of Business and Economics
Department of Accounting
Final Examination on Cost Management and Accounting - II
Time allowed: 1:30 hours
Total Mark: 50%
Name: _____________________________________________ ID/No: ____________ Section: ___
General Instruction:
1. Attempt all the questions.
2. Make sure that the question paper has 4 pages including this cover page.
3. The Exam has Three Parts: True/False, Multiple Choices, write.
4. Any cheating attempt results in serious penalty.
5. Use of cell phone for any purpose in the exam hall is strictly forbidden!
6. Provide your answers in the answer sheet
Answer Sheet
Part II choose
1. _____ 11. ______ Part I true /false
2. _____ 12. ______ 1-
3. _____ 13. ______ 2-
4. _____ 3-
5. _____ 4-
6. _____ 5-
7. _____ 6-
8. _____ 7-
9. _____
10. _____
Wish you a good work!
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Part III: Answer sheet
1. Explain briefly the difference between flexible budget and static budget? 5pts
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2. Define the five steps of Tactical Decision-Making Process? 5pts
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Part I Write ‘True’ if the statement is correct and ‘False’ if the statement is incorrect. (2pts each).
1. A special order is a twice time-order that can be consider as part of the company’s normal ongoing
business
2. Make-or-buy decisions are short run in nature but fall into the large-scale tactical decision category.
3. Outsourcing refers to the move of a business function to another company, either inside or outside
the Ethiopia.
4. Attainable Standard refers to a standard that can be achieved under normal efficient operating
conditions.
5. Basic Standard is the standard, which is established for an unaltered use for an indefinite period,
which may be a very long period of time.
6. Budgeting process creates informal planning framework that provides specific, uniform periodic
deadlines for each phase of the planning process.
7. The major advantage of variable-cost pricing is that managers may set the price too high and
consequently in order to cover the total cost
Part II: Choose the best answer and write the letter only on the answer sheet. (2pts each)
1. Which one of the following master budgets is the foundation for the production budget in
manufacturing enterprises?
A. Sales Budget C. Manufacturing Cost Budget
B. Production Budget D. Cash Budget
2. Is a type of budget which decisions concerning potential investments are made using discounted
cash flow techniques.
A. Appropriation Budget C. Capital Budget
B. Flexible Budget D. Master Budget
3. Which one of the following statement is not correct about the discretionary costs?
A. They arise from periodic decisions regarding the minimum amount to be incurred
B. They have no measurable cause-and-effect relationship between output and resources
used.
C. There is often a delay between when a resource is acquired and when it is used.
D. Discretionary costs include advertising, executive training, R&D, and corporate-staff
department costs.
E. None of the above
4. Are quantitative listings of each planned selling costs for the budget period, and includes
the cost of promoting, marketing and distributing products in the budget period.
A. Selling and Administrative Costs Budget
B. Ending Finished Goods Inventory Budget
C. Selling Expenses Budget
D. All of the above
5. All are characteristics of fixed budget EXCEPT
A) It is a Budget designed to remain unchanged irrespective of activity
B) it is known as a Rigid or Inflexible budget.
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C) It operates on one level of activity and under one set of conditions.
D) Variance Analysis provides use full in formation as each cost is analyzed according
behavior
6. Includes all product and period costs necessary to make and market the product or service.
A. Target cost C. Target selling price
B. Cost-plus mark up D. None of the above
7. Which one of the followings is/are characteristics of static budget
A. Not affected by charge in activity level
B. Prepared for a single volume of activity level
C. Prepared before actual operation
D. Less helpful for performance evaluation purpose
E. All of the above
8. Which one of the following statement is not correct about the discretionary costs?
A. They arise from periodic decisions regarding the minimum amount to be incurred
B. They have no measurable cause-and-effect relationship between output and resources used.
C. There is often a delay between when a resource is acquired and when it is used.
D. Discretionary costs include advertising, executive training, R&D, and corporate-staff
department costs.
9. Which one of the following is not the reason for budgeting in a business and other organizations?
A. For perpetual planning requirement
B. It provides a frame of reference for performance evaluation
C. It creates awareness of business costs
D. It forces managers to think ahead of time
10. is responsible for generating financial information required by the firm for internal and external
reporting
A) Control accountant C. operations-research accountant
B) Management accountant D. cost accountant
11. Youth & Co. has fixed costs of $180,000 and variable costs of $8.50 per unit. It has a target
income of $268,000. How many units must it sell at $12 per unit to achieve its target net income?
A) 51,429 units A. 76,571 units
B) 128,000 units B. 21,176 units.
12. Mercy Corporation has fixed costs of $150,000 and variable costs of $9 per unit. If sales price
per unit is $12, what is a break-even sale in dollars?
A) $200,000. C) $480,000.
B) $450,000. D) $600,000
13. When using the five-step decision process, which one of the following steps should be done
first?
A) Define the problem C) Evaluation and feedback
B) Choose an alternative D) Implementing the decision
