#1
Which of the following statements best defines managerial accounting?
Managerial accounting is primarily concerned with providing information for internal decision-making.
ExplanationManagerial accounting focuses on internal decision-making.
#2
Which of the following is not a component of the master budget?
General ledger
ExplanationGeneral ledger is not a component of the master budget.
#3
What is the break-even point?
The point at which total revenue equals total fixed costs
ExplanationBreak-even point is where revenue covers fixed costs.
#4
Which of the following is a characteristic of a cost center?
It incurs costs but does not directly generate revenue
ExplanationCost centers incur costs but do not generate revenue directly.
#5
Which of the following best describes a cost driver?
A factor that influences the behavior of costs
ExplanationCost driver is a factor affecting cost behavior.
#6
What is the purpose of a cost allocation?
To assign indirect costs to cost objects based on some reasonable basis
ExplanationCost allocation assigns indirect costs to objects based on a reasonable basis.
#7
What is the primary difference between managerial accounting and financial accounting?
Managerial accounting is used by internal stakeholders for decision-making, while financial accounting is used by external stakeholders for investment and lending decisions.
ExplanationManagerial accounting is for internal decisions, while financial accounting is for external decisions.
#8
Which of the following costs would typically be classified as a variable cost?
Direct materials used in production
ExplanationDirect materials are variable costs as they vary with production.
#9
What is the contribution margin?
Total sales revenue minus total variable costs
ExplanationContribution margin is revenue after covering variable costs.
#10
What is the formula to calculate the predetermined overhead rate?
Estimated total manufacturing overhead costs / Estimated total direct labor hours
ExplanationPredetermined overhead rate = Estimated overhead / Estimated labor hours.
#11
What is the purpose of activity-based costing (ABC)?
To allocate manufacturing overhead based on activity levels that drive costs
ExplanationABC allocates overhead based on activities that drive costs.
#12
Which of the following performance measures is calculated as net operating income divided by sales revenue?
Profit margin ratio
ExplanationProfit margin ratio = Net operating income / Sales revenue.
#13
Under absorption costing, fixed manufacturing overhead costs are:
Included in product costs and inventoried
ExplanationFixed overhead costs are part of product costs in absorption costing.
#14
What is the main limitation of using absorption costing?
It may result in overproduction due to fixed overhead absorption
ExplanationAbsorption costing can lead to overproduction due to fixed overhead absorption.
#15
What is the formula to calculate the degree of operating leverage?
(Contribution margin / Net operating income) * Fixed costs
ExplanationDegree of operating leverage = (Contribution margin / Net income) * Fixed costs.