Accounting Online Program Managerial Accounting 2 — Questions and Answers
Question 1: The break-even point is reached when:
- Total revenue equals total variable costs
- Total revenue equals total fixed costs
- Total revenue equals total costs (fixed + variable) (Correct answer)
- Net income equals total expenses
Correct answer: Total revenue equals total costs (fixed + variable)
The break-even point occurs when total revenue equals total costs, meaning the company has neither a profit nor a loss.
Question 2: What does a favorable cost variance indicate?
- Actual costs exceeded budgeted costs
- Actual costs were less than budgeted costs (Correct answer)
- Budgeted costs were zero
- No variance exists between periods
Correct answer: Actual costs were less than budgeted costs
A favorable cost variance means actual costs were lower than the budgeted or standard costs, which is generally a positive outcome.
Question 3: Which costing method assigns all manufacturing costs (fixed and variable) to products?
- Variable costing
- Absorption costing (Correct answer)
- Job-order costing
- Process costing
Correct answer: Absorption costing
Absorption costing (also called full costing) includes both fixed and variable manufacturing costs in the cost of a product.
Question 4: Which of the following is a non-financial performance measure used in managerial accounting?
- Net income
- Return on investment
- Customer satisfaction score (Correct answer)
- Earnings per share
Correct answer: Customer satisfaction score
Non-financial performance measures like customer satisfaction scores help managers assess operational effectiveness beyond what financial statements capture.
Question 5: A sunk cost is best described as:
- A future cost that varies with output
- A cost that has already been incurred and cannot be recovered (Correct answer)
- A cost allocated across multiple departments
- An estimated cost used for budgeting
Correct answer: A cost that has already been incurred and cannot be recovered
Sunk costs are past costs that have already been incurred and are irrelevant to future decision-making because they cannot be recovered.
Question 6: Which managerial accounting tool helps identify the most profitable mix of products given limited resources?
- Break-even analysis
- Activity-based costing
- Theory of constraints / linear programming (Correct answer)
- Payback period
Correct answer: Theory of constraints / linear programming
Linear programming and the theory of constraints help managers optimize the product mix to maximize contribution margin when resources are constrained.
Accounting Online Program Managerial Accounting 2
The break-even point is reached when: