Accounting Online Program Managerial Accounting 3

Question 1

Responsibility accounting assigns costs and revenues to:

Accepted Answer

The managers who control them

Answer

Responsibility accounting holds managers accountable for costs and revenues within their area of control, supporting performance evaluation.

Question 2

Which of the following best describes a cost center?

Accepted Answer

A segment evaluated only on the costs it incurs

Answer

A cost center is a business unit where managers are responsible only for controlling costs, not for generating revenues.

Question 3

What is the margin of safety?

Accepted Answer

The excess of budgeted sales over break-even sales

Answer

The margin of safety measures how much sales can decline before the company reaches its break-even point, expressed in dollars or units.

Question 4

Activity-based costing (ABC) improves cost accuracy by:

Accepted Answer

Assigning costs based on the activities that drive them

Answer

ABC assigns overhead costs to products based on the activities they consume, resulting in more accurate product cost information.

Question 5

Which term refers to the range of activity within which cost behavior assumptions remain valid?

Accepted Answer

Relevant range

Answer

The relevant range is the span of activity over which assumptions about cost behavior (fixed vs. variable) are reasonably accurate.

Accounting Online Program Practice Test