AICPA AICPA Managerial Accounting 2

Question 1

Activity-based costing (ABC) improves product costing accuracy over traditional volume-based methods primarily by:

Accepted Answer

Assigning overhead costs using multiple cost drivers that reflect actual resource consumption

Answer

ABC uses multiple cost drivers tied to specific activities, more accurately tracing overhead to products based on actual consumption rather than a single volume measure.

Question 2

A relevant cost for a make-or-buy decision is best described as a cost that:

Accepted Answer

Differs between the make and buy alternatives and will be incurred in the future

Answer

Relevant costs are future costs that differ between alternatives; sunk costs and costs that are identical under all alternatives are irrelevant.

Question 3

A flexible budget differs from a static budget in that it:

Accepted Answer

Adjusts revenues and variable costs to the actual activity level achieved

Answer

A flexible budget recalculates expected revenues and variable costs at the actual volume, enabling a meaningful comparison to actual results.

Question 4

In capital budgeting, which method considers the time value of money and expresses the project's return as a single percentage rate?

Accepted Answer

Internal rate of return (IRR)

Answer

IRR is the discount rate that makes the NPV of all cash flows equal to zero, expressing the project's return as a percentage while incorporating time value of money.

Question 5

A company has a contribution margin ratio of 40% and fixed costs of $200,000. What is the break-even point in sales dollars?

Accepted Answer

$500,000

Answer

Break-even sales = Fixed costs ÷ Contribution margin ratio = $200,000 ÷ 0.40 = $500,000.

(AICPA) American Institute of Certified Public Accountants Practice Test

(AICPA) American Institute of Certified Public Accountants Practice Test

AICPA AICPA Managerial Accounting 2