Accounting Online Program Managerial Accounting 1 — Questions and Answers
Question 1: Which of the following best describes the primary purpose of managerial accounting?
- Preparing tax returns for the IRS
- Providing financial information to internal managers for decision-making (Correct answer)
- Auditing financial statements for external users
- Reporting earnings to shareholders
Correct answer: Providing financial information to internal managers for decision-making
Managerial accounting focuses on providing relevant financial and non-financial data to internal managers to support planning, controlling, and decision-making.
Question 2: A budget that adjusts based on actual activity levels is called a:
- Static budget
- Master budget
- Flexible budget (Correct answer)
- Capital budget
Correct answer: Flexible budget
A flexible budget adjusts revenue and cost estimates to reflect actual output levels, making variance analysis more meaningful.
Question 3: Which cost behavior remains constant in total regardless of changes in activity level?
- Variable cost
- Mixed cost
- Fixed cost (Correct answer)
- Step cost
Correct answer: Fixed cost
Fixed costs, such as rent or salaries, remain constant in total within a relevant range, regardless of changes in production volume.
Question 4: The difference between budgeted and actual results is called a:
- Variance (Correct answer)
- Deviation
- Margin
- Deficit
Correct answer: Variance
A variance is the difference between a budgeted, planned, or standard amount and the actual amount incurred or achieved.
Question 5: Contribution margin is calculated as:
- Net income minus operating expenses
- Sales revenue minus variable costs (Correct answer)
- Gross profit minus selling expenses
- Operating income minus taxes
Correct answer: Sales revenue minus variable costs
Contribution margin equals sales revenue minus variable costs and represents the amount available to cover fixed costs and generate profit.
Question 6: Which of the following is an example of a direct cost?
- Factory rent
- CEO's salary
- Raw materials used in production (Correct answer)
- Depreciation on corporate headquarters
Correct answer: Raw materials used in production
Direct costs, like raw materials, can be directly traced to a specific product or cost object without allocation.
Accounting Online Program Managerial Accounting 1
Which of the following best describes the primary purpose of managerial accounting?