AICPA AICPA Managerial Accounting 1 — Questions and Answers
Question 1: Which costing method assigns all manufacturing costs (fixed and variable) to products and is required under US GAAP for external financial reporting?
- Absorption costing (Correct answer)
- Variable costing
- Throughput costing
- Activity-based costing
Correct answer: Absorption costing
Absorption costing (full costing) includes both fixed and variable manufacturing overhead in product cost and is mandated by US GAAP for external reporting.
Question 2: A company sells a product for $80, with variable costs of $50 per unit and total fixed costs of $90,000. What is the break-even point in units?
- 3,000 units (Correct answer)
- 1,125 units
- 1,800 units
- 4,500 units
Correct answer: 3,000 units
Break-even units = Fixed costs ÷ Contribution margin per unit = $90,000 ÷ ($80 − $50) = $90,000 ÷ $30 = 3,000 units.
Question 3: Which budgeting approach starts each budget period from zero and requires managers to justify all expenditures, rather than basing the budget on prior-year amounts?
- Zero-based budgeting (Correct answer)
- Incremental budgeting
- Rolling budgeting
- Flexible budgeting
Correct answer: Zero-based budgeting
Zero-based budgeting requires every budget item to be justified from scratch each period, eliminating the assumption that prior-year spending is automatically approved.
Question 4: The balanced scorecard framework developed by Kaplan and Norton measures organizational performance across four perspectives. Which of the following is NOT one of those four perspectives?
- Supply chain efficiency (Correct answer)
- Financial
- Customer
- Internal business processes
Correct answer: Supply chain efficiency
The four balanced scorecard perspectives are Financial, Customer, Internal Business Processes, and Learning & Growth; supply chain efficiency is not a standalone perspective.
Question 5: In a standard cost system, an unfavorable direct labor efficiency variance indicates that:
- Actual labor hours exceeded standard hours allowed for actual production (Correct answer)
- The actual wage rate was higher than the standard wage rate
- Fewer units were produced than budgeted
- Overtime premiums were paid to workers
Correct answer: Actual labor hours exceeded standard hours allowed for actual production
An unfavorable labor efficiency variance means workers took more hours than the standard allowed for the number of units actually produced.
Question 6: Which cost behavior pattern remains constant in total but decreases on a per-unit basis as production volume increases?
- Fixed cost (Correct answer)
- Variable cost
- Mixed cost
- Step cost
Correct answer: Fixed cost
Fixed costs stay constant in total regardless of volume, so the per-unit fixed cost falls as more units are produced and the total is spread over more units.
AICPA AICPA Managerial Accounting 1
Which costing method assigns all manufacturing costs (fixed and variable) to products and is required under US GAAP for external financial reporting?