CNA CNA Managerial Accounting 1 — Questions and Answers
Question 1: Which budgeting approach requires managers to justify all expenditures from scratch each period rather than basing budgets on prior-year figures?
- Incremental budgeting
- Zero-based budgeting (Correct answer)
- Rolling budgeting
- Flexible budgeting
Correct answer: Zero-based budgeting
Zero-based budgeting requires every expense to be justified anew each budget cycle, ignoring historical spending levels.
Question 2: A company's contribution margin is calculated as:
- Net income minus fixed costs
- Sales revenue minus variable costs (Correct answer)
- Gross profit minus operating expenses
- Operating income plus depreciation
Correct answer: Sales revenue minus variable costs
Contribution margin equals sales revenue minus variable costs, representing the amount available to cover fixed costs and generate profit.
Question 3: Which variance measures the difference between standard labor hours allowed for actual output and actual labor hours worked?
- Labor rate variance
- Labor efficiency variance (Correct answer)
- Labor yield variance
- Labor mix variance
Correct answer: Labor efficiency variance
Labor efficiency variance compares standard hours allowed for actual production to actual hours worked, multiplied by the standard rate.
Question 4: The break-even point in units is calculated by dividing fixed costs by:
- Selling price per unit
- Variable cost per unit
- Contribution margin per unit (Correct answer)
- Gross margin per unit
Correct answer: Contribution margin per unit
Break-even units = Fixed Costs ÷ Contribution Margin per Unit, where contribution margin is selling price minus variable cost.
Question 5: Absorption costing differs from variable costing primarily because absorption costing:
- Excludes direct labor from product cost
- Includes fixed manufacturing overhead in product cost (Correct answer)
- Treats selling expenses as product costs
- Ignores period costs entirely
Correct answer: Includes fixed manufacturing overhead in product cost
Absorption costing includes fixed manufacturing overhead in unit product cost, while variable costing treats it as a period expense.
Question 6: Which managerial accounting tool allocates overhead costs to products based on the activities that drive those costs?
- Process costing
- Job-order costing
- Activity-based costing (Correct answer)
- Standard costing
Correct answer: Activity-based costing
Activity-based costing (ABC) assigns overhead using cost drivers linked to specific activities, providing more accurate product costing.
CNA CNA Managerial Accounting 1
Which budgeting approach requires managers to justify all expenditures from scratch each period rather than basing budgets on prior-year figures?