Managerial Accounting Flashcards
6 cards from real Accounting Online Program practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Managerial Accounting flashcards as text
Responsibility accounting assigns costs and revenues to:
Answer: The managers who control them
Responsibility accounting holds managers accountable for costs and revenues within their area of control, supporting performance evaluation.
Which of the following best describes a cost center?
Answer: A segment evaluated only on the costs it incurs
A cost center is a business unit where managers are responsible only for controlling costs, not for generating revenues.
What is the margin of safety?
Answer: The excess of budgeted sales over break-even sales
The margin of safety measures how much sales can decline before the company reaches its break-even point, expressed in dollars or units.
Activity-based costing (ABC) improves cost accuracy by:
Answer: Assigning costs based on the activities that drive them
ABC assigns overhead costs to products based on the activities they consume, resulting in more accurate product cost information.
Which term refers to the range of activity within which cost behavior assumptions remain valid?
Answer: Relevant range
The relevant range is the span of activity over which assumptions about cost behavior (fixed vs. variable) are reasonably accurate.
Return on investment (ROI) for an investment center is calculated as:
Answer: Operating income divided by average invested assets
ROI for an investment center is operating income divided by average invested assets, measuring how effectively assets generate profit.