FINANCIAL AND MANAGERIAL ACCOUNTING
BY JOHN WILD PRACTICE EXAM 2026
PREMIUM QUESTIONS AND ACCURATE
ANSWERS ONE HUNDRED PERCENT CORRECT
◉ direct materials production budget.
Answer: Production budget × direct materials per unit
◉ the direct materials purchases budget.
Answer: Direct materials production budget + ending direct
materials inventory - beginning direct materials inventory
◉ Cash collected from customers.
Answer: (current period revenue × current period collection rate) +
cash collected from previous period sales
◉ Cash payments to suppliers.
Answer: (current period purchases × current period payment rate) +
cash paid on previous period purchases
◉ Cost Variance.
Answer: Difference between actual costs and budgeted costs
,◉ Contribution Margin.
Answer: = Sales Revenue - Variable Costs
The difference between total sales and variable costs; the portion of
sales revenue available to cover fixed costs and provide a profit.
◉ Target Income.
Answer: = Sales Revenue - Variable Costs - Fixed Costs
A profit level desired by management.
◉ At break-even.
Answer: Target income = 0
◉ Sales Revenue.
Answer: = Sales Price x Number of Units
◉ Variable Costs.
Answer: = Variable Cost per Unit x Number of Units
Costs that change in total in direct proportion to changes in activity
level.
◉ Variable Cost Ratio x Sales Revenue.
,Answer: Variable Costs
◉ Unit-level activities.
Answer: Activities that take place each time a unit of product is
produced.
◉ Batch-level activities.
Answer: Activities that take place in order to support a batch or
production run, regardless of the size of the batch.
◉ Product-line Activities.
Answer: Activities that take place in order to support a product line,
regardless of the number of batches or individual units produced.
◉ cost pool.
Answer: Total cost being generated by a specific overhead cost
activity.
◉ cost driver.
Answer: A numerical measure used to reflect the amount of a
specific cost that is associated with a particular activity
◉ Activity rate.
, Answer: The amount of the estimated cost pool divided by the
estimated number of cost driver events
◉ How do expenses impact the accounting equation?.
Answer: Expenses decrease owners' equity
◉ Purpose of the accounting cycle?.
Answer: To turn information about transactions into financial
statements
◉ How is gross profit computed?.
Answer: Sales minus cost of good sold
◉ Which type of account is retained earnings?.
Answer: Equity
◉ How does a classified balance sheet provide useful info to a
decision maker?.
Answer: It distinguishes between current and long-term assets
◉ What are the three primary functions that company managers use
managerial accounting info for?.
Answer: Planning, controlling, evaluating
BY JOHN WILD PRACTICE EXAM 2026
PREMIUM QUESTIONS AND ACCURATE
ANSWERS ONE HUNDRED PERCENT CORRECT
◉ direct materials production budget.
Answer: Production budget × direct materials per unit
◉ the direct materials purchases budget.
Answer: Direct materials production budget + ending direct
materials inventory - beginning direct materials inventory
◉ Cash collected from customers.
Answer: (current period revenue × current period collection rate) +
cash collected from previous period sales
◉ Cash payments to suppliers.
Answer: (current period purchases × current period payment rate) +
cash paid on previous period purchases
◉ Cost Variance.
Answer: Difference between actual costs and budgeted costs
,◉ Contribution Margin.
Answer: = Sales Revenue - Variable Costs
The difference between total sales and variable costs; the portion of
sales revenue available to cover fixed costs and provide a profit.
◉ Target Income.
Answer: = Sales Revenue - Variable Costs - Fixed Costs
A profit level desired by management.
◉ At break-even.
Answer: Target income = 0
◉ Sales Revenue.
Answer: = Sales Price x Number of Units
◉ Variable Costs.
Answer: = Variable Cost per Unit x Number of Units
Costs that change in total in direct proportion to changes in activity
level.
◉ Variable Cost Ratio x Sales Revenue.
,Answer: Variable Costs
◉ Unit-level activities.
Answer: Activities that take place each time a unit of product is
produced.
◉ Batch-level activities.
Answer: Activities that take place in order to support a batch or
production run, regardless of the size of the batch.
◉ Product-line Activities.
Answer: Activities that take place in order to support a product line,
regardless of the number of batches or individual units produced.
◉ cost pool.
Answer: Total cost being generated by a specific overhead cost
activity.
◉ cost driver.
Answer: A numerical measure used to reflect the amount of a
specific cost that is associated with a particular activity
◉ Activity rate.
, Answer: The amount of the estimated cost pool divided by the
estimated number of cost driver events
◉ How do expenses impact the accounting equation?.
Answer: Expenses decrease owners' equity
◉ Purpose of the accounting cycle?.
Answer: To turn information about transactions into financial
statements
◉ How is gross profit computed?.
Answer: Sales minus cost of good sold
◉ Which type of account is retained earnings?.
Answer: Equity
◉ How does a classified balance sheet provide useful info to a
decision maker?.
Answer: It distinguishes between current and long-term assets
◉ What are the three primary functions that company managers use
managerial accounting info for?.
Answer: Planning, controlling, evaluating
