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MANAGERIAL ACCOUNTING MANAGERIAL
ACCOUNTING GARRISON NOREEN AND BREWER
12TH EDITION SOLUTIONS MANUAL PRACTICE
QUESTIONS AND ANSWERS
This practice set is designed to help students prepare for exams in managerial
accounting using the Garrison, Noreen, and Brewer 12th Edition textbook. It
includes a variety of questions covering key topics such as cost concepts,
budgeting, variance analysis, performance evaluation, and decision-making.
What to Expect:
• Questions range from basic to advanced difficulty.
• Topics include cost behavior, cost-volume-profit analysis, budgeting,
standard costing, and performance evaluation.
• Each question includes a detailed solution and rationale for understanding
the concepts.
• Designed to mimic exam-style problems to strengthen problem-solving skills
and conceptual understanding.
Tip for Students:
Focus on understanding why each answer is correct, not just the computation.
Managerial accounting often tests application of concepts, not just memorization.
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1. A company produces 10,000 units of a product. Variable costs are
$15 per unit and fixed costs total $50,000. What is the total cost?
A. $100,000
B. $150,000
C. $200,000
D. $250,000
Answer: C
Rationale: Total cost = (Variable cost × Units) + Fixed cost = (15 ×
10,000) + 50,000 = 150,000 + 50,000 = 200,000.
2. The contribution margin ratio is 40% and sales are $500,000. What
is the contribution margin?
A. $100,000
B. $200,000
C. $300,000
D. $400,000
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Answer: B
Rationale: Contribution margin = Sales × CM ratio = 500,000 × 0.40 =
200,000.
3. A company has a break-even point of 5,000 units. Selling price per
unit is $50 and variable cost per unit is $30. What are the fixed costs?
A. $50,000
B. $100,000
C. $150,000
D. $200,000
Answer: B
Rationale: Break-even units = Fixed Costs ÷ (Selling Price – Variable
Cost). Fixed Costs = 5,000 × (50–30) = 5,000 × 20 = 100,000.
4. A standard cost for direct materials is $4 per unit. Actual cost is $5
per unit for 1,000 units. What is the direct materials variance?
A. $1,000 Favorable
B. $1,000 Unfavorable
C. $4,000 Favorable
D. $4,000 Unfavorable
Answer: B
Rationale: DM variance = (Actual – Standard) × Actual quantity = (5–4) ×
1,000 = 1,000 Unfavorable.
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5. Which of the following is a controllable cost for a department
manager?
A. CEO salary
B. Direct materials used in production
C. Property taxes on the plant
D. Insurance on corporate headquarters
Answer: B
Rationale: Controllable costs are those that a manager can directly
influence; direct materials are controllable at the department level.
6. A company has sales of $800,000, variable expenses of $500,000,
and fixed expenses of $200,000. What is the net operating income?
A. $100,000
B. $150,000
C. $200,000
D. $300,000
Answer: A
Rationale: NOI = Sales – Variable Expenses – Fixed Expenses = 800,000
– 500,000 – 200,000 = 100,000.
7. A company uses activity-based costing. The cost driver for machine
setup is the number of setups. If total setup costs are $60,000 and
there are 300 setups, what is the rate per setup?
A. $150
B. $200
MANAGERIAL ACCOUNTING MANAGERIAL
ACCOUNTING GARRISON NOREEN AND BREWER
12TH EDITION SOLUTIONS MANUAL PRACTICE
QUESTIONS AND ANSWERS
This practice set is designed to help students prepare for exams in managerial
accounting using the Garrison, Noreen, and Brewer 12th Edition textbook. It
includes a variety of questions covering key topics such as cost concepts,
budgeting, variance analysis, performance evaluation, and decision-making.
What to Expect:
• Questions range from basic to advanced difficulty.
• Topics include cost behavior, cost-volume-profit analysis, budgeting,
standard costing, and performance evaluation.
• Each question includes a detailed solution and rationale for understanding
the concepts.
• Designed to mimic exam-style problems to strengthen problem-solving skills
and conceptual understanding.
Tip for Students:
Focus on understanding why each answer is correct, not just the computation.
Managerial accounting often tests application of concepts, not just memorization.
,2
1. A company produces 10,000 units of a product. Variable costs are
$15 per unit and fixed costs total $50,000. What is the total cost?
A. $100,000
B. $150,000
C. $200,000
D. $250,000
Answer: C
Rationale: Total cost = (Variable cost × Units) + Fixed cost = (15 ×
10,000) + 50,000 = 150,000 + 50,000 = 200,000.
2. The contribution margin ratio is 40% and sales are $500,000. What
is the contribution margin?
A. $100,000
B. $200,000
C. $300,000
D. $400,000
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Answer: B
Rationale: Contribution margin = Sales × CM ratio = 500,000 × 0.40 =
200,000.
3. A company has a break-even point of 5,000 units. Selling price per
unit is $50 and variable cost per unit is $30. What are the fixed costs?
A. $50,000
B. $100,000
C. $150,000
D. $200,000
Answer: B
Rationale: Break-even units = Fixed Costs ÷ (Selling Price – Variable
Cost). Fixed Costs = 5,000 × (50–30) = 5,000 × 20 = 100,000.
4. A standard cost for direct materials is $4 per unit. Actual cost is $5
per unit for 1,000 units. What is the direct materials variance?
A. $1,000 Favorable
B. $1,000 Unfavorable
C. $4,000 Favorable
D. $4,000 Unfavorable
Answer: B
Rationale: DM variance = (Actual – Standard) × Actual quantity = (5–4) ×
1,000 = 1,000 Unfavorable.
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5. Which of the following is a controllable cost for a department
manager?
A. CEO salary
B. Direct materials used in production
C. Property taxes on the plant
D. Insurance on corporate headquarters
Answer: B
Rationale: Controllable costs are those that a manager can directly
influence; direct materials are controllable at the department level.
6. A company has sales of $800,000, variable expenses of $500,000,
and fixed expenses of $200,000. What is the net operating income?
A. $100,000
B. $150,000
C. $200,000
D. $300,000
Answer: A
Rationale: NOI = Sales – Variable Expenses – Fixed Expenses = 800,000
– 500,000 – 200,000 = 100,000.
7. A company uses activity-based costing. The cost driver for machine
setup is the number of setups. If total setup costs are $60,000 and
there are 300 setups, what is the rate per setup?
A. $150
B. $200
