BUS5111 Applied Managerial Accounting Units 1-4 Test Bank —
Cost Classifications, CVP, Budgeting, and Variance Analysis
Course:
BUS5111 Applied Managerial Accounting — University of the People (UoPeople)
Level:
MBA
Year:
2025/2026
Format:
Comprehensive Test Bank — 60 Q&A with Verified Answers
BUS5111 Units 1-4 Test Bank
60 Questions with Verified Correct Answers | 100% Complete Solutions
Question 1 — Unit 1:
Which of the following is a primary difference between managerial accounting and financial
accounting?
A) Managerial accounting is highly regulated by GAAP, whereas financial accounting is not.
B) Financial accounting focuses on providing information to internal users for decision-making.
C) Managerial accounting places heavy emphasis on the future, while financial accounting is
primarily historical.
D) Financial accounting reports are generated on a daily or weekly basis, while managerial reports
are strictly annual.
Answer: C
Explanation:
Managerial accounting is designed to help internal management plan and control operations,
heavily focusing on future estimates and budgets. Financial accounting is concerned with
recording historical events to prepare financial statements for external stakeholders.
Question 2 — Unit 1:
,A manufacturing company pays a monthly leasing fee for its factory equipment. How should this
cost be classified?
A) Variable and indirect
B) Fixed and indirect
C) Variable and direct
D) Fixed and direct
Answer: B
Explanation:
The leasing fee remains constant regardless of production volume, making it a fixed cost. Because
the equipment is used for overall manufacturing rather than a single specific product, it is an
indirect cost (manufacturing overhead).
Question 3 — Unit 1:
Which of the following describes an opportunity cost?
A) The amount paid for a machine five years ago.
B) The potential benefit that is given up when one alternative is selected over another.
C) The cost that varies in direct proportion to changes in the activity level.
D) The unavoidable cost that has already been incurred and cannot be recovered.
Answer: B
Explanation:
Opportunity costs represent the foregone benefits from choosing one course of action over the
next best alternative. They are not recorded in financial accounting systems but are crucial for
managerial decision-making.
Question 4 — Unit 1:
Company XYZ is evaluating whether to shut down a product line. The original cost of the
specialized machinery used for this product line was $50,000. In this decision-making scenario,
the $50,000 is considered:
A) A sunk cost
B) A variable cost
C) An opportunity cost
D) A marginal cost
, Answer: A
Explanation:
A sunk cost is a cost that has already been incurred and cannot be changed by any present or
future decision. Therefore, the historical cost of the machinery should be ignored in the decision
to shut down the line.
Question 5 — Unit 1:
Which element is NOT part of a manufacturing company's product costs?
A) Direct Materials
B) Manufacturing Overhead
C) Direct Labor
D) Sales Commissions
Answer: D
Explanation:
Product costs include direct materials, direct labor, and manufacturing overhead. Sales
commissions are selling expenses, which are classified as period costs and expensed on the
income statement in the period incurred.
Question 6 — Unit 1:
If a company’s beginning Work in Process inventory is $15,000, total manufacturing costs incurred
during the period are $85,000, and ending Work in Process inventory is $10,000, what is the Cost
of Goods Manufactured?
A) $80,000
B) $90,000
C) $100,000
D) $110,000
Answer: B
Explanation:
Cost of Goods Manufactured = Beginning WIP + Total Manufacturing Costs - Ending WIP. In this
case, $15,000 + $85,000 - $10,000 = $90,000.
Question 7 — Unit 1:
Cost Classifications, CVP, Budgeting, and Variance Analysis
Course:
BUS5111 Applied Managerial Accounting — University of the People (UoPeople)
Level:
MBA
Year:
2025/2026
Format:
Comprehensive Test Bank — 60 Q&A with Verified Answers
BUS5111 Units 1-4 Test Bank
60 Questions with Verified Correct Answers | 100% Complete Solutions
Question 1 — Unit 1:
Which of the following is a primary difference between managerial accounting and financial
accounting?
A) Managerial accounting is highly regulated by GAAP, whereas financial accounting is not.
B) Financial accounting focuses on providing information to internal users for decision-making.
C) Managerial accounting places heavy emphasis on the future, while financial accounting is
primarily historical.
D) Financial accounting reports are generated on a daily or weekly basis, while managerial reports
are strictly annual.
Answer: C
Explanation:
Managerial accounting is designed to help internal management plan and control operations,
heavily focusing on future estimates and budgets. Financial accounting is concerned with
recording historical events to prepare financial statements for external stakeholders.
Question 2 — Unit 1:
,A manufacturing company pays a monthly leasing fee for its factory equipment. How should this
cost be classified?
A) Variable and indirect
B) Fixed and indirect
C) Variable and direct
D) Fixed and direct
Answer: B
Explanation:
The leasing fee remains constant regardless of production volume, making it a fixed cost. Because
the equipment is used for overall manufacturing rather than a single specific product, it is an
indirect cost (manufacturing overhead).
Question 3 — Unit 1:
Which of the following describes an opportunity cost?
A) The amount paid for a machine five years ago.
B) The potential benefit that is given up when one alternative is selected over another.
C) The cost that varies in direct proportion to changes in the activity level.
D) The unavoidable cost that has already been incurred and cannot be recovered.
Answer: B
Explanation:
Opportunity costs represent the foregone benefits from choosing one course of action over the
next best alternative. They are not recorded in financial accounting systems but are crucial for
managerial decision-making.
Question 4 — Unit 1:
Company XYZ is evaluating whether to shut down a product line. The original cost of the
specialized machinery used for this product line was $50,000. In this decision-making scenario,
the $50,000 is considered:
A) A sunk cost
B) A variable cost
C) An opportunity cost
D) A marginal cost
, Answer: A
Explanation:
A sunk cost is a cost that has already been incurred and cannot be changed by any present or
future decision. Therefore, the historical cost of the machinery should be ignored in the decision
to shut down the line.
Question 5 — Unit 1:
Which element is NOT part of a manufacturing company's product costs?
A) Direct Materials
B) Manufacturing Overhead
C) Direct Labor
D) Sales Commissions
Answer: D
Explanation:
Product costs include direct materials, direct labor, and manufacturing overhead. Sales
commissions are selling expenses, which are classified as period costs and expensed on the
income statement in the period incurred.
Question 6 — Unit 1:
If a company’s beginning Work in Process inventory is $15,000, total manufacturing costs incurred
during the period are $85,000, and ending Work in Process inventory is $10,000, what is the Cost
of Goods Manufactured?
A) $80,000
B) $90,000
C) $100,000
D) $110,000
Answer: B
Explanation:
Cost of Goods Manufactured = Beginning WIP + Total Manufacturing Costs - Ending WIP. In this
case, $15,000 + $85,000 - $10,000 = $90,000.
Question 7 — Unit 1:
