IVY SOFTWARE MBA PREPWORKS
FUNDAMENTALS OF ECONOMICS FINAL PAPER
2026 EXAM
◉ If the quantity sold is greater than the quantity produced there
has to be: Answer: Finished goods beginning inventory. If you sell
more than you produce, you must obtain the units somewhere. You
obtain them from the finished goods beginning inventory.
◉ Contribution margin and contribution margin per unit are the
same. Answer: False
◉ Breakeven indicates that the sales dollars cover all fixed and
variable costs of manufacturing Answer: True
◉ Inventoriable costs using variable costing is appropriate for
external reporting Answer: False
◉ Essex company sells two products- A and B. Product A sales are
two times that of product B. The contribution per unit for A is $4 and
B is $1. What is the weighted average contribution margin per unit?
Answer: $3
,◉ Absorption costing clearly separates fixed costs from variable
costs Answer: false
◉ Converse company has two products- A and B. The weighted
average contribution margin per unit is $4. Converse sells twice as
many As as Bs. The contribution margin per unit for B is $2. What is
it for A? Answer: $5
◉ If the breakeven is 5000 units and fixed costs are $50,000, what is
the contribution margin per unit? Answer: $10
◉ Which of the following will be found on an absorption costing
income statement but not on a variable costing income statement?
Answer: Gross Margin and Cost of Goods Sold
◉ If units produced are less than units sold, net income using
absorption costing is Answer: Less than variable costing
◉ If the selling price is $5 per unit the variable cost is $1 per unit
and the fixed cost is $20,000, what is the breakeven in units?
Answer: $5,000 (5x - 1x - 20000 = 0, 4x - 20,000=0, 4x=20000, x =
5000)
◉ The total of ALL the right-hand sides of the T-accounts must equal
the total of ALL the left-hand sides of the T-Accounts (T/F) Answer:
,True. The double-entry system of accounting means that for each
transaction recorded, there is a left-hand (debit) entry offset by a
right-hand (credit) entry.
◉ Since the total of all the R sides of accounts equals the total of L
sides, then the total amount of increases entered in the general
ledger must equal the total amount of decreases (T/F) Answer:
False. Cash (Asset) and Common Stock (Owners' Equity) is used to
record the sale of company stock. While the R side equals the L side,
they both increase, thus, the total amount of increases does not
equal the decreases.
◉ Almost all the data necessary to prepare an income statement is
contained in the retained earnings account. Answer: False. not
Almost all. ALL.
◉ A transaction is an event that affects the financial position of a
company. Answer: True.
◉ Credits are generally good and debits are generally bad. Answer:
False. credit means nothing more than the R side while a debit
means the L side. Neither is good or bad.
◉ Bookkeeping accounts are a method of accumulating financial
transactions and summarizing their effects on balance sheet items.
, Answer: True. Bookkeeping accounts provide an easy means for
recording, collecting, and reporting financial transactions of a firm.
◉ Liabilities normally have a L balance Answer: False. Liabilities and
OE usually have R balances while assets have L balances
◉ It is possible to have the books in balance but with mistakes.
Answer: Having the books in balance simply means that each time
you entered a transaction you placed equal amounts on the R and L
sides. Books which balance do not rule out the possibility that a
transaction could have been posted to the wrong account.
◉ The main purpose of the trial balance is to make sure you have
not committed any math errors in your T- Accounts (T/F) Answer:
True. The trial balance is taken as a partial check of the arithmetic
accuracy of the entries previously made.
◉ Fixed costs are fixed per unit produced, but vary in total (true or
false) Answer: False. Fixed costs vary by unit produced but are fixed
in total. Remember the graph with the straight line over all the units
of production.
◉ True or False: Variable costs are fixed per unit but vary in total.
Answer: True.
FUNDAMENTALS OF ECONOMICS FINAL PAPER
2026 EXAM
◉ If the quantity sold is greater than the quantity produced there
has to be: Answer: Finished goods beginning inventory. If you sell
more than you produce, you must obtain the units somewhere. You
obtain them from the finished goods beginning inventory.
◉ Contribution margin and contribution margin per unit are the
same. Answer: False
◉ Breakeven indicates that the sales dollars cover all fixed and
variable costs of manufacturing Answer: True
◉ Inventoriable costs using variable costing is appropriate for
external reporting Answer: False
◉ Essex company sells two products- A and B. Product A sales are
two times that of product B. The contribution per unit for A is $4 and
B is $1. What is the weighted average contribution margin per unit?
Answer: $3
,◉ Absorption costing clearly separates fixed costs from variable
costs Answer: false
◉ Converse company has two products- A and B. The weighted
average contribution margin per unit is $4. Converse sells twice as
many As as Bs. The contribution margin per unit for B is $2. What is
it for A? Answer: $5
◉ If the breakeven is 5000 units and fixed costs are $50,000, what is
the contribution margin per unit? Answer: $10
◉ Which of the following will be found on an absorption costing
income statement but not on a variable costing income statement?
Answer: Gross Margin and Cost of Goods Sold
◉ If units produced are less than units sold, net income using
absorption costing is Answer: Less than variable costing
◉ If the selling price is $5 per unit the variable cost is $1 per unit
and the fixed cost is $20,000, what is the breakeven in units?
Answer: $5,000 (5x - 1x - 20000 = 0, 4x - 20,000=0, 4x=20000, x =
5000)
◉ The total of ALL the right-hand sides of the T-accounts must equal
the total of ALL the left-hand sides of the T-Accounts (T/F) Answer:
,True. The double-entry system of accounting means that for each
transaction recorded, there is a left-hand (debit) entry offset by a
right-hand (credit) entry.
◉ Since the total of all the R sides of accounts equals the total of L
sides, then the total amount of increases entered in the general
ledger must equal the total amount of decreases (T/F) Answer:
False. Cash (Asset) and Common Stock (Owners' Equity) is used to
record the sale of company stock. While the R side equals the L side,
they both increase, thus, the total amount of increases does not
equal the decreases.
◉ Almost all the data necessary to prepare an income statement is
contained in the retained earnings account. Answer: False. not
Almost all. ALL.
◉ A transaction is an event that affects the financial position of a
company. Answer: True.
◉ Credits are generally good and debits are generally bad. Answer:
False. credit means nothing more than the R side while a debit
means the L side. Neither is good or bad.
◉ Bookkeeping accounts are a method of accumulating financial
transactions and summarizing their effects on balance sheet items.
, Answer: True. Bookkeeping accounts provide an easy means for
recording, collecting, and reporting financial transactions of a firm.
◉ Liabilities normally have a L balance Answer: False. Liabilities and
OE usually have R balances while assets have L balances
◉ It is possible to have the books in balance but with mistakes.
Answer: Having the books in balance simply means that each time
you entered a transaction you placed equal amounts on the R and L
sides. Books which balance do not rule out the possibility that a
transaction could have been posted to the wrong account.
◉ The main purpose of the trial balance is to make sure you have
not committed any math errors in your T- Accounts (T/F) Answer:
True. The trial balance is taken as a partial check of the arithmetic
accuracy of the entries previously made.
◉ Fixed costs are fixed per unit produced, but vary in total (true or
false) Answer: False. Fixed costs vary by unit produced but are fixed
in total. Remember the graph with the straight line over all the units
of production.
◉ True or False: Variable costs are fixed per unit but vary in total.
Answer: True.
