Test bank for Managerial Accounting Test 1 (Chapter 1-3) exam
2026/2027 complete questions and detailed answers
1. product costing: Determining the cost of a product.
2. Financial Accounting: 1. Prepares financial statements for external users
2. Users are creditors government and the public (external users)
3. Historical nature
4. More summarized and less detail
5. characterized by objectivity, reliability, consistency, historical nature
3. Managerial Accounting: 1. For internal users
2. Includes both historical data and future estimates
3. Can report an entire business or just a segment
4. Need not be prepared according to GAAP
5. Concerned with relevance and timeliness
4. Direct Material: cost of direct materials in the finished products
5. Direct labor: the labor of employees who convert materials to finished goods
6. Manufacturing overhead: All manufacturing costs except direct materials and direct labor. Includes
indirect materials and indirect labor.
7. Average cost per unit: Total Cost/ number of units made
8. Product cost: Costs tied up in inventory and reported as such on the balance sheet
9. Cost of Goods Sold: Expense of manufacturing the inventory and recorded at the time of sale (JE)
10. Period Cost: Costs not attached to inventory and expensed when incurred
Examples include selling and SG&A
11. COGS formula: Gross Profit = Revenue - COGS
12. Net Income formula: Net income = Gross profit - All other expense
13. Selling, General, and Administrative Cost (SG&A): costs that are taken directly to the income
statement as expenses in the period in which they are incurred or accrued
14. Upstream Costs: Costs incurred before manufacturing begins, such as research and development
15. Downstream Costs: Costs incurred after production is complete.
(Ex include transportation, storage, advertising)
16. Cost behavior: how cost change in relation to sales volume
17. Fixed cost: 1. remain the same regardless of production volume
2. change on a per unit basis
18. Variable cost: 1. changes in direct proportion to changes in volume
2. stays the same on a per unit basis
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2026/2027 complete questions and detailed answers
1. product costing: Determining the cost of a product.
2. Financial Accounting: 1. Prepares financial statements for external users
2. Users are creditors government and the public (external users)
3. Historical nature
4. More summarized and less detail
5. characterized by objectivity, reliability, consistency, historical nature
3. Managerial Accounting: 1. For internal users
2. Includes both historical data and future estimates
3. Can report an entire business or just a segment
4. Need not be prepared according to GAAP
5. Concerned with relevance and timeliness
4. Direct Material: cost of direct materials in the finished products
5. Direct labor: the labor of employees who convert materials to finished goods
6. Manufacturing overhead: All manufacturing costs except direct materials and direct labor. Includes
indirect materials and indirect labor.
7. Average cost per unit: Total Cost/ number of units made
8. Product cost: Costs tied up in inventory and reported as such on the balance sheet
9. Cost of Goods Sold: Expense of manufacturing the inventory and recorded at the time of sale (JE)
10. Period Cost: Costs not attached to inventory and expensed when incurred
Examples include selling and SG&A
11. COGS formula: Gross Profit = Revenue - COGS
12. Net Income formula: Net income = Gross profit - All other expense
13. Selling, General, and Administrative Cost (SG&A): costs that are taken directly to the income
statement as expenses in the period in which they are incurred or accrued
14. Upstream Costs: Costs incurred before manufacturing begins, such as research and development
15. Downstream Costs: Costs incurred after production is complete.
(Ex include transportation, storage, advertising)
16. Cost behavior: how cost change in relation to sales volume
17. Fixed cost: 1. remain the same regardless of production volume
2. change on a per unit basis
18. Variable cost: 1. changes in direct proportion to changes in volume
2. stays the same on a per unit basis
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