TCA 321 TEST #1 - MANAGERIAL ACCOUNTING
Questions and Answers | With Complete Solutions
Comprehensive Test 1 Practice Review | 2026/2027 Aligned
50 Practice Questions
Alignment:
AACSB Accounting Curriculum Standards
IMA Management Accounting Competencies
Contemporary Cost Accounting Frameworks
Evidence-Based Managerial Decision-Making
# Content Area Q#
1 Cost Concepts, Classifications & Cost Behavior Analysis 1-10
2 Cost-Volume-Profit (CVP) Analysis & Breakeven Modeling 11-20
3 Job Order & Process Costing Systems 21-30
4 Budgeting, Planning & Variance Analysis Fundamentals 31-40
5 Relevant Costing, Decision Making & Performance Measurement 41-50
Cognitive: 30% Recall | 50% Application | 20% Analysis
Style: 75% Scenario-Based | 25% Direct Knowledge
, Section 1: Cost Concepts, Classifications & Cost Behavior Analysis (Q1-Q10)
Q1: Which of the following costs is classified as a product cost under GAAP?
A. A. Sales commissions
B. B. Depreciation on factory equipment [CORRECT]
C. C. Advertising expense
D. D. Office supplies for the accounting department
Correct Answer: B
Rationale: Product costs include direct materials, direct labor, and manufacturing overhead. Depreciation on factory equipment is
part of manufacturing overhead, making it a product cost that is capitalized into inventory. Sales commissions (A), advertising (C),
and office supplies (D) are period costs expensed when incurred.
Q2: A company incurred $120,000 in manufacturing overhead and produced 10,000 units. If 8,000 units were
sold, what amount of manufacturing overhead is expensed on the income statement under absorption
costing?
A. A. $0
B. B. $96,000 [CORRECT]
C. C. $120,000
D. D. $24,000
Correct Answer: B
Rationale: Under absorption costing, manufacturing overhead is allocated to each unit produced: $120,000/10,000 = $12 per unit.
For 8,000 units sold: 8,000 x $12 = $96,000 expensed as COGS. The remaining $24,000 (D) stays in ending inventory on the
balance sheet. Under variable costing, the answer would differ, but under absorption costing, only sold units are expensed.
Q3: Using the high-low method, a company's total costs were $45,000 at 5,000 units and $57,000 at 8,000 units.
What is the variable cost per unit?
A. A. $3.00
B. B. $4.00 [CORRECT]
C. C. $5.00
D. D. $7.14
Correct Answer: B
Rationale: Variable cost per unit = (High cost - Low cost) / (High activity - Low activity) = ($57,000 - $45,000) / (8,000 - 5,000) =
$12,,000 = $4.00 per unit. This method uses only the highest and lowest activity points to estimate the variable and fixed
cost components of a mixed cost.
Q4: The relevant range is best described as:
A. A. The range of activity where total fixed costs change proportionally
B. B. The range of activity over which assumptions about cost behavior (fixed and variable rates) are valid
[CORRECT]
C. C. The range of possible selling prices for a product
D. D. The range of production volumes at which a company breaks even
Correct Answer: B
Rationale: The relevant range is the band of activity within which cost behavior patterns (per-unit variable costs and total fixed
costs) remain constant and predictable. Outside this range, fixed costs may step up (e.g., new equipment needed) and variable
cost per unit may change (e.g., quantity discounts). It does not relate to pricing (C) or breakeven specifically (D).
Q5: A factory supervisor's salary is $72,000 per year. This cost is best classified as:
A. A. Variable, product cost
B. B. Fixed, product cost (manufacturing overhead) [CORRECT]
C. C. Fixed, period cost
D. D. Mixed, product cost
Correct Answer: B
Rationale: A factory supervisor's salary is a fixed cost (does not change with production volume within the relevant range) and is
classified as manufacturing overhead, which is a product cost. It is not a period cost (C) because it is incurred in the production
facility. It is not variable (A) or mixed (D) since it does not change with activity level.
Q6: Which cost classification describes the cost of direct materials used in production?
A. A. Indirect, variable, product cost
B. B. Direct, variable, product cost [CORRECT]
C. C. Direct, fixed, product cost
Questions and Answers | With Complete Solutions
Comprehensive Test 1 Practice Review | 2026/2027 Aligned
50 Practice Questions
Alignment:
AACSB Accounting Curriculum Standards
IMA Management Accounting Competencies
Contemporary Cost Accounting Frameworks
Evidence-Based Managerial Decision-Making
# Content Area Q#
1 Cost Concepts, Classifications & Cost Behavior Analysis 1-10
2 Cost-Volume-Profit (CVP) Analysis & Breakeven Modeling 11-20
3 Job Order & Process Costing Systems 21-30
4 Budgeting, Planning & Variance Analysis Fundamentals 31-40
5 Relevant Costing, Decision Making & Performance Measurement 41-50
Cognitive: 30% Recall | 50% Application | 20% Analysis
Style: 75% Scenario-Based | 25% Direct Knowledge
, Section 1: Cost Concepts, Classifications & Cost Behavior Analysis (Q1-Q10)
Q1: Which of the following costs is classified as a product cost under GAAP?
A. A. Sales commissions
B. B. Depreciation on factory equipment [CORRECT]
C. C. Advertising expense
D. D. Office supplies for the accounting department
Correct Answer: B
Rationale: Product costs include direct materials, direct labor, and manufacturing overhead. Depreciation on factory equipment is
part of manufacturing overhead, making it a product cost that is capitalized into inventory. Sales commissions (A), advertising (C),
and office supplies (D) are period costs expensed when incurred.
Q2: A company incurred $120,000 in manufacturing overhead and produced 10,000 units. If 8,000 units were
sold, what amount of manufacturing overhead is expensed on the income statement under absorption
costing?
A. A. $0
B. B. $96,000 [CORRECT]
C. C. $120,000
D. D. $24,000
Correct Answer: B
Rationale: Under absorption costing, manufacturing overhead is allocated to each unit produced: $120,000/10,000 = $12 per unit.
For 8,000 units sold: 8,000 x $12 = $96,000 expensed as COGS. The remaining $24,000 (D) stays in ending inventory on the
balance sheet. Under variable costing, the answer would differ, but under absorption costing, only sold units are expensed.
Q3: Using the high-low method, a company's total costs were $45,000 at 5,000 units and $57,000 at 8,000 units.
What is the variable cost per unit?
A. A. $3.00
B. B. $4.00 [CORRECT]
C. C. $5.00
D. D. $7.14
Correct Answer: B
Rationale: Variable cost per unit = (High cost - Low cost) / (High activity - Low activity) = ($57,000 - $45,000) / (8,000 - 5,000) =
$12,,000 = $4.00 per unit. This method uses only the highest and lowest activity points to estimate the variable and fixed
cost components of a mixed cost.
Q4: The relevant range is best described as:
A. A. The range of activity where total fixed costs change proportionally
B. B. The range of activity over which assumptions about cost behavior (fixed and variable rates) are valid
[CORRECT]
C. C. The range of possible selling prices for a product
D. D. The range of production volumes at which a company breaks even
Correct Answer: B
Rationale: The relevant range is the band of activity within which cost behavior patterns (per-unit variable costs and total fixed
costs) remain constant and predictable. Outside this range, fixed costs may step up (e.g., new equipment needed) and variable
cost per unit may change (e.g., quantity discounts). It does not relate to pricing (C) or breakeven specifically (D).
Q5: A factory supervisor's salary is $72,000 per year. This cost is best classified as:
A. A. Variable, product cost
B. B. Fixed, product cost (manufacturing overhead) [CORRECT]
C. C. Fixed, period cost
D. D. Mixed, product cost
Correct Answer: B
Rationale: A factory supervisor's salary is a fixed cost (does not change with production volume within the relevant range) and is
classified as manufacturing overhead, which is a product cost. It is not a period cost (C) because it is incurred in the production
facility. It is not variable (A) or mixed (D) since it does not change with activity level.
Q6: Which cost classification describes the cost of direct materials used in production?
A. A. Indirect, variable, product cost
B. B. Direct, variable, product cost [CORRECT]
C. C. Direct, fixed, product cost
