CPA Cost and Managerial Accounting
Practice Text Questions (Actual Exam
2026-2027) Correct Detailed & Verified
ANSWERS (100% Accurate Solutions)
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1. Which costing method accumulates costs by individual
job or batch?
A. Process costing
B. Activity-based costing
C. Job order costing
D. Standard costing
Rationale: Job order costing tracks costs separately for each
job or customer order.
2. Variable manufacturing costs include:
A. Factory rent
B. Factory insurance
C. Direct materials
D. Property taxes
,Rationale: Direct materials vary directly with production
volume.
3. Which is considered a period cost?
A. Direct labor
B. Manufacturing overhead
C. Direct materials
D. Administrative salaries
Rationale: Selling and administrative expenses are expensed
in the period incurred.
4. Prime costs consist of:
A. Direct labor and overhead
B. Direct materials and overhead
C. Direct materials and direct labor
D. Overhead and indirect labor
Rationale: Prime costs are the primary direct manufacturing
costs.
5. Conversion costs consist of:
A. Direct materials and labor
B. Direct materials and overhead
C. Direct labor and manufacturing overhead
D. Materials and selling expenses
,Rationale: Conversion costs convert raw materials into
finished goods.
6. Fixed costs per unit:
A. Remain constant as production changes
B. Increase as production increases
C. Decrease as production increases
D. Equal variable cost per unit
Rationale: Fixed costs are spread over more units as output
increases.
7. Contribution margin equals:
A. Sales − Fixed costs
B. Gross profit − Operating expenses
C. Sales − Variable costs
D. Sales − Cost of goods sold
Rationale: Contribution margin measures revenue available
to cover fixed costs.
8. The break-even point occurs when:
A. Sales exceed expenses
B. Gross profit equals operating income
C. Total revenue equals total costs
D. Contribution margin equals net income
Rationale: At break-even, profit is zero.
, 9. Which cost behavior changes in total with activity?
A. Fixed cost
B. Mixed cost
C. Step cost
D. Variable cost
Rationale: Total variable cost changes proportionately with
activity.
10. The high-low method estimates:
A. Product profitability
B. Standard cost variances
C. Variable and fixed cost components
D. Inventory valuation
Rationale: The high-low method separates mixed costs.
11. Which budget is prepared first?
A. Cash budget
B. Production budget
C. Sales budget
D. Capital budget
Rationale: Most operating budgets begin with expected sales.
12. The production budget is based primarily on:
Practice Text Questions (Actual Exam
2026-2027) Correct Detailed & Verified
ANSWERS (100% Accurate Solutions)
ALREADY GRADED A+||NEWEST
VERSION Of The Exam Guarantee
Pass!!
1. Which costing method accumulates costs by individual
job or batch?
A. Process costing
B. Activity-based costing
C. Job order costing
D. Standard costing
Rationale: Job order costing tracks costs separately for each
job or customer order.
2. Variable manufacturing costs include:
A. Factory rent
B. Factory insurance
C. Direct materials
D. Property taxes
,Rationale: Direct materials vary directly with production
volume.
3. Which is considered a period cost?
A. Direct labor
B. Manufacturing overhead
C. Direct materials
D. Administrative salaries
Rationale: Selling and administrative expenses are expensed
in the period incurred.
4. Prime costs consist of:
A. Direct labor and overhead
B. Direct materials and overhead
C. Direct materials and direct labor
D. Overhead and indirect labor
Rationale: Prime costs are the primary direct manufacturing
costs.
5. Conversion costs consist of:
A. Direct materials and labor
B. Direct materials and overhead
C. Direct labor and manufacturing overhead
D. Materials and selling expenses
,Rationale: Conversion costs convert raw materials into
finished goods.
6. Fixed costs per unit:
A. Remain constant as production changes
B. Increase as production increases
C. Decrease as production increases
D. Equal variable cost per unit
Rationale: Fixed costs are spread over more units as output
increases.
7. Contribution margin equals:
A. Sales − Fixed costs
B. Gross profit − Operating expenses
C. Sales − Variable costs
D. Sales − Cost of goods sold
Rationale: Contribution margin measures revenue available
to cover fixed costs.
8. The break-even point occurs when:
A. Sales exceed expenses
B. Gross profit equals operating income
C. Total revenue equals total costs
D. Contribution margin equals net income
Rationale: At break-even, profit is zero.
, 9. Which cost behavior changes in total with activity?
A. Fixed cost
B. Mixed cost
C. Step cost
D. Variable cost
Rationale: Total variable cost changes proportionately with
activity.
10. The high-low method estimates:
A. Product profitability
B. Standard cost variances
C. Variable and fixed cost components
D. Inventory valuation
Rationale: The high-low method separates mixed costs.
11. Which budget is prepared first?
A. Cash budget
B. Production budget
C. Sales budget
D. Capital budget
Rationale: Most operating budgets begin with expected sales.
12. The production budget is based primarily on:
