ACC 260
Management Accounting
Comprehensive Finals Review (Qns & Ans)
2025
1. Which of the following is a key characteristic of activity-
based costing (ABC)?
- A) Uses a single cost driver
- B) Allocates overhead costs based on direct labor hours
- C) Uses multiple cost drivers to allocate overhead costs
- D) Applies overhead costs uniformly across all products
- ANS: C) Uses multiple cost drivers to allocate overhead
costs
©/2025
, - Rationale: Activity-based costing (ABC) uses multiple cost
drivers to allocate overhead costs more accurately based on the
activities that consume resources.
2. What is the primary purpose of a flexible budget?
- A) To provide a static forecast of expenses
- B) To adjust budgeted expenses based on actual activity levels
- C) To control fixed costs
- D) To eliminate variance analysis
- ANS: B) To adjust budgeted expenses based on actual
activity levels
- Rationale: A flexible budget adjusts budgeted expenses
based on actual activity levels, providing a more accurate
comparison of budgeted and actual performance.
### Fill-in-the-Blank Questions
3. The __________ is a financial performance measure that
calculates the difference between actual results and budgeted
amounts for specific periods.
- ANS: variance
- Rationale: Variance analysis involves calculating the
difference between actual results and budgeted amounts to assess
financial performance and identify areas for improvement.
©/2025
, 4. __________ cost refers to a cost that changes in total in direct
proportion to changes in the level of activity.
- ANS: Variable
- Rationale: A variable cost changes in total in direct
proportion to changes in the level of activity, such as production
volume or sales.
### True/False Questions
5. True or False: Direct labor cost is considered a variable cost.
- ANS: True
- Rationale: Direct labor cost is considered a variable cost
because it varies with the level of production activity.
6. True or False: Managerial accounting primarily focuses on
providing information for external users such as investors and
creditors.
- ANS: False
- Rationale: Managerial accounting primarily focuses on
providing information for internal users, such as managers, to aid
in decision-making, planning, and control.
©/2025
Management Accounting
Comprehensive Finals Review (Qns & Ans)
2025
1. Which of the following is a key characteristic of activity-
based costing (ABC)?
- A) Uses a single cost driver
- B) Allocates overhead costs based on direct labor hours
- C) Uses multiple cost drivers to allocate overhead costs
- D) Applies overhead costs uniformly across all products
- ANS: C) Uses multiple cost drivers to allocate overhead
costs
©/2025
, - Rationale: Activity-based costing (ABC) uses multiple cost
drivers to allocate overhead costs more accurately based on the
activities that consume resources.
2. What is the primary purpose of a flexible budget?
- A) To provide a static forecast of expenses
- B) To adjust budgeted expenses based on actual activity levels
- C) To control fixed costs
- D) To eliminate variance analysis
- ANS: B) To adjust budgeted expenses based on actual
activity levels
- Rationale: A flexible budget adjusts budgeted expenses
based on actual activity levels, providing a more accurate
comparison of budgeted and actual performance.
### Fill-in-the-Blank Questions
3. The __________ is a financial performance measure that
calculates the difference between actual results and budgeted
amounts for specific periods.
- ANS: variance
- Rationale: Variance analysis involves calculating the
difference between actual results and budgeted amounts to assess
financial performance and identify areas for improvement.
©/2025
, 4. __________ cost refers to a cost that changes in total in direct
proportion to changes in the level of activity.
- ANS: Variable
- Rationale: A variable cost changes in total in direct
proportion to changes in the level of activity, such as production
volume or sales.
### True/False Questions
5. True or False: Direct labor cost is considered a variable cost.
- ANS: True
- Rationale: Direct labor cost is considered a variable cost
because it varies with the level of production activity.
6. True or False: Managerial accounting primarily focuses on
providing information for external users such as investors and
creditors.
- ANS: False
- Rationale: Managerial accounting primarily focuses on
providing information for internal users, such as managers, to aid
in decision-making, planning, and control.
©/2025
