ACG 5075
Managerial Accounting
Midterms Exam Review (Qns & Ans)
2025
1. Which of the following costing methods involves allocating
costs to products based on the activities required to produce them?
- A. Job order costing
- B. Process costing
- C. Activity-based costing (ABC)
- D. Absorption costing
ANS: C. Activity-based costing (ABC)
©/2025
, Rationale: Activity-based costing (ABC) allocates costs to
products based on the activities required to produce them,
providing a more accurate allocation of overhead costs.
2. What is the primary purpose of a budget in managerial
accounting?
- A. To prepare financial statements
- B. To provide information for external stakeholders
- C. To assist in planning and control
- D. To calculate taxes owed
ANS: C. To assist in planning and control
Rationale: Budgets are used in managerial accounting to
assist in planning and control, helping managers make informed
decisions and monitor performance.
Fill-in-the-Blank Questions
3. The __________ margin is calculated by subtracting variable
costs from sales revenue.
ANS: Contribution
©/2025
, Rationale: The contribution margin is calculated by
subtracting variable costs from sales revenue, providing insight
into the amount available to cover fixed costs and generate profit.
4. __________ costs are costs that remain constant regardless of
the level of production or sales.
ANS: Fixed
Rationale: Fixed costs remain constant regardless of the level
of production or sales, such as rent and salaries of permanent
staff.
True/False Questions
5. True or False: Standard costing involves setting
predetermined costs for products or services and comparing them
to actual costs.
ANS: True
Rationale: Standard costing involves setting predetermined
costs for products or services and comparing them to actual costs
to identify variances and control costs.
©/2025
Managerial Accounting
Midterms Exam Review (Qns & Ans)
2025
1. Which of the following costing methods involves allocating
costs to products based on the activities required to produce them?
- A. Job order costing
- B. Process costing
- C. Activity-based costing (ABC)
- D. Absorption costing
ANS: C. Activity-based costing (ABC)
©/2025
, Rationale: Activity-based costing (ABC) allocates costs to
products based on the activities required to produce them,
providing a more accurate allocation of overhead costs.
2. What is the primary purpose of a budget in managerial
accounting?
- A. To prepare financial statements
- B. To provide information for external stakeholders
- C. To assist in planning and control
- D. To calculate taxes owed
ANS: C. To assist in planning and control
Rationale: Budgets are used in managerial accounting to
assist in planning and control, helping managers make informed
decisions and monitor performance.
Fill-in-the-Blank Questions
3. The __________ margin is calculated by subtracting variable
costs from sales revenue.
ANS: Contribution
©/2025
, Rationale: The contribution margin is calculated by
subtracting variable costs from sales revenue, providing insight
into the amount available to cover fixed costs and generate profit.
4. __________ costs are costs that remain constant regardless of
the level of production or sales.
ANS: Fixed
Rationale: Fixed costs remain constant regardless of the level
of production or sales, such as rent and salaries of permanent
staff.
True/False Questions
5. True or False: Standard costing involves setting
predetermined costs for products or services and comparing them
to actual costs.
ANS: True
Rationale: Standard costing involves setting predetermined
costs for products or services and comparing them to actual costs
to identify variances and control costs.
©/2025
