Managerial Accounting
Final Assessment Review
(Questions & Solutions)
2025
1
, Question 1:
Which technique is most effective for identifying the primary cost drivers
and allocating overhead more accurately?
A. Absorption costing
B. Variable costing
C. Activity‑based costing
D. Process costing
Correct ANS: C
Rationale:
Activity‑based costing (ABC) identifies the cost drivers behind overhead
and assigns costs based on the actual activities that consume resources,
leading to more precise product costing.
---
Question 2:
Which budgeting method starts from zero and requires that every
expense be justified for each new period, rather than using past budgets
as a baseline?
A. Incremental budgeting
B. Zero‑based budgeting
C. Flexible budgeting
D. Activity‑based budgeting
Correct ANS: B
Rationale:
Zero‑based budgeting requires managers to justify every expense item
from scratch, ensuring that all expenditures are necessary and aligned
with current objectives.
---
2
, Question 3:
The balanced scorecard is best described as a performance measurement
system that integrates:
A. Only financial metrics
B. Only operational data
C. Financial and non‑financial indicators across multiple perspectives
D. Only cost reduction targets
Correct ANS: C
Rationale:
The balanced scorecard combines financial, customer, internal process,
and learning/growth measures to give a well‑rounded view of
organizational performance.
---
Question 4:
In cost–volume–profit (CVP) analysis, which assumption is generally
made regarding cost behavior over the relevant range?
A. All costs are fixed
B. All costs are variable
C. Costs are linear and constant per unit
D. Costs fluctuate unpredictably
Correct ANS: C
Rationale:
CVP analysis assumes that variable costs change in a linear fashion with
volume and that fixed costs remain constant within the relevant range.
---
Question 5:
An unfavorable labor efficiency variance typically indicates that:
A. Workers were paid less than the standard rate
3
, B. More labor hours were used than the standard allowed for the actual
output
C. Fixed overhead was overestimated
D. Production volume was lower than expected
Correct ANS: B
Rationale:
An unfavorable labor efficiency variance means that the actual labor
hours exceeded the standard hours permitted for the output achieved,
indicating lower efficiency.
---
Question 6:
Which cost should be disregarded in managerial decision making because
it cannot be recovered?
A. Differential cost
B. Sunk cost
C. Opportunity cost
D. Incremental cost
Correct ANS: B
Rationale:
Sunk costs are past expenses that cannot be altered by any current or
future actions and should therefore be ignored in decision making.
---
Question 7:
Which analytical method is most useful for assessing the risk of various
cost and revenue scenarios in managerial decisions?
A. Variance analysis
B. Sensitivity analysis
C. Break‑even analysis
D. Ratio analysis
4
Final Assessment Review
(Questions & Solutions)
2025
1
, Question 1:
Which technique is most effective for identifying the primary cost drivers
and allocating overhead more accurately?
A. Absorption costing
B. Variable costing
C. Activity‑based costing
D. Process costing
Correct ANS: C
Rationale:
Activity‑based costing (ABC) identifies the cost drivers behind overhead
and assigns costs based on the actual activities that consume resources,
leading to more precise product costing.
---
Question 2:
Which budgeting method starts from zero and requires that every
expense be justified for each new period, rather than using past budgets
as a baseline?
A. Incremental budgeting
B. Zero‑based budgeting
C. Flexible budgeting
D. Activity‑based budgeting
Correct ANS: B
Rationale:
Zero‑based budgeting requires managers to justify every expense item
from scratch, ensuring that all expenditures are necessary and aligned
with current objectives.
---
2
, Question 3:
The balanced scorecard is best described as a performance measurement
system that integrates:
A. Only financial metrics
B. Only operational data
C. Financial and non‑financial indicators across multiple perspectives
D. Only cost reduction targets
Correct ANS: C
Rationale:
The balanced scorecard combines financial, customer, internal process,
and learning/growth measures to give a well‑rounded view of
organizational performance.
---
Question 4:
In cost–volume–profit (CVP) analysis, which assumption is generally
made regarding cost behavior over the relevant range?
A. All costs are fixed
B. All costs are variable
C. Costs are linear and constant per unit
D. Costs fluctuate unpredictably
Correct ANS: C
Rationale:
CVP analysis assumes that variable costs change in a linear fashion with
volume and that fixed costs remain constant within the relevant range.
---
Question 5:
An unfavorable labor efficiency variance typically indicates that:
A. Workers were paid less than the standard rate
3
, B. More labor hours were used than the standard allowed for the actual
output
C. Fixed overhead was overestimated
D. Production volume was lower than expected
Correct ANS: B
Rationale:
An unfavorable labor efficiency variance means that the actual labor
hours exceeded the standard hours permitted for the output achieved,
indicating lower efficiency.
---
Question 6:
Which cost should be disregarded in managerial decision making because
it cannot be recovered?
A. Differential cost
B. Sunk cost
C. Opportunity cost
D. Incremental cost
Correct ANS: B
Rationale:
Sunk costs are past expenses that cannot be altered by any current or
future actions and should therefore be ignored in decision making.
---
Question 7:
Which analytical method is most useful for assessing the risk of various
cost and revenue scenarios in managerial decisions?
A. Variance analysis
B. Sensitivity analysis
C. Break‑even analysis
D. Ratio analysis
4
