Managerial Accounting Study Guide Test Bank
Section A: Key Concepts & Principles
1. Managerial accounting focuses on providing information to external users such as investors.
Answer: False
Explanation: Managerial accounting is aimed at internal users like managers for
decision-making.
2. The primary purpose of managerial accounting is to assist management in planning and
controlling operations.
Answer: True
Explanation: Managerial accounting emphasizes decision support for internal management.
3. Cost accounting and managerial accounting are unrelated disciplines.
Answer: False
Explanation: Cost accounting is a subset of managerial accounting.
4. A fixed cost remains constant in total regardless of changes in activity level.
Answer: True
Explanation: Fixed costs do not change with production volume.
5. Variable costs per unit remain constant within the relevant range.
Answer: True
Explanation: While total variable cost changes, cost per unit stays consistent.
6. The contribution margin equals total revenue minus total variable costs.
Answer: True
Explanation: This metric shows the amount available to cover fixed costs and profit.
7. The break-even point occurs where total revenue equals total expenses.
Answer: True
Explanation: At break-even, the company earns zero profit and zero loss.
8. Managerial reports are prepared quarterly for external publication.
Answer: False
Explanation: They are prepared as needed for internal decision-making.
9. Direct materials, direct labor, and manufacturing overhead make up product costs.
Answer: True
Explanation: These three elements define total manufacturing cost.
10. Period costs include selling, general, and administrative expenses.
Answer: True
Explanation: These are expensed in the period incurred.
Section B: Problem Solving & Applications
11. If total fixed costs are $100,000 and contribution margin per unit is $25, the break-even point is
4,000 units.
Answer: True
Explanation: Break-even = Fixed Costs / CM per unit = 100, = 4,000 units.
12. A company’s sales mix affects its overall break-even point.
Answer: True
Explanation: Different products have different contribution margins, influencing the composite
break-even point.
13. In a CVP graph, the total cost line starts at the origin.
Section A: Key Concepts & Principles
1. Managerial accounting focuses on providing information to external users such as investors.
Answer: False
Explanation: Managerial accounting is aimed at internal users like managers for
decision-making.
2. The primary purpose of managerial accounting is to assist management in planning and
controlling operations.
Answer: True
Explanation: Managerial accounting emphasizes decision support for internal management.
3. Cost accounting and managerial accounting are unrelated disciplines.
Answer: False
Explanation: Cost accounting is a subset of managerial accounting.
4. A fixed cost remains constant in total regardless of changes in activity level.
Answer: True
Explanation: Fixed costs do not change with production volume.
5. Variable costs per unit remain constant within the relevant range.
Answer: True
Explanation: While total variable cost changes, cost per unit stays consistent.
6. The contribution margin equals total revenue minus total variable costs.
Answer: True
Explanation: This metric shows the amount available to cover fixed costs and profit.
7. The break-even point occurs where total revenue equals total expenses.
Answer: True
Explanation: At break-even, the company earns zero profit and zero loss.
8. Managerial reports are prepared quarterly for external publication.
Answer: False
Explanation: They are prepared as needed for internal decision-making.
9. Direct materials, direct labor, and manufacturing overhead make up product costs.
Answer: True
Explanation: These three elements define total manufacturing cost.
10. Period costs include selling, general, and administrative expenses.
Answer: True
Explanation: These are expensed in the period incurred.
Section B: Problem Solving & Applications
11. If total fixed costs are $100,000 and contribution margin per unit is $25, the break-even point is
4,000 units.
Answer: True
Explanation: Break-even = Fixed Costs / CM per unit = 100, = 4,000 units.
12. A company’s sales mix affects its overall break-even point.
Answer: True
Explanation: Different products have different contribution margins, influencing the composite
break-even point.
13. In a CVP graph, the total cost line starts at the origin.
