UGA ACCT 5100 Exam I | Practice Problems Only Updated Edition
UGA ACCT 5100 — EXAM I
PRACTICE PROBLEMS & SOLUTIONS
Multiple Choice · Step-by-Step Calculations
Updated Edition
100+ practice questions covering cost concepts, cost behavior,
CVP analysis, manufacturing cost flows, and operating income.
Every numerical item includes full step-by-step work.
Page 1
,UGA ACCT 5100 Exam I | Practice Problems Only Updated Edition
SET 1 — Financial vs Managerial Accounting & Value Chain
1. The primary users of management accounting information are ________.
A) bankers
B) governmental regulatory bodies
C) managers in organizations
D) managerial accountants
Step-by-step:
Management accounting is designed for internal decision makers. External parties (bankers, regulators) rely on financial
accounting. Managerial accountants prepare the information; they are not the primary users.
Answer: C
2. Which statement about managerial vs financial accounting is FALSE?
A) Managerial accounting is future-oriented; financial is primarily historical.
B) Managerial reports are detailed; financial reports are summarized.
C) Managerial accounting must follow GAAP just as financial accounting does.
D) Behavioral considerations are important in managerial accounting.
Step-by-step:
GAAP constrains financial reporting for external users. Managerial accounting has no external GAAP requirement; managers
design systems based on cost-benefit and relevance.
Answer: C
3. Management accounting is used at which parts of the value chain?
A) Production only
B) R&D and production only
C) Every stage (R&D through customer service)
D) Marketing and distribution only
Step-by-step:
The value chain includes R&D, design, production, marketing, distribution, and customer service. Management accounting
supports planning, control, and decisions at every link.
Answer: C
4. Which is NOT one of the three guidelines for management accounting information?
A) Cost-benefit approach
B) Balance technical and behavioral considerations
C) Always use GAAP measurement rules
D) Different costs for different purposes
Step-by-step:
The three guidelines are: (1) cost-benefit, (2) technical/behavioral balance, (3) different costs for different purposes. GAAP is
not required for internal reporting.
Answer: C
5. The sequence R&D → Design → Production → Marketing → Distribution → Customer Service is called the:
A) cost hierarchy
B) value chain
C) contribution format
D) relevant range
Step-by-step:
By definition, the value chain is the sequence of business functions in which usefulness is added to products or services.
Answer: B
Page 2
, UGA ACCT 5100 Exam I | Practice Problems Only Updated Edition
SET 2 — Cost Objects, Drivers & Classification
6. Cost drivers are ________.
A) the different functions in the value chain
B) different types of functional areas in the firm
C) measures of activities that require the use of resources and thereby cause costs
D) different types of cost calculations
Step-by-step:
A cost driver is a variable that causally affects costs. Examples: machine-hours, labor-hours, number of setups. The standard
definition matches option C.
Answer: C
7. A cost that can be traced to a cost object in an economically feasible way is a:
A) period cost
B) indirect cost
C) direct cost
D) sunk cost
Step-by-step:
Direct costs are related to the cost object and can be traced economically. Indirect costs are allocated.
Answer: C
8. Prime costs equal:
A) DM + MOH
B) DL + MOH
C) DM + DL
D) DM + DL + MOH
Step-by-step:
Prime costs = all direct manufacturing costs = Direct materials + Direct labor.
Answer: C
9. Conversion costs equal:
A) DM + DL
B) DL + MOH
C) DM + MOH
D) DM + DL + MOH
Step-by-step:
Conversion costs = costs to convert materials into finished goods = Direct labor + Manufacturing overhead.
Answer: B
10. For a laptop manufacturer (cost object = one laptop), factory supervisor salary is:
A) Direct product cost
B) Indirect product cost
C) Direct period cost
D) Indirect period cost
Step-by-step:
Supervisor salary is manufacturing overhead (cannot be traced to one laptop economically) → indirect. It is a production cost →
product (inventoriable).
Answer: B
11. Advertising for a product is classified as a:
A) product cost
B) inventoriable cost
C) period cost
D) conversion cost
Step-by-step:
Advertising is a marketing cost, incurred outside production. It is expensed when incurred → period cost.
Page 3
UGA ACCT 5100 — EXAM I
PRACTICE PROBLEMS & SOLUTIONS
Multiple Choice · Step-by-Step Calculations
Updated Edition
100+ practice questions covering cost concepts, cost behavior,
CVP analysis, manufacturing cost flows, and operating income.
Every numerical item includes full step-by-step work.
Page 1
,UGA ACCT 5100 Exam I | Practice Problems Only Updated Edition
SET 1 — Financial vs Managerial Accounting & Value Chain
1. The primary users of management accounting information are ________.
A) bankers
B) governmental regulatory bodies
C) managers in organizations
D) managerial accountants
Step-by-step:
Management accounting is designed for internal decision makers. External parties (bankers, regulators) rely on financial
accounting. Managerial accountants prepare the information; they are not the primary users.
Answer: C
2. Which statement about managerial vs financial accounting is FALSE?
A) Managerial accounting is future-oriented; financial is primarily historical.
B) Managerial reports are detailed; financial reports are summarized.
C) Managerial accounting must follow GAAP just as financial accounting does.
D) Behavioral considerations are important in managerial accounting.
Step-by-step:
GAAP constrains financial reporting for external users. Managerial accounting has no external GAAP requirement; managers
design systems based on cost-benefit and relevance.
Answer: C
3. Management accounting is used at which parts of the value chain?
A) Production only
B) R&D and production only
C) Every stage (R&D through customer service)
D) Marketing and distribution only
Step-by-step:
The value chain includes R&D, design, production, marketing, distribution, and customer service. Management accounting
supports planning, control, and decisions at every link.
Answer: C
4. Which is NOT one of the three guidelines for management accounting information?
A) Cost-benefit approach
B) Balance technical and behavioral considerations
C) Always use GAAP measurement rules
D) Different costs for different purposes
Step-by-step:
The three guidelines are: (1) cost-benefit, (2) technical/behavioral balance, (3) different costs for different purposes. GAAP is
not required for internal reporting.
Answer: C
5. The sequence R&D → Design → Production → Marketing → Distribution → Customer Service is called the:
A) cost hierarchy
B) value chain
C) contribution format
D) relevant range
Step-by-step:
By definition, the value chain is the sequence of business functions in which usefulness is added to products or services.
Answer: B
Page 2
, UGA ACCT 5100 Exam I | Practice Problems Only Updated Edition
SET 2 — Cost Objects, Drivers & Classification
6. Cost drivers are ________.
A) the different functions in the value chain
B) different types of functional areas in the firm
C) measures of activities that require the use of resources and thereby cause costs
D) different types of cost calculations
Step-by-step:
A cost driver is a variable that causally affects costs. Examples: machine-hours, labor-hours, number of setups. The standard
definition matches option C.
Answer: C
7. A cost that can be traced to a cost object in an economically feasible way is a:
A) period cost
B) indirect cost
C) direct cost
D) sunk cost
Step-by-step:
Direct costs are related to the cost object and can be traced economically. Indirect costs are allocated.
Answer: C
8. Prime costs equal:
A) DM + MOH
B) DL + MOH
C) DM + DL
D) DM + DL + MOH
Step-by-step:
Prime costs = all direct manufacturing costs = Direct materials + Direct labor.
Answer: C
9. Conversion costs equal:
A) DM + DL
B) DL + MOH
C) DM + MOH
D) DM + DL + MOH
Step-by-step:
Conversion costs = costs to convert materials into finished goods = Direct labor + Manufacturing overhead.
Answer: B
10. For a laptop manufacturer (cost object = one laptop), factory supervisor salary is:
A) Direct product cost
B) Indirect product cost
C) Direct period cost
D) Indirect period cost
Step-by-step:
Supervisor salary is manufacturing overhead (cannot be traced to one laptop economically) → indirect. It is a production cost →
product (inventoriable).
Answer: B
11. Advertising for a product is classified as a:
A) product cost
B) inventoriable cost
C) period cost
D) conversion cost
Step-by-step:
Advertising is a marketing cost, incurred outside production. It is expensed when incurred → period cost.
Page 3
