Managerial Accounting 5th Canadian Edition Solution Manual –Karen
Braun, Wendy Tietz &Louis Beaubien |Complete Chapters |Verified
Accurate Solution |A+ Grade
What is the primary purpose of managerial accounting?
A. To prepare tax returns
B. To provide information for internal decision-making
C. To report financial results to shareholders
D. To comply with government regulations
Answer: B. To provide information for internal decision-making
Rationale: Managerial accounting focuses on providing managers with relevant financial and
non-financial information to assist in planning, controlling, and decision-making within the
organization.
Question 2
Which of the following is a characteristic of managerial accounting information?
A. Historical in nature only
B. Prepared according to IFRS standards only
C. Emphasizes relevance and timeliness
D. Used mainly by external users
Answer: C. Emphasizes relevance and timeliness
Rationale: Managerial accounting information is designed to meet internal management needs
and therefore focuses on relevance, flexibility, and timely reporting rather than strict external
reporting standards.
Question 3
A manufacturing company incurs direct materials cost of $15,000, direct labour cost of $10,000,
and manufacturing overhead of $5,000. What is the total manufacturing cost?
A. $20,000
B. $25,000
,C. $30,000
D. $35,000
Answer: C. $30,000
Rationale: Total manufacturing cost equals direct materials plus direct labour plus
manufacturing overhead. Therefore: $15,000 + $10,000 + $5,000 = $30,000.
Question 4
Which of the following costs would be classified as a product cost?
A. Advertising expense
B. Office salaries
C. Factory rent
D. Sales commissions
Answer: C. Factory rent
Rationale: Product costs are associated with manufacturing goods and include direct materials,
direct labour, and manufacturing overhead such as factory rent.
Question 5
What is a sunk cost?
A. A future cost that differs between alternatives
B. A cost that cannot be changed regardless of the decision made
C. A variable production cost
D. A manufacturing overhead cost
Answer: B. A cost that cannot be changed regardless of the decision made
Rationale: Sunk costs are past costs already incurred and cannot be recovered or altered by
future decisions.
Chapter 2: Cost Behaviour and Cost Estimation
Question 6
,Which type of cost remains constant in total regardless of changes in activity level?
A. Variable cost
B. Mixed cost
C. Fixed cost
D. Step cost
Answer: C. Fixed cost
Rationale: Fixed costs remain unchanged in total within the relevant range regardless of
production or sales volume.
Question 7
If total variable costs are $40,000 when 10,000 units are produced, what is the variable cost per
unit?
A. $2
B. $4
C. $6
D. $8
Answer: B. $4
Rationale: Variable cost per unit equals total variable cost divided by total units produced.
$40,000 ÷ 10,000 = $4 per unit.
Question 8
Which method separates mixed costs into fixed and variable components using the highest and
lowest activity levels?
A. Scattergraph method
B. Regression analysis
C. Contribution margin method
D. High-low method
Answer: D. High-low method
Rationale: The high-low method estimates variable and fixed costs using the difference between
the highest and lowest activity observations.
, Question 9
A company’s utility bill includes a fixed monthly charge plus a charge per machine hour used.
This utility cost is best described as:
A. Fixed cost
B. Variable cost
C. Mixed cost
D. Step-variable cost
Answer: C. Mixed cost
Rationale: Mixed costs contain both fixed and variable elements. Utilities often include a base
fee plus usage charges.
Question 10
What happens to fixed cost per unit as production increases?
A. It increases
B. It decreases
C. It remains constant
D. It fluctuates randomly
Answer: B. It decreases
Rationale: Total fixed costs remain constant, so when more units are produced, the fixed cost is
spread over more units, reducing the fixed cost per unit.
Chapter 3: Cost-Volume-Profit Analysis
Question 11
Contribution margin is calculated as:
A. Sales minus fixed costs
B. Sales minus variable costs
C. Sales minus cost of goods sold
D. Net income minus fixed costs
Braun, Wendy Tietz &Louis Beaubien |Complete Chapters |Verified
Accurate Solution |A+ Grade
What is the primary purpose of managerial accounting?
A. To prepare tax returns
B. To provide information for internal decision-making
C. To report financial results to shareholders
D. To comply with government regulations
Answer: B. To provide information for internal decision-making
Rationale: Managerial accounting focuses on providing managers with relevant financial and
non-financial information to assist in planning, controlling, and decision-making within the
organization.
Question 2
Which of the following is a characteristic of managerial accounting information?
A. Historical in nature only
B. Prepared according to IFRS standards only
C. Emphasizes relevance and timeliness
D. Used mainly by external users
Answer: C. Emphasizes relevance and timeliness
Rationale: Managerial accounting information is designed to meet internal management needs
and therefore focuses on relevance, flexibility, and timely reporting rather than strict external
reporting standards.
Question 3
A manufacturing company incurs direct materials cost of $15,000, direct labour cost of $10,000,
and manufacturing overhead of $5,000. What is the total manufacturing cost?
A. $20,000
B. $25,000
,C. $30,000
D. $35,000
Answer: C. $30,000
Rationale: Total manufacturing cost equals direct materials plus direct labour plus
manufacturing overhead. Therefore: $15,000 + $10,000 + $5,000 = $30,000.
Question 4
Which of the following costs would be classified as a product cost?
A. Advertising expense
B. Office salaries
C. Factory rent
D. Sales commissions
Answer: C. Factory rent
Rationale: Product costs are associated with manufacturing goods and include direct materials,
direct labour, and manufacturing overhead such as factory rent.
Question 5
What is a sunk cost?
A. A future cost that differs between alternatives
B. A cost that cannot be changed regardless of the decision made
C. A variable production cost
D. A manufacturing overhead cost
Answer: B. A cost that cannot be changed regardless of the decision made
Rationale: Sunk costs are past costs already incurred and cannot be recovered or altered by
future decisions.
Chapter 2: Cost Behaviour and Cost Estimation
Question 6
,Which type of cost remains constant in total regardless of changes in activity level?
A. Variable cost
B. Mixed cost
C. Fixed cost
D. Step cost
Answer: C. Fixed cost
Rationale: Fixed costs remain unchanged in total within the relevant range regardless of
production or sales volume.
Question 7
If total variable costs are $40,000 when 10,000 units are produced, what is the variable cost per
unit?
A. $2
B. $4
C. $6
D. $8
Answer: B. $4
Rationale: Variable cost per unit equals total variable cost divided by total units produced.
$40,000 ÷ 10,000 = $4 per unit.
Question 8
Which method separates mixed costs into fixed and variable components using the highest and
lowest activity levels?
A. Scattergraph method
B. Regression analysis
C. Contribution margin method
D. High-low method
Answer: D. High-low method
Rationale: The high-low method estimates variable and fixed costs using the difference between
the highest and lowest activity observations.
, Question 9
A company’s utility bill includes a fixed monthly charge plus a charge per machine hour used.
This utility cost is best described as:
A. Fixed cost
B. Variable cost
C. Mixed cost
D. Step-variable cost
Answer: C. Mixed cost
Rationale: Mixed costs contain both fixed and variable elements. Utilities often include a base
fee plus usage charges.
Question 10
What happens to fixed cost per unit as production increases?
A. It increases
B. It decreases
C. It remains constant
D. It fluctuates randomly
Answer: B. It decreases
Rationale: Total fixed costs remain constant, so when more units are produced, the fixed cost is
spread over more units, reducing the fixed cost per unit.
Chapter 3: Cost-Volume-Profit Analysis
Question 11
Contribution margin is calculated as:
A. Sales minus fixed costs
B. Sales minus variable costs
C. Sales minus cost of goods sold
D. Net income minus fixed costs
