MGMT 201 Midterm Exam Questions &
Correct Answers|| Graded A+|| Latest
Update 2026
What is financial accounting concerned with? -CORRECTANSWER Reporting financial
information to external parties such as stockholders, creditors, and regulators
What is managerial accounting concerned with? -CORRECTANSWER Providing
information to employees within an organization so they can formulate plans, control
operations, and make decisions
What are direct costs? -CORRECTANSWER Costs that can be easily and conveniently
traced to a unit of product or other cost object (examples: direct material and direct
labor)
What are indirect costs? -CORRECTANSWER Costs that cannot be easily and
conveniently traced to a unit of product or other cost object (example: manufacturing
overhead)
What are common costs? -CORRECTANSWER Indirect costs incurred to support a
number of cost objects that cannot be traced to any individual cost object
, What are direct materials? -CORRECTANSWER Raw materials that become an
integral part of the product and can be conveniently traced directly to it (example: a seat
installed in an aircraft)
What are direct labor costs? -CORRECTANSWER Labor costs that can be easily
traced to individual units of product (example: wages paid to automobile assembly
workers)
What is manufacturing overhead? -CORRECTANSWER All manufacturing costs except
direct material and direct labor that cannot be readily traced to finished products
(includes indirect materials and indirect labor)
What are examples of manufacturing overhead? -CORRECTANSWER Depreciation of
manufacturing equipment, utility costs, property taxes, and insurance premiums
incurred to operate a manufacturing facility
What are prime costs? -CORRECTANSWER Direct materials + Direct labor
What are conversion costs? -CORRECTANSWER Direct labor + Manufacturing
overhead
What are the two categories of nonmanufacturing costs? -CORRECTANSWER Selling
costs and administrative costs
Correct Answers|| Graded A+|| Latest
Update 2026
What is financial accounting concerned with? -CORRECTANSWER Reporting financial
information to external parties such as stockholders, creditors, and regulators
What is managerial accounting concerned with? -CORRECTANSWER Providing
information to employees within an organization so they can formulate plans, control
operations, and make decisions
What are direct costs? -CORRECTANSWER Costs that can be easily and conveniently
traced to a unit of product or other cost object (examples: direct material and direct
labor)
What are indirect costs? -CORRECTANSWER Costs that cannot be easily and
conveniently traced to a unit of product or other cost object (example: manufacturing
overhead)
What are common costs? -CORRECTANSWER Indirect costs incurred to support a
number of cost objects that cannot be traced to any individual cost object
, What are direct materials? -CORRECTANSWER Raw materials that become an
integral part of the product and can be conveniently traced directly to it (example: a seat
installed in an aircraft)
What are direct labor costs? -CORRECTANSWER Labor costs that can be easily
traced to individual units of product (example: wages paid to automobile assembly
workers)
What is manufacturing overhead? -CORRECTANSWER All manufacturing costs except
direct material and direct labor that cannot be readily traced to finished products
(includes indirect materials and indirect labor)
What are examples of manufacturing overhead? -CORRECTANSWER Depreciation of
manufacturing equipment, utility costs, property taxes, and insurance premiums
incurred to operate a manufacturing facility
What are prime costs? -CORRECTANSWER Direct materials + Direct labor
What are conversion costs? -CORRECTANSWER Direct labor + Manufacturing
overhead
What are the two categories of nonmanufacturing costs? -CORRECTANSWER Selling
costs and administrative costs
