IVY SOFTWARE MBA PREPWORKS MANAGERIAL
ACCOUNTING EXAM 400 ACTUAL QUESTIONS AND
CORRECT ANSWERS WITH RATIONALE ALREADY
GRADED A+
1. If Elli Inc sells 20,000 units of X and 60,000 units of Y, the composite unit
consists of 0.25 X and 0.75 Y.
A. True
B. False
Correct Answer: A
Rationale: Adding 20,000 and 60,000 gives 80,000 total units. Splitting this into
proportions yields 20,000/80,000 = 25% for X and 60,000/80,000 = 75% for Y .
2. If the quantity sold is greater than the quantity produced, there has to be:
A. Finished goods beginning inventory
B. Work-in-process beginning inventory
C. Raw materials beginning inventory
D. Negative manufacturing costs
Correct Answer: A
Rationale: If you sell more units than you produced, you must have obtained the
additional units from finished goods beginning inventory .
3. Contribution margin and contribution margin per unit are the same.
A. True
B. False
Correct Answer: B
Rationale: Contribution margin is the total amount, while contribution margin per
unit is calculated per individual unit sold; they are different measures .
4. Breakeven indicates that sales dollars cover all fixed and variable costs of
manufacturing.
A. True
B. False
Correct Answer: A
,Rationale: At the breakeven point, total revenues equal total costs (fixed plus
variable), meaning the company neither makes a profit nor incurs a loss .
5. Inventoriable costs using variable costing is appropriate for external reporting.
A. True
B. False
Correct Answer: B
Rationale: Variable costing is not acceptable for external reporting under GAAP;
absorption costing is required for external financial statements .
6. Absorption costing clearly separates fixed costs from variable costs.
A. True
B. False
Correct Answer: B
Rationale: Absorption costing combines fixed and variable manufacturing costs
into product costs; it does not clearly separate them. Variable costing separates
fixed and variable costs .
7. Essex Company sells two products, A and B. Product A sales are two times that
of product B. The contribution per unit for A is $4 and for B is $1. What is the
weighted average contribution margin per unit?
A. $2.50
B. $3.00
C. $3.50
D. $5.00
Correct Answer: B
Rationale: If sales of A are twice that of B, the sales mix is 2/3 A and 1/3 B.
Weighted average CM = ($4 × 2/3) + ($1 × 1/3) = $2.67 + $0.33 = $3.00 .
8. Converse Company has two products, A and B. The weighted average
contribution margin per unit is $4. Converse sells twice as many A's as B's. The
contribution margin per unit for B is $2. What is it for A?
A. $3.00
B. $4.00
C. $5.00
D. $6.00
Correct Answer: C
Rationale: With a 2:1 sales mix (A:B), the weighted average CM = ($2 × CM_A +
$1 × CM_B) / 3. Substituting: ($2 × CMA + $2) / 3 = $4, so $2 × CMA + $2 =
$12, therefore CMA = $5.00 .
,9. If the breakeven is 5,000 units and fixed costs are $50,000, what is the
contribution margin per unit?
A. $5.00
B. $10.00
C. $15.00
D. $25.00
Correct Answer: B
Rationale: Breakeven units = Fixed Costs / Contribution Margin per Unit. So
$50,000 / CM per unit = 5,000 units, therefore CM per unit = $50,,000 =
$10.00 .
10. Which of the following will be found on an absorption costing income
statement but not on a variable costing income statement?
A. Contribution margin
B. Gross margin and Cost of Goods Sold
C. Variable expenses
D. Fixed expenses
Correct Answer: B
Rationale: Absorption costing uses gross margin (sales minus cost of goods sold),
while variable costing uses contribution margin (sales minus variable costs) .
11. The "Flex" in a flexible budget comes from the assumption of activity levels
that vary.
A. True
B. False
Correct Answer: A
Rationale: Flexible budgets are designed to adjust for different levels of activity,
making them more useful for performance evaluation than static budgets .
12. Which of the following is most useful to management in exercising their
control function?
A. Budget
B. Performance Report
C. Annual Report
D. Income Tax Report
Correct Answer: B
Rationale: A performance report shows budgeted numbers, actual numbers, and
variances, which helps management control operations by identifying areas
needing attention .
, 13. Which statement is FALSE about the uses of managerial accounting?
A. Managerial accounting cannot be used to determine how many products need to
be sold in order to cover recurring costs
B. Managerial accounting is used to support long-term planning decisions
C. Managerial accounting helps a company evaluate the performance of company
decisions
D. Managerial accounting helps users run the day-to-day operations of the business
Correct Answer: A
Rationale: Managerial accounting is precisely used to determine breakeven points
and how many products need to be sold to cover costs .
14. When information is reported in statements that are useful for persons or
institutions that are "outside" or external to the organization, which branch of
accounting does this fall under?
A. Financial accounting
B. Managerial accounting
C. Governmental accounting
D. Nonprofit accounting
Correct Answer: A
Rationale: Financial accounting focuses on providing information to external users
such as investors, creditors, and regulators .
15. When information includes both historical and estimated data used by
management in conducting daily operations, planning future operations, and
developing overall business strategies, which branch of accounting does this fall
under?
A. Financial accounting
B. Managerial accounting
C. Governmental accounting
D. Contract accounting
Correct Answer: B
Rationale: Managerial accounting uses both historical and estimated data to
support internal management decisions .
16. Which of the following is an example of a line position?
A. The chief foreperson of the factory
B. The accounting manager
C. The head of human resources
D. The CEO
ACCOUNTING EXAM 400 ACTUAL QUESTIONS AND
CORRECT ANSWERS WITH RATIONALE ALREADY
GRADED A+
1. If Elli Inc sells 20,000 units of X and 60,000 units of Y, the composite unit
consists of 0.25 X and 0.75 Y.
A. True
B. False
Correct Answer: A
Rationale: Adding 20,000 and 60,000 gives 80,000 total units. Splitting this into
proportions yields 20,000/80,000 = 25% for X and 60,000/80,000 = 75% for Y .
2. If the quantity sold is greater than the quantity produced, there has to be:
A. Finished goods beginning inventory
B. Work-in-process beginning inventory
C. Raw materials beginning inventory
D. Negative manufacturing costs
Correct Answer: A
Rationale: If you sell more units than you produced, you must have obtained the
additional units from finished goods beginning inventory .
3. Contribution margin and contribution margin per unit are the same.
A. True
B. False
Correct Answer: B
Rationale: Contribution margin is the total amount, while contribution margin per
unit is calculated per individual unit sold; they are different measures .
4. Breakeven indicates that sales dollars cover all fixed and variable costs of
manufacturing.
A. True
B. False
Correct Answer: A
,Rationale: At the breakeven point, total revenues equal total costs (fixed plus
variable), meaning the company neither makes a profit nor incurs a loss .
5. Inventoriable costs using variable costing is appropriate for external reporting.
A. True
B. False
Correct Answer: B
Rationale: Variable costing is not acceptable for external reporting under GAAP;
absorption costing is required for external financial statements .
6. Absorption costing clearly separates fixed costs from variable costs.
A. True
B. False
Correct Answer: B
Rationale: Absorption costing combines fixed and variable manufacturing costs
into product costs; it does not clearly separate them. Variable costing separates
fixed and variable costs .
7. Essex Company sells two products, A and B. Product A sales are two times that
of product B. The contribution per unit for A is $4 and for B is $1. What is the
weighted average contribution margin per unit?
A. $2.50
B. $3.00
C. $3.50
D. $5.00
Correct Answer: B
Rationale: If sales of A are twice that of B, the sales mix is 2/3 A and 1/3 B.
Weighted average CM = ($4 × 2/3) + ($1 × 1/3) = $2.67 + $0.33 = $3.00 .
8. Converse Company has two products, A and B. The weighted average
contribution margin per unit is $4. Converse sells twice as many A's as B's. The
contribution margin per unit for B is $2. What is it for A?
A. $3.00
B. $4.00
C. $5.00
D. $6.00
Correct Answer: C
Rationale: With a 2:1 sales mix (A:B), the weighted average CM = ($2 × CM_A +
$1 × CM_B) / 3. Substituting: ($2 × CMA + $2) / 3 = $4, so $2 × CMA + $2 =
$12, therefore CMA = $5.00 .
,9. If the breakeven is 5,000 units and fixed costs are $50,000, what is the
contribution margin per unit?
A. $5.00
B. $10.00
C. $15.00
D. $25.00
Correct Answer: B
Rationale: Breakeven units = Fixed Costs / Contribution Margin per Unit. So
$50,000 / CM per unit = 5,000 units, therefore CM per unit = $50,,000 =
$10.00 .
10. Which of the following will be found on an absorption costing income
statement but not on a variable costing income statement?
A. Contribution margin
B. Gross margin and Cost of Goods Sold
C. Variable expenses
D. Fixed expenses
Correct Answer: B
Rationale: Absorption costing uses gross margin (sales minus cost of goods sold),
while variable costing uses contribution margin (sales minus variable costs) .
11. The "Flex" in a flexible budget comes from the assumption of activity levels
that vary.
A. True
B. False
Correct Answer: A
Rationale: Flexible budgets are designed to adjust for different levels of activity,
making them more useful for performance evaluation than static budgets .
12. Which of the following is most useful to management in exercising their
control function?
A. Budget
B. Performance Report
C. Annual Report
D. Income Tax Report
Correct Answer: B
Rationale: A performance report shows budgeted numbers, actual numbers, and
variances, which helps management control operations by identifying areas
needing attention .
, 13. Which statement is FALSE about the uses of managerial accounting?
A. Managerial accounting cannot be used to determine how many products need to
be sold in order to cover recurring costs
B. Managerial accounting is used to support long-term planning decisions
C. Managerial accounting helps a company evaluate the performance of company
decisions
D. Managerial accounting helps users run the day-to-day operations of the business
Correct Answer: A
Rationale: Managerial accounting is precisely used to determine breakeven points
and how many products need to be sold to cover costs .
14. When information is reported in statements that are useful for persons or
institutions that are "outside" or external to the organization, which branch of
accounting does this fall under?
A. Financial accounting
B. Managerial accounting
C. Governmental accounting
D. Nonprofit accounting
Correct Answer: A
Rationale: Financial accounting focuses on providing information to external users
such as investors, creditors, and regulators .
15. When information includes both historical and estimated data used by
management in conducting daily operations, planning future operations, and
developing overall business strategies, which branch of accounting does this fall
under?
A. Financial accounting
B. Managerial accounting
C. Governmental accounting
D. Contract accounting
Correct Answer: B
Rationale: Managerial accounting uses both historical and estimated data to
support internal management decisions .
16. Which of the following is an example of a line position?
A. The chief foreperson of the factory
B. The accounting manager
C. The head of human resources
D. The CEO
