MAC2601
Principles of Management
Accounting
Comprehensive Final
Exam Review
Q&A
2024
,1. Which of the following is not a method used in cost estimation?
A) High-low method
B) Least-squares regression
C) Account analysis
D) Time-driven activity-based costing
Correct Answer: D) Time-driven activity-based costing
Rationale: Time-driven activity-based costing is a method of
cost accounting used in managerial accounting that allows
businesses to gather data about their operating costs.
2. In cost-volume-profit analysis, what does the contribution
margin ratio signify?
A) The percentage of each sales dollar available to cover fixed
costs and profit
B) The total fixed costs divided by the contribution margin per
unit
C) The change in total costs due to a one-unit change in
production volume
D) The ratio of variable costs to sales revenue
Correct Answer: A) The percentage of each sales dollar
available to cover fixed costs and profit
Rationale: The contribution margin ratio is the percentage of
each sales dollar remaining after variable costs have been
deducted, which contributes to covering fixed costs and
generating profit.
3. Which cost classification would be used for a cost that changes
in total with the level of activity but remains constant on a per-
unit basis?
A) Fixed cost
B) Variable cost
C) Mixed cost
D) Step cost
, Correct Answer: B) Variable cost
Rationale: Variable costs vary in total in direct proportion to
changes in an activity level but remain constant on a per-unit
basis.
4. What is a cost object?
A) A segment of the business that generates costs
B) A unit of product or service in relation to which costs are
measured
C) A department or function within the organization
D) A ledger account that tracks costs
Correct Answer: B) A unit of product or service in relation to
which costs are measured
Rationale: A cost object is anything for which a separate
measurement of costs is desired, such as a product, service,
project, customer, or activity.
5. In management accounting, which of the following best
describes 'cost behavior'?
A) The process of assigning costs to cost objects
B) The study of how costs change in response to changes in an
organization's activities
C) The classification of costs as either direct or indirect
D) The allocation of fixed costs over various cost objects
Correct Answer: B) The study of how costs change in response
to changes in an organization's activities
Rationale: Cost behavior refers to the way different types of
production costs change when there is a change in the level of
production.
6. Which method is most appropriate for estimating the fixed and
variable components of a mixed cost?
A) Scatter plot method
Principles of Management
Accounting
Comprehensive Final
Exam Review
Q&A
2024
,1. Which of the following is not a method used in cost estimation?
A) High-low method
B) Least-squares regression
C) Account analysis
D) Time-driven activity-based costing
Correct Answer: D) Time-driven activity-based costing
Rationale: Time-driven activity-based costing is a method of
cost accounting used in managerial accounting that allows
businesses to gather data about their operating costs.
2. In cost-volume-profit analysis, what does the contribution
margin ratio signify?
A) The percentage of each sales dollar available to cover fixed
costs and profit
B) The total fixed costs divided by the contribution margin per
unit
C) The change in total costs due to a one-unit change in
production volume
D) The ratio of variable costs to sales revenue
Correct Answer: A) The percentage of each sales dollar
available to cover fixed costs and profit
Rationale: The contribution margin ratio is the percentage of
each sales dollar remaining after variable costs have been
deducted, which contributes to covering fixed costs and
generating profit.
3. Which cost classification would be used for a cost that changes
in total with the level of activity but remains constant on a per-
unit basis?
A) Fixed cost
B) Variable cost
C) Mixed cost
D) Step cost
, Correct Answer: B) Variable cost
Rationale: Variable costs vary in total in direct proportion to
changes in an activity level but remain constant on a per-unit
basis.
4. What is a cost object?
A) A segment of the business that generates costs
B) A unit of product or service in relation to which costs are
measured
C) A department or function within the organization
D) A ledger account that tracks costs
Correct Answer: B) A unit of product or service in relation to
which costs are measured
Rationale: A cost object is anything for which a separate
measurement of costs is desired, such as a product, service,
project, customer, or activity.
5. In management accounting, which of the following best
describes 'cost behavior'?
A) The process of assigning costs to cost objects
B) The study of how costs change in response to changes in an
organization's activities
C) The classification of costs as either direct or indirect
D) The allocation of fixed costs over various cost objects
Correct Answer: B) The study of how costs change in response
to changes in an organization's activities
Rationale: Cost behavior refers to the way different types of
production costs change when there is a change in the level of
production.
6. Which method is most appropriate for estimating the fixed and
variable components of a mixed cost?
A) Scatter plot method
