BUS A 100 EXAM 1 2025 QUESTIONS AND ANSWERS
What is the formula for a contribution margin income statement? - CORRECT ANSWER✅✅Sales-
variable cost=Contribution Margin;Contribution Margin-Fixed Costs=Net income
What is the formula for a single step income statement? - CORRECT ANSWER✅✅Revenue-
expenses=net income(or loss)
What is the formula for a multi step income statement? - CORRECT ANSWER✅✅Sales-cost of goods
sold=Gross profit;gross profit-operating expenses=net income(or loss)
What is included in the total product cost? - CORRECT ANSWER✅✅Direct Materials+Direct
Labor+Manufacturing overhead
What is the difference between inventoriable vs non inventoriable costs? - CORRECT
ANSWER✅✅Inventoriable directly relates to production,capitalized as inventory until sold non
inventoriable not directly tied to production expensed in the period incurred
What are two main strategies companies use to compete in the market? - CORRECT
ANSWER✅✅Product differentiation,price based competition
What is an example of product differentiation - CORRECT ANSWER✅✅BMW differentating its cars from
other cars in their speed handling
What is an example of price based competition - CORRECT ANSWER✅✅Walmart selling products at a
lower price
Three types of inventory accounts in a manufacturing firm - CORRECT ANSWER✅✅Raw materials
inventory,work in process inventory, finished goods inventory
What does raw material inventory represent? - CORRECT ANSWER✅✅Materials purchased but not yet
used in production
, What does work in process inventory represent? - CORRECT ANSWER✅✅Costs accumulated during
production but before completion
What does finished goods inventory represent? - CORRECT ANSWER✅✅Completed products ready for
sale
Three types of manufacturing costs - CORRECT ANSWER✅✅direct material, direct labor, manufacturing
overhead
What are direct materials - CORRECT ANSWER✅✅Raw materials that are directly used in production
What is direct labor - CORRECT ANSWER✅✅labor costs for employees who directly work on converting
raw materials into finished products
What is manufacturing overhead? - CORRECT ANSWER✅✅All other factory related costs
What is the flow of costs in a manufacturing system? - CORRECT ANSWER✅✅Raw materials->work in
process->finished goods->cost of goods sold
When are costs moved from finished goods inventory to cost of goods sold - CORRECT
ANSWER✅✅When the finished goods are sold
Who are the internal users of accounting information? - CORRECT ANSWER✅✅Board of directors CEOs
managers plant supervisors
Who are the external users of accounting information? - CORRECT ANSWER✅✅Creditors investors
What decisions does managerial accounting help with? - CORRECT ANSWER✅✅Setting goals,evaluating
performance,deciding on product pricing,improving efficiency
What is the formula for a contribution margin income statement? - CORRECT ANSWER✅✅Sales-
variable cost=Contribution Margin;Contribution Margin-Fixed Costs=Net income
What is the formula for a single step income statement? - CORRECT ANSWER✅✅Revenue-
expenses=net income(or loss)
What is the formula for a multi step income statement? - CORRECT ANSWER✅✅Sales-cost of goods
sold=Gross profit;gross profit-operating expenses=net income(or loss)
What is included in the total product cost? - CORRECT ANSWER✅✅Direct Materials+Direct
Labor+Manufacturing overhead
What is the difference between inventoriable vs non inventoriable costs? - CORRECT
ANSWER✅✅Inventoriable directly relates to production,capitalized as inventory until sold non
inventoriable not directly tied to production expensed in the period incurred
What are two main strategies companies use to compete in the market? - CORRECT
ANSWER✅✅Product differentiation,price based competition
What is an example of product differentiation - CORRECT ANSWER✅✅BMW differentating its cars from
other cars in their speed handling
What is an example of price based competition - CORRECT ANSWER✅✅Walmart selling products at a
lower price
Three types of inventory accounts in a manufacturing firm - CORRECT ANSWER✅✅Raw materials
inventory,work in process inventory, finished goods inventory
What does raw material inventory represent? - CORRECT ANSWER✅✅Materials purchased but not yet
used in production
, What does work in process inventory represent? - CORRECT ANSWER✅✅Costs accumulated during
production but before completion
What does finished goods inventory represent? - CORRECT ANSWER✅✅Completed products ready for
sale
Three types of manufacturing costs - CORRECT ANSWER✅✅direct material, direct labor, manufacturing
overhead
What are direct materials - CORRECT ANSWER✅✅Raw materials that are directly used in production
What is direct labor - CORRECT ANSWER✅✅labor costs for employees who directly work on converting
raw materials into finished products
What is manufacturing overhead? - CORRECT ANSWER✅✅All other factory related costs
What is the flow of costs in a manufacturing system? - CORRECT ANSWER✅✅Raw materials->work in
process->finished goods->cost of goods sold
When are costs moved from finished goods inventory to cost of goods sold - CORRECT
ANSWER✅✅When the finished goods are sold
Who are the internal users of accounting information? - CORRECT ANSWER✅✅Board of directors CEOs
managers plant supervisors
Who are the external users of accounting information? - CORRECT ANSWER✅✅Creditors investors
What decisions does managerial accounting help with? - CORRECT ANSWER✅✅Setting goals,evaluating
performance,deciding on product pricing,improving efficiency
