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MANAGERIAL ACCOUNTING TEST 2 (ACG2071) QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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MANAGERIAL ACCOUNTING TEST 2 (ACG2071) QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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MANAGERIAL ACCOUNTING TEST 2(ACG2071) QUESTIONS AND ANSWERS
WITH SOLUTIONS 2024
Difference betwen variable and absorption costing: - ANSWER Variable costing:
1. Only considers variable costs to be product costs. So fixed manufacturing costs are included in period
costs(selling and administrative expenses).
2. More accurate for CVP Analysis
3. Harder to misinterpret, better decision making
Absorption costing:
1. regards both variable and fixed costs as product costs. So unit costs for a product is both variable
manufacturing costs and fixed manufacturing costs.
Both variations produce different net incomes (If units produced > Units sold, net income is greater for
absorption costing and vice versa)
To make a variable costing contribution format income statement: - ANSWER 1. Find unit product cost
(Direct materials + Direct Labor + Variable manufacturing overhead)
2. Multiply unit product cost for number of products sold
3. Find variable period costs(variable selling and administrative expenses)
4. Sales - step 2 - step 3 = Contribution Margin
5. Contribution margin - fixed costs(fixed overhead + fixed selling/administrative expenses) = Net income
To make an absorption costing income statement: - ANSWER 1. Find unit product costs (Direct Materials
+ Direct Labor + Variable overhead + Fixed overhead per unit)
2. Sales - step 1 = Gross margin
3. Gross margin - period costs(selling and administrative expenses) = Net income
To convert from variable costing to absorption costing: - ANSWER 1. Determine overhead released from
inventory (Fixed overhead in ending inventory - fixed overhead in beginning inventory)
, 2. Variable costing net income - step 1 = Absorption costing net income
What is a traceable fixed cost? - ANSWER A fixed cost incurred due to the existence of a
department/segment; if that department disappeared, so would the cost.
What is a common fixed cost? - ANSWER A fixed cost for more than one department/segment. Even if
that department was eliminated, the cost would still be incurred.
To make an income statement for a segment: - ANSWER 1. Sales - variable expenses = segment
contribution margin
2. Segment margin = segment contribution margin - segment traceable fixed costs
Segment margin is basically the net income for a segment.
What form of income statements are required by GAAP? - ANSWER Absorption costing income
statements.
What is the difference between a self-imposed and top-down budget? - ANSWER A self-imposed budget
is created with the involved managers.
A top-down budget is imposed by higher-level management.
What is a master budget? - ANSWER A collection of multiple budgets that outlines a company's goals.
What budgets are included in the master budget? - ANSWER 1. Sales budget(Shows estimated selling
price and units sold)
2. Production Budget(Shows amount of production needed to satisfy sales and meet ending inventory
expectations)
3. Direct Materials Budget(Shows how much raw materials must be purchased)
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