Sample Test Materials
Select only one answer for each question.
1. At what point does depreciation on equipment used to produce a table become an expense? a. At the end of the period when the depreciation is recorded b. When the table is started
c. When the table is completed
d. When the table is sold
2. Which of the following describes an opportunity cost?
a. The largest net benefit given up by choosing one action that precludes taking other actions. b. The costs associated with taking advantage of a business opportunity. c. The costs that appear in the cost of goods sold section of the income statement. d. The revenues that a company will earn when it takes advantage of a business opportunity.
3. Managerial accounting differs from financial accounting in that financial accounting is a. More oriented toward the future
b. Concerned with nonquantitative information
c. Heavily involved with decision analysis and implementation of decisions d. Primarily concerned with external financial reporting
4. A cost that remains unchanged on a per unit basis in a given time period despite changes in the level of activity should be considered a. A variable cost
b. A fixed cost
c. An overhead cost
d. A relevant cost
5. All costs related to the manufacturing function in a company are a. Prime costs
b. Direct costs
c. Product costs
d. Conversion costs
6. Period costs
a. Are always expensed in the period in which they are incurred b. Vary from one period to the next
c. Remain unchanged over a given period of time
d. Are associated with the periodic inventory method
7. Contribution margin is
a. Sales price minus fixed conversion cost
b. Sales price minus direct materials cost
c. Sales price minus variable conversion cost
d. Sales price minus total variable cost
8. Breakeven analysis assumes that
a. Unit variable cost is constant
b. Total revenue is constant
c. Unit fixed cost is...
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