# Managerial Accounting Quiz

By Schwartz, Marlyn A. | The National Public Accountant, April 1992 | Go to article overview

# Managerial Accounting Quiz

Schwartz, Marlyn A., The National Public Accountant

Most accounting practitioners do not spend much time working in the areas of managerial and cost accounting. However, many of the concepts can be applied to everyday business and can be used to help guide clients as they analyze their business decisions.

Additionally, for those practitioners planning on sitting for the ACAT accounting examination scheduled for may 8, 1992, understanding managerial accounting has traditionally been a big help. In anticipation of this examination, this month's column is made up of typical problems in managerial accounting. Work the problems either as a review for the exam or just for fun to test your knowledge. Answers appear at the end of this column. If you have any questions, please call the NSPA Education Department. We will be happy to help you. 1. The excess of sales revenues over

variable costs and expenses

called:

a. gross profit

b. contribution margin

c. operating income

d. profit margin

2. Salter Inc., unit selling price is

\$40, the unit variable costs is

\$25, fixed costs are \$135,000

and current sales are 10,000 units.

How much will operating income

change if sales increase by

5,000 units?

a. \$60,000 decrease

b. \$75,000 increase

c. \$100,000 increase

d. \$135,000 increase

3. If fixed costs are \$450,000, the

unit selling price is \$75 and the

unit variable costs are \$50, what

is the old and new break-even

sales (units) if the unit selling

price increases by \$5?

a. 6,000 units and 5,250 units

b. 9,000 units and 6,000 units

c. 15,000 units and 18,000

units

d. 18,000 units and 15,000

units

4. The method of analyzing capital

investment proposals that divides

the estimated average annual income

by the average investment

is:

a. average rate of return method

b. cash payback method

c. net present value method

d. internal rate of return

method

5. The expected average rate of return

for a proposed investment

of \$300,000 in a plant asset,

giving effect to depreciation

(straight-line years, no residual

value and an expected total

income yield of \$108,000 is:

a. 9%

b. 15%

c. 18%

d. 27%

6. To maximize profits, which of

the following statements is true?

a. The cost of ordering inventory

must not be greater than

the inventory purchase cost.

b. The cost of carrying inventory

must be balanced with

the opportunity costs related

to inventory.

c. The cost of interrupting

production because of

inventory shortages must be

reduced to zero.

d. The cost of storing inventory

must be reduced below

the cost of ordering

inventory.

7. Production estimates for August

are as follows: Estimated inventory (units),

```  August 1                      12,000
Desired inventory (units),
August 31                      9,000
Expected sales volume (units),
August                        75,000
For each unit produced, the direct
materials requirements are as follows:
Direct material A
(\$5 per lb.)                 3 lbs.
Direct material B
(\$18 per lb.)               1/2 lb.
```

The number of pounds of materials A and B required for August production is:

a. 216,000 lbs. of A;

36,000 lbs. of B

b. 216,000 lbs. of A;

72,000 lbs. of B

c. 225,000 lbs. of A;

37,500 lbs. …

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