Managerial Accounting is one of the two big branches of accounting most first year students tackle. To help get you up to speed, we have created this Managerial Accounting 101 Quiz. It covers some common concepts and also includes a few interesting facts to accelerate your learning.
Managerial accounting is:
- Focused on creating standardized reports that are presented to people outside the business
- The study of internal costs, profits, and volumes to control and optimize a business
- Concerned with investigating how managers spend money to uncover fraud
Good managerial accounting can help:
- Businesses decide what international markets to enter
- Managers determine what products should be discontinued
- Executives set their pricing strategy
- All of the above
Previous answers: 2, 4
Managerial Accounting 101 Quiz Learning! Managerial Accounting looks at the internal operations of a business to understand where its costs come from, what its minimum pricing should be, and where to make investments. Where Financial Accounting exists to report results to both internal and external stakeholders, Managerial Accounting helps leaders make big decisions and that grow the business.
Generally, the work of a Managerial Accountant is:
- Not checked by an external auditor – you’re on your own!
- Checked by an external auditor
Managerial Accountants work with lots of kinds of costs. Which of the following is not a kind of cost:
Previous answers: 1, 4
Managerial Accounting 101 Quiz Learning! Managerial Accountants spend a lot of time working out how much stuff really costs (not just what people tell them it costs). They most commonly deal with the concepts of fixed and variable costs. If they know the fixes and variable cost of an item, how much it was sold for, and the total units sold, accountants can calculate the total profit for a product. In a world where profits are king, Managerial Accountants can then make recommendations about what products are more profitable and where the boss should invest.
A variable costs can best be described as:
- A cost that is incurred for every unit a business produces
- A cost that decreases over time
- A cost that includes things like buildings and factory equipment
A fixed cost can best be described as:
- A cost that changes, either up or down, depending on the number of units produced
- A cost that remains the same regardless of the number of units produced
- A cost that increases with the number of units produced
Previous 2 answers: 1, 2
Managerial Accounting 101 Quiz Learning! Variable costs are normally expressed “per unit” e.g., a business that makes hamburgers might pay $2 for the bun, meat, onions, and ketchup in each burger. If they produce no burgers, then the total variable cost is $0. If they produce 100 burgers, then total variable costs are $200. In either case, the variable cost is considered “$2 per burger”. Fixed costs, on the other hand, capture things that don’t change with volume, like rent. It doesn’t matter how many burgers you make, the rent for the building will never change (assuming you don’t get a bigger place!)
The overall formula for profit is:
- Profit = (Price – Variable Cost) * Quantity – Fixed Costs
- Profit = Price * Quantity – Fixed Cost * Quantity
- Profit = (Price – Variable Costs + Fixed Costs) * Quantity
Previous answer: 1 – and don’t forget it!
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