Managerial Accounting Exam 1 Definitions Practice Questions

Managerial accounting is the process of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organizations goals.

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A cost object is anything for which a separate measurement of costs is desired, such as a product, service, project, or department.

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A direct cost is a cost that can be directly traced to a specific cost object.

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An indirect cost is a cost that cannot be directly traced to a specific cost object and is instead allocated to cost objects using a systematic approach.

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A variable cost is a cost that varies in total in direct proportion to changes in the level of activity or volume.

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A fixed cost is a cost that remains constant in total, regardless of changes in the level of activity or volume.

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A mixed cost is a cost that contains both variable and fixed cost elements.

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Contribution margin is the amount remaining from sales revenue after variable expenses have been deducted.

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