Management Accounting MCQs

Question. Costs such as book value of old machines are $25000 can be a classified as an example of
A. salvages
B. relevant
C. irrelevant
D. depreciated cost

Answer: C

Question. An operating income is divided by revenues to calculate
A. residual income
B. return on after-tax operating income
C. return on sales
D. return on investment

Answer: C

Question. Working capital cash outflow, cash outflow to buy machine and cash inflow from machine are examples of
A. cash flow from operations
B. terminal disposal of investment
C. net initial investment
D. average return on investment

Answer: C

Question. Quantity of manufactured goods are sold at which total cost equal, is known as
A. breakeven point
B. cost point
C. revenue point
D. quantity point

Answer: A

Question. If budgeted input price is $50, price variance is $30 then an actual price will be
A. $100
B. $20
C. $80
D. $60

Answer: C

Question. An actual input quantity is 200 units and budgeted input quantity is 50 units, then efficiency variance will be
A. 275 units
B. 250 units
C. 150 units
D. 650 units

Answer: C

Question. Considering two fiscal years 2013 and 2014, actual units sold in 2013 and 2014 are 11000 and 12500 units respectively, and selling price in year 2013 is $50, then revenue effect of growth will be
A. $70,000
B. $75,000
C. $65,000
D. $73,000

Answer: B

Question. Graph which plots series of successive observations of specific procedure, operation or step at regular time intervals is called
A. relevant costing diagram
B. cause and effect diagram
C. control chart
D. pareto diagram

Answer: C

Question. Contribution margin per unit is multiplied to number of units sold to calculate
A. revenue margin
B. variable margin
C. contribution margin
D. divisor margin

Answer: C

Question. An approach is used to manage unused capacity is
A. reengineering
B. downsizing
C. upgrading
D. none of the options

Answer: B

Question. If sales quantity is 7000 units and breakeven quantity is 1500 units, then margin of safety would be
A. 4500 units
B. 5500 units
C. 8500 units
D. 9500 units

Answer: B

Question. An engineering of products or detailed planning of products or services is called
A. product design
B. research steps
C. useful chain
D. value added

Answer: A

Question. After-tax average cost of funds used by company in long run is equal to
A. weighted average cost of capital 
B. economic value added
C. after-tax operating income
D. net income

Answer: A

Question. Timeframe between placement of order until a finished good produces is classified as
A. customer response time
B. manufacturing lead time
C. manufacturing cycle time
D. both b and c

Answer: D

Question. In an innovation process, operation process and post sales services are all sub processes of a perspective named
A. internal business process perspective
B. external business process perspective
C. leadership perspective
D. reengineering perspective

Answer: A

Question. If cost of goods sold is $8000, gross margin is $5000 then revenue will be
A. $13,000
B. -$13000
C. $3,000
D. -$3000

Answer: A

Question. If actual input quantity is 300 units and budgeted input quantity is 100 units, then efficiency variance will be
A. 600 units
B. 200 units
C. 400 units
D. 500 units

Answer: B

Question. Fishbone diagram is an example of
A. relevant costing diagram
B. cause and effect diagram
C. control chart
D. Pareto diagram

Answer: B

Question. An accounting which records and measures business transactions and is followed by general accepted accounting principles is classified as
A. external accounting
B. internal accounting
C. business accounting
D. financial accounting

Answer: D

Question. If current assets are $856000 and working capital is $654500, then current liabilities will be
A. $501,500
B. $401,500
C. $201,500
D. $301,500

Answer: C

Question. Formal way of differentiating, between non-random and random variations, in manufacturing process is classified as
A. statistical process control
B. statistical failure control
C. statistical control of prevention cost
D. statistical control of sunk cost

Answer: A

Question. An estimated price, which is expected to be paid by customers for particular market offering is classified as
A. target price
B. target cost
C. outsource price
D. off shore price

Answer: A

Question. An approach in which managers use resources to increase customer value is classified as
A. help management
B. cost management
C. past management
D. future management

Answer: B

Question. Process which leads to disassembling and analysis of competitors, operating activities to become acquainted with competitors’ technologies is called
A. outsource engineering
B. reverse engineering
C. target engineering
D. off shore engineering

Answer: B

Question. If contribution margin per unit is $500 and contribution margin percentage is 25%, then selling price will be
A. $2,000
B. $5,250
C. $4,280
D. $3,860

Answer: A

Question. Current assets are subtracted from current liabilities to calculate
A. opportunity cost of capital
B. working capital
C. total long term assets
D. weighted average cost of capital

Answer: B

Question. Contribution margin per unit is divided by selling price of product to calculate
A. selling margin percentage
B. cost margin percentage
C. discount percentage
D. contribution margin percentage

Answer: D

Question. If flexible budget amount is $40000 and variable overhead flexible budget variance is $25000, then actual costs incur will be
A. $15,000
B. $35,000
C. $65,000
D. $75,000

Answer: C

Question. An effect of fixed cost to change in operating income is classified as
A. uncertain margin
B. certain margin
C. operating margin
D. operating leverage

Answer: D

Question. If payback period is 4 years and uniform increases in cash flows per year is $2750000, then net initial investment can be
A. $10,511,000
B. $12,105,000
C. $1,100,000
D. $11,000,000

Answer: D

Question. Price variance for direct manufacturing labour is referred as
A. direct variance
B. rate variance
C. labour variance
D. manufacturing variance

Answer: B

Question. Examining of past performance, exploring alternative and planning future is
A. learning
B. alternating
C. examining
D. deciding

Answer: A

Question. Reduction in setup time, manufacturing cycle efficiency and average time of manufacturing for key products are examples of
A. measures of growth and learning
B. measures of internal business processes
C. customer measures
D. financial measures

Answer: B

Question. If contribution margin is $15000 and units sold are 500 units, then contribution margin per unit would be
A. $20 per unit
B. $30 per unit
C. $50 per unit
D. $40 per unit

Answer: B

Question. Incurred costs to exclude production of goods, that do not meet specification, are called
A. rework costs
B. prevention costs
C. incremental costs
D. reengineering costs

Answer: B

Question. Gross margin is added into cost of sold goods is to calculate the
A. revenues
B. operating leverage
C. contribution margin
D. operating margin

Answer: A

Question. If actual input price is $150 and budgeted input price is $80, then price variance will be
A. $130
B. $70
C. $150
D. $80

Answer: B

Question. Balanced scorecard perspective, which measures strategy profitability and amount of operating income results from cost reduction is classified as
A. learning perspective
B. financial perspective
C. internal business process perspective
D. customer perspective

Answer: B

Question. Consumed time to deliver a complete order to its customers is termed as
A. responding time
B. value chain time
C. delivery time
D. manufacturing cycle efficiency

Answer: C

Question. If manufacturing cycle efficiency is 0.725 and total manufacturing time is 45 minute, then value added manufacturing time will be
A. 42.625
B. 36.724
C. 32.625
D. 41.625

Answer: C

Question. If margin of safety is $25000 and budgeted revenue is $45000, then margin of safety in percentage will be
A. 55.56%
B. 25.50%
C. 28.00%
D. 45.00%

Answer: A

Question. Target annual operating income is divided with invested capital to calculate
A. target rate of return on investment
B. operating income per unit
C. operating cost per unit
D. cost of goods sold

Answer: A

Question. Vertically upward dimension of cost analysis is also called
A. project dimension
B. accounting-period dimension
C. back-flush accounting dimension
D. lean accounting dimension

Answer: B

Question. An implementation of planning decisions and evaluating performance is classified as
A. control
B. evaluation
C. deciding
D. performing

Answer: A

Question. Amount of money by which total revenues exceed breakeven revenues is classified as
A. margin of safety
B. margin of profit
C. margin of loss
D. margin of income

Answer: A

Question. An example of quantitative factor is
A. employee behavior at workplace
B. employee satisfaction
C. employee morale
D. cost of materials

Answer: D

Question. If tax operating income is $885000 per year and net initial investment is $35750000 then increase in average is
A. 2.475% per year
B. 4.475% per year
C. 3.475% per year
D. 2.475% per year

Answer: D

Question. If cost is eliminated, then reducing perceived usefulness that customers can obtain by using market offering will come under
A. designed-in costs
B. locked-in costs
C. value added cost
D. non-value added cost

Answer: C

Question. An officer responsible for financial operations of organization is considered as
A. chief financial officer
B. chief manager
C. chief line function
D. chief staff function

Answer: A

Question. Employees that are trained to manage bottlenecks, during production operations and employee satisfaction are related to
A. measures of growth and learning
B. measures of internal business processes
C. customer measures
D. financial measures

Answer: A

Question. Balanced scorecard perspective measures company’s success in targeted segments of customers, this perspective can also be classified as
A. internal business process perspective
B. customer perspective
C. learning perspective
D. financial perspective

Answer: B

Question. In accounting, possibility of deviation of actual amount from an expected amount is classified as
A. contribution
B. certainty
C. uncertainty
D. margin

Answer: C

Question. Fixed cost is divided to contribution margin to calculate
A. breakeven revenue
B. total revenue
C. fixed revenue
D. variable revenue

Answer: A

Question. Technique, which accumulates and tracks revenues of business function in value chain attributed to each market offering from R&D to final customer support is called
A. product life cycle
B. life cycle budgeting
C. life cycle costing
D. target costing

Answer: B

Question. A product performance in comparison to its features and design is classified as
A. learning quality
B. design quality
C. conformance quality
D. business process quality

Answer: C

Question. Measures that analyze performance of a company, such as residual income, economic value added and customer satisfaction are collectively called
A. interactive control systems
B. belief systems
C. boundary systems
D. diagnostic control systems

Answer: D

Question. An efficiency variance is subtracted from actual input quantity to calculate
A. actual quantity manufactured
B. budgeted quantity manufactures
C. budgeted quantity sold
D. budgeted input quantity

Answer: D

Question. Total available assets are subtracted from idle assets to calculate
A. market equity
B. total assets employed
C. total assets available
D. stockholders’ equity

Answer: B

Question. In manufacturing companies, revenue and cost drivers are categorized under
A. variable costs
B. costs of goods sold
C. number of units sold
D. all of the options

Answer: C

Question. Payback period is multiplied for constant increase in yearly future cash flows to calculate
A. cash value of money
B. net initial investment
C. net future value
D. time value of money

Answer: B

Question. If working capital is $265000 and current liabilities are $378000, then current assets can be
A. $113,000
B. $643,000
C. $743,000
D. $543,000

Answer: B

Question. If total units of product A, B and C are as 200,300 and 400 respectively then sales mix would be
A. 100 units
B. 900 units
C. 400 units
D. 500 units

Answer: B

Question. An amount of available capacity other than employed capacity, to meet customer’s demand, is classified as
A. targeted capacity
B. budgeted capacity
C. recovery capacity
D. unused capacity

Answer: D

Question. Dimensional analysis of cost includes
A. horizontally across dimension
B. horizontally upward dimension
C. vertically upward dimension
D. both a and c

Answer: D

Question. Dysfunctional decision making is also known as
A. dysfunctional decision making
B. congruent decision making
C. incongruent decision making
D. both a and c

Answer: D

Question. An example of direct engineered cost is
A. indirect material cost
B. direct material cost
C. direct labour cost
D. indirect labour cost

Answer: B

Question. Annual earned income is divided from a project by capital invested to calculate
A. accrual accounting rate of return
B. returned working capital
C. increase in expected average annual
D. decrease in expected average annual

Answer: A

Question. All choices for decision that are easily available to managers are classified as
A. outcome
B. actions
C. events
D. distribution

Answer: B

Question. Rate of return to cover a risk of investment and decrease in purchasing power, as a result of inflation is known as
A. nominal rate of return
B. accrual accounting rate of return
C. real rate of return
D. required rate of return

Answer: A

Question. Return on investment is also known as
A. accrual accounting rate of return
B. accounting rate of return
C. nominal rate of return
D. both a and b

Answer: D

Question. If an actual price of material is $700 and budgeted price is $900, then the
A. cost variance is favourable
B. cost variance is unfavourable
C. price variance is favourable
D. price variance is unfavourable

Answer: C

Question. Capital budgeting method to analyze information of financials include
A. internal rate of return
B. accrual accounting rate of return
C. net present value
D. all of the options

Answer: D

Question. When an essential information for calculation of income statement is missing, then costs that can be considered for this purpose is called
A. expected cost
B. expected revenues
C. irrelevant costs
D. relevant costs

Answer: D

Question. Systematic evaluation of value chain, to reduce costs and high quality to achieve satisfied customers is known as
A. reverse engineering
B. value engineering
C. target engineering
D. operation engineering

Answer: B

Question. An estimated cost per unit in long run, which enables company to achieve it’s per unit target, operating income is classified as
A. target operating income per unit
B. target cost per unit
C. total current full cost
D. total cost per unit

Answer: B

Question. An energy, machine maintenance, indirect materials and engineering support are considered as
A. variable overhead cost
B. fixed overhead cost
C. fixed batch cost
D. variable batch cost

Answer: A

Question. An example of financial perspective in balanced scorecard is
A. employee turnover rates
B. operating capabilities and number of patents
C. operating income and revenue growth
D. customer satisfaction and market share

Answer: C

Question. If actual price input is $500, budgeted price of input is $300 and actual quantity of input is 50 units, then price variance would be
A. $4,000
B. $6,000
C. $8,000
D. $10,000

Answer: D

Question. Difference that exists between total revenues, can be earned from two different alternatives is termed as
A. independent revenue
B. incremental revenue
C. differential revenue
D. dependent revenue

Answer: C

Question. Step by step business functions, in which product or services must have customer usefulness is classified as
A. value chain
B. useful chain
C. product chain
D. services chain

Answer: A

Question. In management accounting, an emphasis and focus must be
A. future oriented
B. past oriented
C. communication oriented
D. bank oriented

Answer: A

Question. If target net income is $36000 and tax rate is 40%, then target operating income will be
A. $10,000
B. $20,000
C. $40,000
D. $60,000

Answer: D

Question. Decisions made by company, which products to manufacture and sell and in what quantities out, of many product lines are called
A. incremental decisions
B. outsource decisions
C. product mix decisionsD. in-source decisions

Answer: C

Question. If total production is 25000 units and target annual operating income is $300000 then target operating income per unit would be
A. $15
B. $12
C. $16
D. $18

Answer: B

Question. In a relevant range, variable cost per unit, selling price and total fixed costs are
A. unknown and variable
B. known and variable
C. unknown and constant
D. known and constant

Answer: D

Question. Which of following do not include among major categories of corporate costs? D
A. human resource management costs
B. corporate administration costs
C. treasury costs
D. discretionary costs

Answer: D

Question. Minimum freedom for managers and maximum constraints are main features of
A. total autonomy
B. total centralization
C. total decentralization
D. total congruency

Answer: B

Question. Rate of required return to cover risk of investment in absence of inflation is classified as
A. real rate of return
B. required rate of return
C. nominal rate of return
D. none of the options

Answer: A

Question. A process by which employees can make decisions is divided by total number of processes to calculate
A. employee turnover ratio
B. employee empowerment ratio
C. employee satisfaction ratio
D. employee training percentage

Answer: B

Question. Cash management, investments, long and short term financing are included in
A. proprietorship
B. functional line
C. treasury
D. controllership

Answer: C

Question. An investment is multiplied to required rate of return to calculate
A. congruent cost of investment
B. transfer cost of investment
C. operating cost of investment
D. imputed cost of investment

Answer: D

Question. Method of pricing, when two separate pricing methods are used to price transfer of products from one subunit to another, is called
A. dual pricing
B. functional pricing
C. congruent pricing
D. optimal pricing

Answer: A

Question. Type of accounting which measures, reports and analysis non-financial and financial information to help in decision making is called
A. financial accounting
B. management accounting
C. cost accounting
D. decision accounting

Answer: B

Question. Kind of costs that has been occurred in past are also known as
A. unrecorded costs
B. recorded costs
C. sunk costs
D. bunked costs

Answer: C

Question. If input used in manufacturing is smaller in quantity and output produced is greater in quantity, this will be categorized under
A. lesser effective
B. greater efficiency
C. smaller efficiency
D. greater effective

Answer: B

Question. Types of costs of quality consist of
A. appraisal costs
B. internal and external failure costs
C. prevention costs
D. all of the options

Answer: D

Question. If flexible budget variance is $95000 and an actual cost is $40000, then flexible budget cost would be
A. $135,000
B. $45,000
C. $50,000
D. $55,000

Answer: D

Question. Span time from initial research and development of product till support and customer service, if not offered for that particular product will be called
A. product life cycle
B. life cycle budgeting
C. life cycle costing
D. target costing

Answer: A

Question. Practice of seller to charge higher price for same market offering is classified as
A. peak-load pricing
B. elastic pricing
C. elastic demand
D. inelastic demand

Answer: A

Question. Return on sales is multiplied to investment turnover to calculate
A. residual income
B. return on investment
C. return on sales
D. investment turnover

Answer: B