Management Accounting MCQs
Management Accounting MCQs
The following Management Accounting MCQs have been compiled by our experts through research, in order to test your knowledge of the subject of Management Accounting. We encourage you to answer these multiple-choice questions to assess your proficiency.
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1: True or False: Payback period in capital budgeting refers to the period of time required for the return on an investment to "repay" the sum of the original investment.
A. False
B. True
2: Which of the following businesses would generally use job/order costing rather than process costing?
A. Manufacturing canned fruit
B. Building houses
C. Baking bread
D. Manufacturing instant coffee
E. Manufacturing bags of cement
3: True or False: Decreasing a company's fixed expenses should reduce the break-even point.
A. True
B. False
4: What order of inventory classification best describes the manufacturing process?
A. Raw material-Work in process- Finished Goods
B. work in Process- Finished Goods
C. None of these
D. Raw material- Finished Goods work in process
5: True or False: While depreciation does not result in a payment of cash, tax depreciation does reduce the cash payments for income taxes.
A. False
B. True
6: Costs that cannot be easily or economically traced accurately to the final product are known as ...?
A. Indirect costs
B. Service costs
C. Direct costs
D. Manufacturing costs
E. Product costs
7: What is the name given to the difference between the actual cost of a product's inputs and the standard cost of one of the product's inputs?
A. Difference
B. Variance
8: The management accounting function produces a variety of financial reports set by the needs of management.
A. True
B. False
9: What is a hurdle rate?
A. The rate which company earns after investing in Stock Exchange in securities.
B. Bank interest rate is also called the hurdle rate.
C. In capital budgeting, hurdle rate is the minimum rate that a company expects to earn when investing in a project.
10: A company makes computers. Which one of the following is likely to be a Variable Cost?
A. The salary of the managing director
B. Salary of the accounts manager
C. The salary of the factory manager
D. Salary of the Admin manager
E. The wages of shop workers paid by piece rate
11: Should a project be accepted if the NPV is -632?
A. Yes - The project should be accepted
B. No - The project should not be accepted
12: True or False: In calculating the cash flow in capital budgeting, depreciation is added back in the net profit to arrive at the cash flow figure.
A. False
B. True
13: Which of the following would NOT be a labor-related cost?
A. Payroll taxes
B. Long-service leave
C. Holiday leave
D. Depreciation on staff cafeteria equipment
E. Workers accident insurance
14: True or False: In variable costing, variable costs are considered for product costing inventory valuation and other allied management decisions.
A. True
B. False
15: True or False: BOTH variable and fixed manufacturing overhead are included in the Absorption Costing Method
A. False
B. True
16: Net present value (NPV) is best defined as:
A. The different between the cash inflow and present value of cash outflow
B. The difference between cash out flow and inflow
C. The difference between the present value of cash inflows and the present value of cash outflows
17: True or False: Actual Costing is the system of costing in which actual cost incurred during the period is charged to the product.
A. True
B. False
18: Which option below correctly completes the statement: Involvement in the budgeting process should _____.
A. be restricted to qualified accountants
B. be open to everyone in the organisation who thinks they have some good ideas
C. never include people below tactical level management
D. be restricted to top-level management
E. include the management and the people responsible for achieving the budgeted outcomes
19: True or False: Just in time (JIT) is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs.
A. False
B. True
20: If the profitability index of the project is greater than 1 then this project should be...?
A. NOT accepted
B. Accepted
21: The project with shorter payback period should be...
A. Not accepted
B. Accepted
22: Which of the following costs would NOT be an element of product (manufacturing) costs?
A. Material costs
B. Factory overhead costs
C. Financial costs
D. Labor costs
23: Which of the following is an example of qualitative data ...?
A. product cost
B. customer satisfaction
C. net worth
D. inventory cost
E. net income
24: Product and service costing information is prepared for...
A. manufacturing companies without inventory
B. manufacturing companies with inventory
C. merchandising companies
D. all of these
E. service providers
25: The appropriate and careful selection of financial resources results in ...?
A. greater profitability
B. improvement in the brand image
C. a higher skilled workforce
D. increased production
E. more efficient work groups
26: Sunk cost is best defined as...
A. the cost which has already been incurred in the past any future or present action could not affect it
B. a cost which is incurred due to increase in the volume of production
C. a cost which will incurred in the future
D. a cost which remains fixed
E. a cost which changes due to volume
27: Manufacturing costs typically consist of ...?
A. direct materials, direct labor, marketing and administrative costs
B. direct materials, direct labor, and administrative costs
C. production and marketing costs
D. direct materials, direct labor, and manufacturing overhead
E. production and shipping costs
28: Complete the sentence - Perpetuity is the annuity that lasts...?
A. 1 years
B. Forever
C. 10 years
D. 3 years
E. 5 years
29: If a product cost $50 and the required mark-up was 50%, what would the selling price be?
A. $75.00
B. $250.00
C. $52.50
D. $100.00
E. $25.00
30: Working capital is ...?
A. cash at bank
B. all the assets of the organisation
C. the total of all the investments of the business
D. current assets less current liabilities
E. money held on the business premises
31: The project should be accepted if NPV of the Cash flow is...
A. Positive
B. 0
C. Negative
D. 1
32: Indirect costs that cannot be easily and economically traced to a finished product are known as ....?
A. material costs
B. service costs
C. factory overheads
D. labor costs
E. product costs
33: Which of the following would NOT be classified as a production department?
A. painting
B. assembly
C. stores
D. machining
34: True of False: A general rule for profit maximization in the short run is: If the additional revenues exceed the additional expenses, do it.
A. True
B. False
35: True or False: Setup cost is an example of a batch-level cost.
A. True
B. False
36: True or False: In zero base budgeting, each item is redefined from zero instead of using last year's budget as a base.
A. True
B. False
37: The break-even point is the level of sales that ....?
A. meets the expected sales target
B. ensures a sustainable net profit
C. is exactly equal to the fixed costs
D. is needed to pay the bank loans
E. will result in no profit or loss.
38: The Discounted Payback Period is the length of time required for an investment's discounted cash flows to equal its initial cost. True or False?
A. True
B. False
39: Which of the mentioned payroll cost(s) represent direct labor?
A. Hourly pay to production employees and Salaries to production managers
B. Hourly pay to factory Cleaning employees
C. Hourly pay to administrative employees
D. Hourly pay to security employees
40: Partly finished goods that a manufacturer may have on hand at the end of an accounting period is known as ...?
A. Material on hand
B. Finished goods
C. Merchandise inventory
D. Work in progress
41: True or False: Activity-based costing can be used to allocate SG&A expenses in order to assist management with pricing and other marketing decisions.
A. False
B. True
42: True or False: The standard cost of direct materials is the cost the manufacturer should have used to make the good output.
A. True
B. False
43: True or False: If a company requires a profit of $30,000 (instead of breaking even), the $30,000 should be combined with the fixed expenses in order to compute the point at which the company will earn $30,000.
A. True
B. False
44: True or False: The value of inventory under full costing is higher then variable costing.
A. True
B. False
45: Which statement best describes the current role of the managerial accountant?
A. Managerial Accountants are solely staff advisors in an organization.
B. Managerial accountants prepare the financial statements for an organization.
C. Managerial accountants facilitate the decision-making process within an organization.
D. Managerial accountants are primarily information collectors.
E. Managerial accountants make the key decisions within an organization.
46: Which of the following is NOT a type of internal benchmark?
A. Pareto Diagrams
B. Control charts
C. Cause and Effect (fishbone) diagram
D. Government economic indicators
47: If marginal costing toal sales is $10000, total variable cost is $5000, and total fixed cost is $2500, what will the profit be?
A. 8500
B. 2500
C. 7500
D. 4500
E. 5000
48: A company is considering building a factory in Lahore. Which one of the following is a sunk cost to the decision?
A. The wages rate of the workers
B. The cost of the investigation so far
C. The business rates of the factory
D. None of these.
49: The time value of money primarily focuses on ...?
A. current earnings.
B. future cash flow predictions.
C. accrual net income.
D. earnings per share.
E. accounting net income.
50: Variable costs do NOT include:
A. direct labor
B. variable manufacturing overhead
C. rent
D. direct materials
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