Advanced Management Accounting MCQs : This section focuses on the "Advanced Management Accounting". These Multiple Choice Questions (MCQs) should be practiced to improve the Advanced Management Accounting skills required for various interviews (campus interview, walk-in interview, company interview), placement, entrance exam and other competitive examinations.
Question 1
The business environmental factors are _________.
A. Static
B. Dynam
C. C. Both of the above
D. None of the above
Question 2
The control ratios used by the management to know whether the deviations of the actual performance from the budgeted performance are favourable or unfavourable are __________.
A. Capacity ratio and calendar ratio.
B. Efficiency ratio and calendar ratio.
C. Both A a
D. B D. None of these
Question 3
The problems associated with marginal costing are
A. Difficulties in divisions of costs
B. Problem of valuation of stocks
C. Ignores time elements
D. All of the above
Question 4
___________ is not suitable where selling price is determined on the basis of cost-plus method.
A. Absorption costing
B. Marginal costing
C. Both A a
D. B D. None of the above
Question 5
Managers utilizes marginal costing for
A. Make or buy decision
B. Utilisation of additional capacity
C. Determination of dumping price
D. All of the above
Question 6
Which of the following are advantages of marginal costing?
A. Makes the process of cost accounting more simple
B. Helps in proper valuation of closing stock
C. Useful for standa
D. and budgetary control D. All of the above
Question 7
Given production is 1,00,000 units, fixed costs is Rs 2,00,000 Selling price is Rs 10 per unitand variable cost is Rs 6 per unit. Determine profit using technique of marginal costing.
A. Rs 2, 00,000
B. Rs 8, 00,000
C. Rs 6, 00,000
D. None of the above
Question 8
Contribution margin is also known as
A. Gross profit
B. Net profit
C. Earning before tax
D. Marginal income
Question 9
Contribution is the difference between
A. Sales and variable cost
B. Sales and fixed cost
C. Sales a
D. total cost D Factory cost and profit
Question 10
When fixed cost is Rs. 20,000 and Profit volume ratio is 25 per cent, then breakeven pointwill occur at
A. Rs. 5000
B. 5000 units
C. Rs. 80,000
D. 80,000 units
Question 11
Period cost means
A. Variable cost
B. Fixed costs
C. Prime cost
D. Factory cost
Question 12
If profit-volume ratio is 25 per cent and sales is Rs. 100,000, the variable cost will be
A. Rs. 25,000
B. Rs. 50,000
C. Rs. 75,000
D. None of the above
Question 13
The valuation of stock in marginal costing as compared to absorption costing is
A. Higher
B. Lower
C. Same
D. None of the above
Question 14
The term standard cost refers to the:
A. Average unit cost of product produced in the previous period
B. Budgeted unit cost of product produced in a particular period
C. Average unit cost of product produc
D. by other companies
Question 15
The term budgeted cost refers to the:
A. Estimated expenses of budgeted production
B. Actual expenses of budgeted production
C. Estimat
D. expenses of actual production
Question 16
……………is concerned with providing information to management for taking managerialdecisions.
A. Management Accounting
B. Financial accounting
C. Cost accounting
D. All of these
Question 17
The essence of marginal costing is that ……………… cost is considered on the whole asseparate.
A. Fixed
B. variable
C. both of these
D. none of these
Question 18
A document that records the standard cost of a single unit of product is known as:
A. Bill of materials
B. Bill of product
C. Standa
D. cost card D. product expense card
Question 19
Following is used as tool for Cost Control
A. Marginal cost
B. Historical cost
C. Standa
D. cost (D) All of the above
Question 20
Which phrase best describes the current role of the managerial accountant?
A. Managerial accountants prepare the financial statements for an organization.
B. Managerial accountants facilitate the decision-making process within an organization.
C. Managerial accountants make the key decisions within an organization.
D. Managerial accountants are primarily information collectors.
Question 21
In comparison to the traditional manufacturing environment, overhead costs in a JITenvironment all the following are true except
A. is more easily tracked to products.
B. is frequently direct in nature.
C. includes rent, insurance a
D. utilities.
Question 22
As production increases within the relevant range,
A. variable costs will vary on a per unit basis.
B. variable costs will vary in total.
C. fix
D. costs will vary in total.
Question 23
Which of the following statements regarding graphs of fixed and variable costs is true?
A. Variable costs can be represented by a straight line where costs are the same for each data point.
B. Fixed costs can be represented by a straight line starting at the origin and continuing through each data point.
C. Fix
D. costs are zero when production is equal to zero.
Question 24
All of the following statements regarding budgeting is true except
A. Budgeting helps managers determine the resources needed to meet their goals and objectives.
B. Budgeting is a key ingredient in good decision-making.
C. Budgeting is a bookkeeping task
D. The focus of budgeting is planning.
Question 25
Which of the following costs is not capitalized as inventory?
A. costs of delivering finished goods
B. factory (manufacturing) overhead
C. insurance of factory building a
D. equipment
Question 26
A management concept under which all managers and employees at all stages of companyoperations strive toward higher standards and a reduced number of defective units are called:
A. Continuous Improvement
B. Total Quality Management (TQM)
C. Theory of Constraints (TOC)
D. Total Quality Control (TQC)
Question 27
The following information belongs to John Manufacturing Company that uses a standardcosting system: • Basic wage rate:Rs.12 per hour • Fringe benefits: Rs. 2 per hour • Basic time: 2 hours per unit • Allowance for down time: 0.3 hours per unit • Allowance for brakes: 0.2 hours per unit Based on the above information, what is the standard direct labor cost per unit?
A. RS.35
B. RS.28
C. RS.30
D. RS.32.2
Question 28
Which of the following is a correct formula for computing direct materials price variance?
A. Standard quantity purchased × (Actual rate - Standard rate)
B. Actual quantity purchased × (Actual rate - Standard rate)
C. Standa
D. quantity purchased × (Actual rate + Standard rate)
Question 29
A favorable direct materials price variance occurs when:
A. Actual rate of direct materials is higher than standard rate of direct materials
B. Actual rate of direct materials is equal to standard rate of direct materials
C. Actual rate of direct materials is less than standa
D. rate of direct materials
Question 30
The “standard hours allowed” or “standard quantity allowed” is equal to:
A. Actual output in units × standard input allowed
B. Actual output in units × standard output allowed
C. Actual output in units × standa
D. output allowed
Question 31
During the month of January, the standard cost of actual hours worked amounted toRs.25, 000, the standard direct labor rate was Rs.10 per hour and the direct labor efficiency variance amounted to Rs.1, 000 favorable. The standard hours allowed for actual production were:
A. 2,500 hours
B. 2,400 hours
C. 10,000 hours
D. 2,600 hours
Question 32
Which one of the following does measure risk?
A. Coefficient of variation
B. Standard deviation
C. Expect
D. value D. All of the above are measures of risk.
Question 33
A situation in which a decision maker knows all of the possible outcomes of a decision and also knows the probability associated with each outcome is referred to as
A. Certainty.
B. Risk.
C. Uncertainty.
D. Strategy.
Question 34
A situation in which a decision maker must choose between strategies that have more thanone possible outcome when the probability of each outcome is unknown is referred to as
A. Diversification.
B. Certainty.
C. Risk.
D. Uncertainty.
Question 35
Circumstances that influence the profitability of a decision are referred to as
A. Strategies.
B. A payoff matrix.
C. States of nature.
D. The marginal utility of money.
Question 36
The analysis of a complex decision situation by constructing a mathematical model of thesituation and then performing a large number of iterations in order to determine the probability distribution of outcomes is called
A. Sensitivity analysis.
B. Expected utility analysis.
C. Simulation
D. A decision tree.
Question 37
The tendency for low-quality cars to drive high quality cars out of the used car market is anexample of
A. Hedging.
B. Adverse selection.
C. Portfolio analysis.
D. Moral hazard.
Question 38
Which of the following is a way to deal with decision making under uncertainty?
A. Simulation
B. Diversification
C. Acquisition of additional information
D. Application of the maximin criterion
Question 39
______ is an objective assessment of an individual's performance against well-definedbenchmarks.
A. Performance Appraisal
B. HR Planning
C. Information for goal identification
D. None of the above
Question 40
what is linked with performance appraisal?
A. J
B. Design B Development
C. Job analysis
D. None of the above
Question 41
which of the following is an alternate term used for performance appraisal?
A. Quality and quantity of output
B. Job knowledge
C. Employee assessment
D. None of the above
Question 42
Match the following general applications of performance assessment with their specificpurposes I. Administrative Uses/ Decisions ___ A. Performance Feedback II. Documentation _____ B. Lay - offs III Organizational Maintenance/ Objectives ___ C. Helping to meet legal requirements IV. Developmental Uses ___ D. Evaluation of HR systems
A. I-C, II-D, III-B, IV-A
B. I-B, II-C, III-D, IV-A
C. I-B, II-C, III-D, IV
D. D. I-A, II-B, III-D, IV-C
Question 43
How performance appraisal can contribute to a firm's competitive advantage?
A. Ensures legal compliances
B. Minimizing job dissatisfaction and turnover
C. Improves performance
D. All of the above
Question 44
From the strategic point of view, in which three categories can an organisation, be grouped?
A. Defenders
B. Prospectors
C. Analyzers
D. All of the above
Question 45
Successful defenders use performance appraisal for identifying ____________.
A. Staffing needs
B. Job behaviour
C. Training needs
D. None of the above
Question 46
Analyzers tend to emphasis both ______ and _______ and employee extensive trainingprogrammes.
A. Skill building and skill acquisition
B. Current performance and past performance
C. Strategy a
D. behaviour
Question 47
What do successful analyzers tend to examine?
A. Division and corporate performance evaluation
B. Ideal appraisal process
C. Current performance with past performance
D. None of the above
Question 48
which of the following cannot be a reason of unfavorable direct materials price variance?
A. Sudden rise in price of materials
B. Quality of materials purchased
C. Appointment of inexperienc
D. workers D Inefficient standard setting
Question 49
Which of the following is not likely to be a reason of unfavorable direct labor efficiencyvariance?
A. Increase in direct materials prices
B. Lack of proper supervision
C. Frequent break downs during production process
D. Use of old, outdated or faulty equipment
Question 50
Question Selling price per tonne is Rs. 69.50, variable cost per tonne is Rs. 35.50 and fixedcost is Rs. 18, 02,000. Find out the BEP in units
A. 49000
B. 51000
C. 53000
D. 55000
Question 51
Labour Efficiency Standards are decided by considering following factor(s)
A. Records of past performance
B. Time & Motion Study
C. Trial Runs
D. All of the above
Question 52
A good _____ system will not punish the workers for the matters beyond the control of theworkers.
A. Wage payment
B. Appraisal
C. Promotion
D. none of the above
Question 53
________ do not give the returns during the same period during which they are paid for
A. Intangible assets
B. Fixed assets
C. Both (A) a
D. (B) (D) None of the above
Question 54
____________ Following is (are) called the element(s) of Cost
A. Material
B. Labour
C. Expenses
D. All of the above
Question 55
The cause(s) of idle time can be analysed as
A. Administrative causes
B. Productive causes
C. Economic causes
D. All of the above
Question 56
__________ Accounting becomes a source of information for Management Accounting.
A. Financial
B. Cost
C. Both (A) a
D. (B) (D) None of the above
Question 57
Which of the following cannot be a reason of unfavorable direct materials quantityvariance?
A. Unmotivated workers
B. Lack of supervision
C. Frequent power failures
D. Uneconomical order size
Question 58
Which of the following is not likely to be a reason of unfavorable direct labor rate variance?
A. Poor estimates while setting direct labor standards
B. An increase in labor rates and overtime premium
C. Frequent break downs
D. Assignment of easy tasks to highly skilled workers
Question 59
Standard Costing specifically relates to the function of
A. Finance
B. Production
C. Quality
D. None of the above
Question 60
Cost Accounting restrict itself with _____ transactions
A. Financial
B. Spot
C. Historical
D. Administrative
Question 61
In Cash budget, Non- operating cash inflow include(s)
A. Receipt of loan/borrowings
B. Issue of shares
C. Sale of fix
D. assets (D) All of the above
Question 62
Sales Budget is a forecast expressed in
A. Quantity
B. Money
C. Both (A) a
D. (B) (D) None of the above
Question 63
Management accounting is 1) Subjective 2) Objective
A. Only 1
B. Only 2
C. Both 1 a
D. 2 (D) None of the above
Question 64
The management accounting can be stated an extension of 1) Cost Accounting 2 ) Financial Accounting 3) Responsibility Accounting
A. Both 1 and 2
B. Both 1 and 3
C. Both 2 a 3
D. 1, 2, 2003
Question 65
The definition ‘Management Accounting is the presentation of accounting information insuch a way as to assist management in the creation of policy and the day-to-day operation of an undertaking.’
A. Anglo –American Council on Productivity
B. AICPA
C. Robert N. Anthony
D. All of the above
Question 66
During the month of December actual direct labor cost amounted to Rs. 39,550, thestandard direct labor rate was Rs.10 per hour and the direct labor rate variance amounted toRs.450 favorable. The actual direct labor hours worked was:
A. 3,955 hours
B. 4,000 hours
C. 3,910 hours
D. 4,500 hours
Question 67
Responsibility centres are departments or organizational functions whose performance is thedirect responsibility of specific managers. One type of responsibility centre is a revenue centre, which is responsible for
A. Investments and costs
B. sales and profits
C. profits
D. sales
Question 68
Key motivational factors in budgeting do not include
A. Training in the budget process
B. correct identification of the blame for below budget performance
C. the feedback of information
D. the setting of fair, achievable standards
Question 69
Which of the following does not help to minimize the problems encountered in budgeting?
A. Ensuring adequate budget planning
B. identifying the responsibility for key performance areas
C. Encouraging manager participation
D. keeping bad news from the managing director
Question 70
What would be the most likely cause of an unfavourable labour rate variance together with afavourable labour efficiency variance?
A. The employment of more highly skilled staff than budgeted
B. Poor wage negotiation by the Human Resources manager
C. The employment of less well-train
D. staff than in
Question 71
A budgeting process which demands each manager to justify his entire budget in detailfrom beginning is
A. Functional budget
B. Master budget
C. Zero base budgeting
D. none of the above
Question 72
__________ contains the picture of total plans during the budget period and it comprisesinformation relating to sales, profit, cost, production etc.
A. Master budget
B. Functional budget
C. Cost budget
D. None of the above
Question 73
Budgetary control system acts as a friend, philosopher and guide to the…
A. Management
B. Share holders
C. Creditors
D. Employees
Question 74
Budgetary control facilitates easy introduction of the…
A. Marginal costing
B. Ratio analysis
C. Standa
D. costing D) Subjective matter
Question 75
Key factor is also known as…
A. Limiting factor
B. Governing factor
C. Principal factor
D. All
Question 76
The responsibility accounting stresses on _________
A. Decentralization
B. Centralization
C. Both (a) & (b)
D. None of these
Question 77
In responsibility accounting system…
A. Budgets are prepared
B. Actual performance is recorded
C. The performance is report
D. D) All of the above
Question 78
The responsibility accounting emphasizes the performance of ____
A. System
B. Men
C. Both
D. None of these
Question 79
The responsibility accounting is also called…
A. Profitability accounting
B. Activity accounting
C. Both
D. None of these
Question 80
The responsibility accounting is the part of …
A. Financial accounting
B. Management accounting
C. Mechaniz
D. accounting D) none of these
Question 81
The responsibility accounting is a controlling tool for…
A. Top‐level management
B. Lower level management
C. Middle level management
D. none of these
Question 82
The accounting department in an organization is…
A. Investment centre
B. Expense centre
C. Profit centre
D. All of the above
Question 83
The responsibility accounting is a system by which the responsibility is assigned to theconcerned persons…
A. To increase sales
B. To control cash
C. To increase production
D. All of the above
Question 84
According to responsibility accounting, the entire organization is divided into various…
A. Business centre
B. Profit centre
C. Responsibility centre
D. none of these
Question 85
In responsibility centre, the output is called as…
A. Revenue
B. Costs
C. Both
D. None
Question 86
If the responsibility centre gets more revenue from output, then it is called…
A. Investment centre
B. Cost centre
C. Profit centre
D. Expense centre
Question 87
Internal transfer of process at profit _________ of the company
A. Will not increase the asset
B. Will increase the asset
C. Can’t say
D. Inadequate information
Question 88
The determination of actual value of assets employed in a responsibility centre is…
A. Easy
B. Can’t determine
C. Difficult
D. Not necessary
Question 89
Flexible manufacturing systems (FMS) are reported to have a number of benefits. Which isNOT a reported benefit of FMS?
A. Lead time and throughput time reduction
B. Increased quality
C. More flexible than the manufacturing systems they replace
D. Increased utilisation
Question 90
The use of Internet-based technology, either to support existing business processes or tocreate entirely new business opportunities, has become known as what?
A. E-globalization
B. E-business
C. E-value creation
D. E-process management
Question 91
Which one of the following is not one of the Balanced Scorecard’s four generic perspectives?
A. Marketing and advertising
B. internal business processes
C. Innovation a
D. learning D) financial
Question 92
Which one of the following statements is true?
A. Balanced Scorecards are a feedback mechanism
B. Balanced Scorecards always have four perspectives
C. Balanc
D. Scorecards can be used in Not-for-Profit organisations