Management Accounting Questions and Answers | Online Quiz for Practice

46. What is the margin of safety?

1. The difference between actual profit and budgeted profit
2. The difference between actual costs and budgeted costs
3. The difference between actual production and budgeted production
4. The difference between actual sales and break-even sales

47. Which of the following is NOT a method of cost behavior analysis?

1. Regression analysis
2. High-low method
3. Net present value analysis
4. Account analysis

48. What is the difference between absorption costing and variable costing?

1. Absorption costing is used for external reporting, while variable costing is used for internal decision-making
2. Absorption costing is based on generally accepted accounting principles (GAAP), while variable costing is not
3. All of the above
4. Absorption costing includes fixed manufacturing overhead in product costs, while variable costing does not

49. What is the purpose of a cost allocation system?

1. To trace direct costs to cost objects
2. To calculate the cost of goods sold
3. To determine the selling price of a product
4. To assign indirect costs to cost objects

50. What is a cost driver?

1. A factor that determines the selling price of a product
2. A factor that influences customer demand
3. A factor that affects employee morale
4. A factor that causes a change in the cost of an activity

51. What is the purpose of a performance report?

1. To identify variances
2. To analyze the causes of variances
3. All of the above
4. To compare actual results to budgeted amounts

52. What is management by exception?

1. A management approach that focuses on meeting all budget targets
2. A management approach that involves setting challenging budget targets
3. A management approach that involves delegating all budget responsibilities
4. A management approach that focuses on significant deviations from budgeted amounts

53. What is the purpose of a capital budgeting decision?

1. To decide how to finance a long-term asset
2. To decide when to replace a long-term asset
3. All of the above
4. To decide whether to invest in a long-term asset

54. What is the payback period?

1. The present value of an investment's future cash flows
2. The rate of return that an investment is expected to generate
3. The profitability of an investment relative to its cost
4. The length of time it takes for an investment to generate enough cash flow to recover its initial cost

55. What is the net present value (NPV) of an investment?

1. The future value of an investment's future cash flows minus its initial cost
2. The internal rate of return of an investment
3. The payback period of an investment
4. The present value of an investment's future cash flows minus its initial cost

56. Which of the following is a period cost?

1. Direct labor
2. Manufacturing overhead
3. Administrative expenses
4. Direct materials

57. What is the internal rate of return (IRR) of an investment?

1. The discount rate that makes the payback period of an investment equal to zero
2. The discount rate that makes the profitability index of an investment equal to one
3. The discount rate that is used to calculate the present value of an investment's future cash flows
4. The discount rate that makes the net present value of an investment equal to zero

58. Which of the following is NOT a type of costing system?

1. Process costing
2. Target costing
3. Marginal costing
4. Job order costing

59. What is a cost pool?

1. A method of allocating costs
2. A type of budget
3. A performance measurement tool
4. A grouping of individual costs

60. What is the purpose of a cost-benefit analysis?

1. To determine the profitability of a product
2. To evaluate the performance of a department
3. To set the selling price of a product
4. To compare the costs and benefits of a decision