Management Accounting MCQs

✅ The correct answer is option B.
An approach is used to manage unused capacity is downsizing. Downsizing (also called rightsizing) is an integrated approach configuring processes, products, and people to match costs to the activities that need to be performed to operate effectively and efficiently in the present and future. Downsizing is an attempt to eliminate unused capacity.

✅ The correct answer is option B.
Difference between actual quantity use and input quantity for output is multiplied with budgeted price to calculate efficiency variance. The efficiency variance is the difference between the actual unit usage of something and the expected amount of it. The expected amount is usually the standard quantity of direct materials, direct labor, machine usage time, and so forth that is assigned to a product.

✅ The correct answer is option A.
Method of pricing, when two separate pricing methods are used to price transfer of products from one subunit to another, is called dual pricing. Dual pricing is a situation in which the same product or service is sold at different prices in different markets.

✅ The correct answer is option C.
If cost is eliminated, then reducing perceived usefulness that customers can obtain by using market offering will come under value added cost. A value added cost is incurred when an asset is consumed in order to increase the value of goods or services to the consumer.

✅ The correct answer is option A.
Rate of required return to cover risk of investment in absence of inflation is classified as real rate of return. A real rate of return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external factors.

✅ The correct answer is option D.
Contribution margin per unit is divided by selling price of product to calculate contribution margin percentage. The contribution margin ratio is the difference between a company’s sales and variable expenses, expressed as a percentage. The total margin generated by an entity represents the total earnings available to pay for fixed expenses and generate a profit.

✅ The correct answer is option A.
Difference between actual input variance and budgeted input variance is called price variance. Price variance is the difference between the actual price paid by a company to purchase an item and its standard price, multiplied by the number of units purchased.

✅ The correct answer is option C.
Balanced scorecard perspective focuses on all operations, which leads to value creation process for customers, can be categorized as internal business process perspective. This perspective explains how the company is going to satisfy customer needs and meet financial goals.

✅ The correct answer is option C.
In relevance concepts, relevant revenues are also termed as expected future revenues. The revenue recognition principle is a cornerstone of accrual accounting together with the matching principle. They both determine the accounting period in which revenues and expenses are recognized. According to the principle, revenues are recognized when they are realized or realizable, and are earned (usually when goods are transferred or services rendered), no matter when cash is received.

✅ The correct answer is option B.
Contribution margin = Total revenue + Total variable cost
= $10000 + $4000 = $14,000.