Management Accounting MCQs

✅ The correct answer is option C.
If a company uses large quantity of input than budgeted quantity for output level, then company is known to be company is inefficient.

✅ The correct answer is option B.
Contribution margin per unit is divided by selling price 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 B.
Point at which control functions and planning of management come together is known as variance. A variance in management accounting may be favourable (costs lower than expected or revenues higher than expected) or adverse (costs higher than expected or revenues lower than expected).

✅ The correct answer is option B.
Target operating income = Target annual operating income ÷ Total production
= $300000 ÷ 25000 = $12.

✅ The correct answer is option D.
In costing and budgeting hierarchy, an example of product sustaining cost is product design cost.

✅ The correct answer is option D.
At break-even point, an operating income must equal to zero. A company breaks even for a given period when sales revenue and costs incurred during that period are equal. Thus the break-even point is that level of operations at which a company realizes no net income or loss.

✅ The correct answer is option B.
Static budget amount = Actual result – Static budget variance
= $50000 – $25000 = $25,000.

✅ The correct answer is option C.
Degree of operating leverage = Contribution margin ÷ Operating income
= $72000 ÷ $12000 = 6.

✅ The correct answer is option B.
Cost of goods sold = Revenue – Gross margin
= $5000 – $2000 = $3,000.

✅ The correct answer is option B.
In budget hierarchy, material handling cost is batch level cost. A batch-level cost is a cost related to a group of units, but which is not associated with specific individual units.