Management Accounting MCQs

✅ The correct answer is option C.
Costs such as book value of old machines are $25000 can be a classified as an example of irrelevant cost. An irrelevant cost is a cost that will not change as the result of a management decision.

✅ The correct answer is option D.
Cost such as dispose value of an old machine is $6000 is classified as relevant cost. Relevant cost is a managerial accounting term that describes avoidable costs that are incurred only when making specific business decisions.

✅ The correct answer is option C.
Margin of safety = Budgeted revenue – Breakeven revenue
= $20000 – $15000 = $5,000.

✅ The correct answer is option D.
Contribution margin per unit is divided by contribution margin percentage to calculate selling price. Selling price is the price at which a product or service is sold to the buyer.

✅ The correct answer is option C.
Contribution margin per unit is multiplied to number of units sold to calculate contribution margin. Contribution margin is a product’s price minus all associated variable costs, resulting in the incremental profit earned for each unit sold. The total contribution margin generated by an entity represents the total earnings available to pay for fixed expenses and to generate a profit.

✅ The correct answer is option D.
An insensitivity of demand in relevance to change in price will be called demand inelasticity. Inelastic demand is when the buyer’s demand does not change as much as the price changes.

✅ The correct answer is option C.
Budget which is planned around a single output level is called static budget. A static budget is a type of budget that incorporates anticipated values about inputs and outputs that are conceived before the period in question begins.

✅ The correct answer is option B.
Revenue effect of growth = (12500 – 11000) × $50
= $75,000.

✅ The correct answer is option A.
Price variance = (actual price input – budgeted price of input) × actual quantity of input
= ($700 – $400) × 50 = $15,000.

✅ The correct answer is option C.