Management Accounting MCQs

✅ The correct answer is option A.
Determined price at which company expects to pay for every single unit is called standard price. Standard price is the pre-established uniform price for a good or service, based on its historical price, replacement cost, or an analysis of its competitive position in the market.

✅ The correct answer is option D.
An investment is multiplied to required rate of return to calculate imputed cost of investment. An imputed cost is a cost that is incurred by virtue of using an asset instead of investing it or undertaking an alternative course of action. An imputed cost is an invisible cost that is not incurred directly, as opposed to an explicit cost, which is incurred directly.

✅ The correct answer is option B.
Considering two years 2013 and 2014, quantity of output produced in 2014 is divided by cost of input used in 2013, to produce output in 2014 to calculate benchmark total factor productivity.

✅ The correct answer is option C.
Margin of safety = Budgeted revenue – Breakeven revenue
= $50000 – $35000 = $15,000.

✅ The correct answer is option B.
Difference between static budget amount and flexible budget amount is named as sales volume variance. Sales volume variance is the change in revenue or profit caused by the difference between actual and budgeted sales units.

✅ The correct answer is option C.
In customer cost hierarchy, costs of all activities incurred to sell group of units to end consumers are classified as customer batch-level costs. Batch-level costs are expenses related to a group of products that cannot readily be traced back to an individual item. In other words, these production costs are incurred to produce a set of products or a batch and can’t be allocated to an individual unit.

✅ The correct answer is option B.
Costing technique, which traces direct costs by multiplying price rate for producing actual outputs is known as standard costing. Standard costing is the practice of substituting an expected cost for an actual cost in the accounting records. Subsequently, variances are recorded to show the difference between the expected and actual costs.

✅ The correct answer is option A.
Amount of money by which total revenues exceed breakeven revenues is classified as margin of safety. Margin of safety is a principle of investing in which an investor only purchases securities when their market price is significantly below their intrinsic value.

✅ The correct answer is option C.
Contribution margin = Contribution per unit × Number of units sold
= $900 × $70 = $63,000.

✅ The correct answer is option D.
For increasing sales, decrease in selling price below selling price list is known as price discount. Typically, a store will discount an item by a percent of the original price. The rate of discount is usually given as a percent, but may also be given as a fraction.