Management Accounting MCQs

✅ The correct answer is option B.
Systematic evaluation of value chain, to reduce costs and high quality to achieve satisfied customers is known as value engineering. Value engineering is a systematic and organized approach to providing the necessary functions in a project at the lowest cost. Value engineering promotes the substitution of materials and methods with less expensive alternatives, without sacrificing functionality.

✅ The correct answer is option C.
Variable cost is subtracted from fixed costs to calculate operating income. Operating income is an accounting figure that measures the amount of profit realized from a business’s operations, after deducting operating expenses such as wages, depreciation, and cost of goods sold (COGS).

✅ The correct answer is option C.
Total cost incur by customer to use, acquire, maintain and dispose service or product is classified as customer life cycle. The customer lifecycle is a term that describes the different steps a customer goes through when they are considering, buying, using, and remaining loyal to a particular product or service. This lifecycle has been broken down into five distinct stages: reach, acquisition, conversion, retention, and loyalty.

✅ The correct answer is option B.
Executive salaries, rent and other general administration cost in corporate costs are classified under corporate administration costs. Administrative expenses are costs related to the general administration of the business. This category of costs does not relate specifically to any business function such as production and sales. These costs are incurred at the corporate level, rather than by individual departments or business units.

✅ The correct answer is option B.
Actual price = Budgeted input price + Price variance
= $80 + $40 = $120.

✅ The correct answer is option B.

✅ The correct answer is option D.
Production of goods or services that can be bought from outside suppliers is classified as in-sourcing. Insourcing is a business practice in which work that would otherwise have been contracted out is performed in house. Insourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced.

✅ The correct answer is option C.
Sum of all resources used to generate income is classified as investment. An investment is a monetary asset purchased with the idea that the asset will provide income in the future or will later be sold at a higher price for a profit.

✅ The correct answer is option C.
Third step in decision making process is making predictions. A step-by-step approach to the decision making process is an efficient way to make thoughtful, informed decisions.

✅ The correct answer is option C.
Revenue = Gross margin + Cost of goods sold
= $9000 + $8000 = $17,000.