Management Accounting MCQs

✅ The correct answer is option D.
If actual payment to labour is $1200 and budgeted rate is $1000, then labour price variance would be unfavourable. An unfavorable variance means that the cost of labor was more expensive than anticipated, while a favorable variance indicates that the cost of labor was less expensive than planned.

✅ The correct answer is option B.
Variable cost per unit is multiplied to quantity of sold units to calculate variable cost. A variable cost is a corporate expense that changes in proportion to production output. Variable costs increase or decrease depending on a company’s production volume; they rise as production increases and fall as production decreases.

✅ The correct answer is option C.
An economic value added method is specific type of method to calculate residual income. Residual income is excess income generated more than the minimum rate of return. Residual income is a measurement of internal corporate performance, whereby a company’s management team evaluates the income generated relative to the company’s minimum required return.

✅ The correct answer is option A.
An amount of additional cost incurred for any particular activity is classified as incremental cost. Incremental cost also referred to as marginal cost, is the total change a company experiences within its balance sheet or income statement due to the production and sale of an additional unit of product. Incremental costs may be classified as relevant costs in managerial accounting.

✅ The correct answer is option C.
Actual costs = Flexible budget amount + Variable overhead flexible budget variance
= $40000 + $25000 = $65,000.

✅ The correct answer is option B.
Operating income = Total revenue – Variable cost – Fixed cost
= $15000 – $5000 – $2000 = $8,000.

✅ The correct answer is option C.
Working capital cash outflow, cash outflow to buy machine and cash inflow from machine are examples of net initial investment. Net investment is the amount spent by a company or an economy on capital assets, or gross investment, less depreciation. Net investment helps give a sense of how much money a company is spending on capital items used for operations, such as property, plants, equipment, and software.

✅ The correct answer is option A.
Prospective selling price = $350 × 111% = 388.5.

✅ The correct answer is option D.
Dysfunctional decision making is also known as dysfunctional decision making and incongruent decision making. Dysfunctional decision making can be a big drag on the results unless properly addressed.

✅ The correct answer is option A.
Contribution margin percentage = Contribution margin per unit÷ Selling price × 100
= $40 ÷ $200 × 100 = 20.00%.