Management Accounting: Multiple Choice Questions with Solutions

This document presents a set of multiple-choice questions related to management accounting, covering key concepts and principles in the field. The questions address topics such as cost pools, methods for setting standards, the balanced scorecard approach, budgeting purposes, break-even point calculation, contribution margin, time value of money, net present value method, characteristics of merchandising organizations, cost drivers, standard costing systems, accounting rate of return, operating leverage, overhead allocation, cost variance, goal seek analysis, and hybrid costing. The answers provided offer clear solutions to each question, making this a valuable resource for students studying management accounting and preparing for exams. Desklib provides access to similar solved assignments and past papers.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student:
Name of the University:
Author’s Note:

1MANAGEMENT ACCOUNTING
1. A cost pool is:
Answer: (a) a collection of costs to be assigned.
2. Which of the following are methods for setting standards?
Answer: (b) Task analysis and analysis of historical data.
3. On which of the following does a balanced scorecard approach focus on?
Answer: (d) All of the given answers.
4. The purposes of a budget include:
Answer: (a) Planning

2MANAGEMENT ACCOUNTING
5. The break-even point is that level of activity where
Answer: (a) Total revenue equals total costs
6. The contribution margin per unit is calculated as the difference between
Answer: (b) Sales revenue per unit and variable cost per unit
7. The main concept of time value of money is:
Answer: (a) that cash flows received in the distant future are not as valuable as cash
flows received in the near future.
8. According to the net present value method, if the present value of cost savings
exceeds the acquisition cost of a new machine:
Answer: (b) the new machine should be purchased
9. Which of the following characteristics apply to merchandising organisations?
i. They purchase goods for sale.
ii. Outputs can be stored.
iii. They produce intangible outputs.
iv. Services are consumed as they are produced.
Answer: (c) i and ii
10. A cost driver:
Answer: (d) is a factor that causes a cost and may also be a resource driver.

3MANAGEMENT ACCOUNTING
11. An increasingly popular approach that integrates financial and customer performance
measures with measures in the areas of internal operations and innovation is known
as:
Answer: (b) the balanced scorecard
12. Under a standard costing system
Answer: (a) standard costs are entered into the work in process and finished goods
inventory account
13. The simple rate of return, rate of return on assets and the unadjusted rate of return are
synonymous with:
Answer: (a) the accounting rate of return
14. In a standard costing system all inventories are recorded at
Answer: (b) standard cost
15. The extent to which an organisation uses fixed costs in its cost structure is called
Answer: (b) operating leverage
16. Direct labour hours or direct labour dollars are suitable overhead allocation bases
when:
Answer: (b) direct labour details are readily available
17. A cost variance is
Answer: (c) the difference between the actual cost and the standard cost

4MANAGEMENT ACCOUNTING
18. In the concept of Balanced score card, market share may be a lead indicator from:
Answer: (b) a customer perspective
19. ‘Goal seek' analysis provides for which of the following?
i. An output for a given set of inputs
ii. Required inputs for a given output
iii. A range of outputs for a range of inputs
Answer: (b) ii
20. Which of the following statements are true?
Answer: (c) Service shops generally employ hybrid costing.