Management Accounting MCQs (Chapterwise Multiple Choice Questions)

A company has a capital employed of $200,000. It has a cost of capital of 12% per year. Its residual income is $36,000 What is the company’s return on investment?

20%

50%

30%

40%

10%

Answer & Explanation

Correct Answer: 30%

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Contribution Margin/Net Income is the formula for

Operating leverage

Break even point

Answer & Explanation

Correct Answer: Operating leverage

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In a manufacturing overhead variance, which is excluded from a two-way variance, as opposed to a three-way?

spending variance

budget (controllable) variance

volume (uncontrollable) variance

Answer & Explanation

Correct Answer: spending variance

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A company used the net present value method for evaluating a project. The project requires an immediate cash outlay of $950,000. The company discounted the cash flows by 16% and determined that the net present value of the project was a negative $600. From this information it is likely that the project...

had an internal rate of return that was slightly LESS than 16%

had negative internal rate of return

had an internal rate of return that was slightly Greater than 16%

had positive internal rate of return

Answer & Explanation

Correct Answer: had an internal rate of return that was slightly LESS than 16%

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The difference between the budgeted sales and the break-even sales, is known as ....?

the contribution margin

the margin of safety

the gross profit margin

the margin call

the actual variance

Answer & Explanation

Correct Answer: the margin of safety

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____ is using a single authentication credential that is shared across multiple networks.

Identity management

Single Sign On

Standard biometric

Charmap.exe

Answer & Explanation

Correct Answer: Identity management

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True or False: While depreciation does not result in a payment of cash, tax depreciation does reduce the cash payments for income taxes.

False

True

Answer & Explanation

Correct Answer: True

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Break-even analysis assumes that over the relevant range:

Total costs are unchanged

Unit variable costs are unchanged

Total fixed costs are nonlinear

Unit revenues are nonlinear

Answer & Explanation

Correct Answer: Unit variable costs are unchanged

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Expenses that do not vary with the volume of production are known as _______

Fixed expenses

Variable expenses

Semi‐variable expenses

None

Answer & Explanation

Correct Answer: Fixed expenses

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Which of the following specialist information systems is management accounting least engaged?

Material requirement planning

Cost accounting

Management information system

Double-entry bookkeeping system

Operational budgets

Answer & Explanation

Correct Answer: Double-entry bookkeeping system

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