On This Page

This set of Management Accounting Multiple Choice Questions & Answers (MCQs) focuses on Management Accounting Set 23

Q1 | Profit-Volume ratio is also known as
  • Contribution ratio
  • Contribution/Sales ratio
  • Marginal Income percentage
  • All of the above
Q2 | Which of the following statements are true?
  • P/V Ratio can never be used to measure break-even point
  • Higher the P/V ratio less will be the profit and vice versa
  • Concept of P/V ratio is also used to determine profit at a given volume of sales
  • All of the above
Q3 | The P/V ratio can be improved by
  • Decreasing the selling price per unit
  • Increasing variable cost
  • Changing the sales mix
  • None of the above
Q4 | P/V ratio can be calculated on the basis of variable cost ratio as
  • 1 - Variable Cost Ratio
  • 1 + Variable Cost Ratio
  • 1/Variable Cost Ratio
  • None of the above
Q5 | Sales for desired profit is measured as
  • (Fixed cost + profit)/ (P/V Ratio)
  • (Fixed cost + profit) * (P/V Ratio)
  • (Fixed cost - profit)/ (P/V Ratio)
  • None of the above
Q6 | Margin of safety is equal to
  • Actual sales – Sales at Breakeven point
  • Actual sales + Sales at Breakeven point
  • Actual sales x Sales at Breakeven point
  • Actual sales / Sales at Breakeven point
Q7 | Angle of incidence is the angle at which
  • Total revenue line intersects the total cost line
  • Total cost line intersects the variable cost line
  • Variable cost line intersects fixed cost line
  • Fixed cost line intersects total revenue line
Q8 | Direct material cost + direct labor cost + other variable costs is equal to…
  • Contribution
  • Total cost
  • Marginal cost
  • Sales
Q9 | The factor which limits the volume of output of different products of an understanding at a particular point of time is known as…
  • Key factor
  • BEP
  • Contribution
  • None
Q10 | The break even chart helps the management in…
  • Forecasting costs and profits
  • Cost control
  • Long term planning and growth
  • All of the above
Q11 | In management accounting, an emphasis and focus must be
  • Past oriented
  • Future oriented
  • Bank oriented
  • Communication oriented
Q12 | In financial accounting, investors, banks, suppliers and government agencies are classified as
  • External parties
  • Internal parties
  • Environmental parties
  • Transactional parties
Q13 | If the actual output is more than the budgeted output, volume variance is
  • Favourable
  • Non-favourable
  • No impact
  • None of the above
Q14 | To get to labour efficiency variance, the formula to be applied is
  • Total standard labour cost of actual output - Total actual cost of actual output
  • (Standard rate per hour - Actual rate per hour) * Actual Hours
  • (Standard time - Actual time) * Standard rate per hour
  • Abnormal idle hours * Standard hourly rate
Q15 | Which of the following is technique of financial statement analysis?
  • Common?size statement
  • Comparative statement
  • Trend analysis
  • All
Q16 | For calculating trend percentages any year is selected as:
  • Current year
  • Previous year
  • Base year
  • None of these
Q17 | If total cost of 100 units is Rs 5000 and those of 101 units is Rs. 5030 then increase of Rs. 30 in total cost is
  • Marginal cost
  • Prime cost
  • All Fixed overheads
  • None of the above
Q18 | Which of the following statements are true?
  • In absorption costing, cost is divided into three major parts while in marginal costing cost is divided into two main parts.
  • In absorption costing period is important and in marginal costing product is important.
  • Both a and b
  • None of the above
Q19 | In case of other enterprises cash flow arising from interest paid should be classified as cash flow from ________ while dividends and interest received should be stated as cash flow from ____.
  • Operating activities, financing activities
  • Financing activities, investing activities
  • Investing activities, operating activities
  • None of the above
Q20 | Determine Contribution if Fixed cost is Rs 50,000 and loss is Rs 20,000.
  • Rs 60,000
  • Rs 70,000
  • Rs 30,000
  • None of the above
Q21 | Which of the below is an Accounting Concept
  • Materiality
  • Separate Legal Entity
  • Consistency
  • Conservatism
Q22 | The Carl Care Company established the following direct labour cost standards for one unit of product Z:•Standard hours: 1.5 hours•Standard rate: $20 per hour•Standard cost: $30 (1.5 hours @ $20 per hour)During the month of July, 20,000 direct labour hours were worked, and 12,500 units ofproduct Z were manufactured. The total wages related to direct labour in July were$405,000. The direct labour rate variance for July was:
  • $5,000 unfavourable
  • $5,000 favourable
  • $30,000 favourable
  • $30,000 unfavourable
Q23 | Which of the following is an example of Semi-Variable Costs
  • Salary
  • Tax
  • Telephone Expenses
  • Office Expenses
Q24 | Long Term Solvency is indicated by:
  • Current Ratio
  • Debt / Equity Ratio
  • Net Profit Ratio
  • Gross Profit Ratio
Q25 | A department makes a product whose contribution per unit is £1,000, and which takes 20 hours machine time. A component used in this product with a marginal cost of £300 (taking 5 hours of machine time) could be purchased from an external supplier. The department is working at full capacity. What is the maximum price that the company may pay to buy the component from an external supplier?
  • £550
  • £500
  • £575
  • £600