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This set of Cost Management Multiple Choice Questions & Answers (MCQs) focuses on Cost Management Set 2
Q1 | Marginal Costing is concerned with:
- Fixed Costs
- Variable Costs
- Semi-fixed Costs
- None of the above three
Q2 | A biscuit manufacturing concern employs:
- Operating costing
- Departmental Costing
- Batch Costing
- Contract Costing
Q3 | A just in time manufacturing system should lead to:
- A wider range of stock items being made available
- An increase in the number of suppliers of stocks.
- Higher levels of stock being held in the warehouse
- Lower stock holding costs being incurred
Q4 | TQM revolves around the concept of:
- Providing adequate back up support once the product leaves the factory
- Recruiting the best managers in their field
- Making the best quality products regardless of the cost
- Getting things right first time
Q5 | Which of the following management accounting systems places a very strong emphasis onincorporating external data into the preparation of management reports?
- Sales variance analysis
- Activity based management
- Strategic management accounting
- Flexible budgeting
Q6 | What term is given to the idea that traditional budgeting should be replaced by a new type of budgeting?
- Behavioural budgeting
- Beyond budgeting
- Flexible budgeting
- Better budgeting
Q7 | Which of the following statements is true?
- There is an accounting standard covering environmental reporting
- Professional accountancy bodies are encouraging the development of environmental reporting
- By law company directors must report to shareholders on environmental matters.
- The Chartered Institute of Management Accountants (CIMA) requires its members to prepare reports on environmental issues for company directors
Q8 | What term best describes the use of both financial and non-financial measures in assessingwhether an entity has achieved its objectives?
- balanced scorecard
- Benchmarking
- performance measurement
- target setting
Q9 | Which management accounting technique is sometimes referred to as super variable costing?
- Throughput accounting
- Marginal costing
- Direct costing
- Product life cycle costing
Q10 | Which management accounting technique involves the identification of value adding activities?
- Backflush costing
- Target costing
- Activity based management
- Value chain analysis
Q11 | Which one of the following items is relatively unimportant in decision making?
- Relevant costs
- Net cash flow
- Opportunity costs
- Accruals and prepayments
Q12 | What is an alternative term for expected value?
- Estimated profit
- Forecasted profit
- Eventual outcome
- Weighted average
Q13 | Which of the following cost classification categories is almost identical to a relevant cost?
- Opportunity cost
- Sunk cost
- Committed cost
- Avoidable cost
Q14 | Which costs may normally be ignored when determining whether to close a factory for a short period?
- Fixed costs
- Opportunity costs
- Variable costs
- Total costs
Q15 | What is the minimum cost below which a company would be unwilling to price a one-off special contract?
- Between variable cost and total cost
- Total cost
- Variable cost
- Below variable cost
Q16 | What is the ideal transfer price?
- Market price
- Total cost
- Total cost less internal savings
- Opportunity cost
Q17 | In what circumstances might a company be prepared to price a special contract at less than itsrelevant cost?
- When sales of other products will not increase
- When the company is operating at almost full capacity
- In the expectation that additional profitable orders will be placed by the same customer
- When there are signs of improved market conditions
Q18 | The standard cost of a product is:
- The average unit cost of products produced during a particular period
- The unit cost of products incurred at the start of a particular period
- The average unit cost of products produced in the previous period
- The planned unit cost of products produced during a particular period
Q19 | What term is used to describe the level of efficiency achieved that appropriately trained, motivated and resourced employees can achieve in the long-run?
- Standard performance
- Standard hours
- Standard ex ante
- Standard ex post
Q20 | A standard that represents the most likely scenario can be referred to as the:
- Average standard
- Attainable standard
- Basic standard
- Ideal standard
Q21 | When calculating cost variances under a standard costing system we must:
- Compare standard costs with actual costs at the standard level of activity
- Compare actual costs with those that were budgeted
- Compare actual costs with standard costs at the actual level of output
- Compare actual outputs against budgeted outputs
Q22 | When carrying out variance analysis ideally, we should:
- Look at controllable adverse and favourable variances that are over a predetermined amount
- Look at adverse variances that are over a predetermined amount
- Look at all variances
- Look at all adverse and favourable variances that are over a predetermined amount
Q23 | The efficiency ratio can be defined as:
- Actual hours worked / budgeted labour hours
- Standard hours produced/ actual labour hours worked
- Standard hours produced / budgeted labour hours
- Actual hours worked / actual production based on standard hours
Q24 | The labour rate variance can be calculated by the following equation:
- (Standard hours - actual hours) x actual wage rate
- (Standard wage rate - actual wage rate) x standard hours worked
- (Standard wage rate - actual wage rate) x actual hours worked
- Budgeted labour costs - actual labour costs
Q25 | In August actual material used amounted to 5,650 kg, budgeted output was 1,000 units and standard material usage was 5 kg per unit. Actual output was 1,075 units. If the standard material cost of each product is 25 the material efficiency variance will be:
- 3,250 favourable
- 1,375 favourable
- 3,250 adverse
- 1,375 adverse