Management Accounting MCQ Questions and Answers Part – 3

Management Accounting MCQ Questions and Answers Part – 1

Management Accounting MCQ Questions and Answers Part – 2

Management Accounting MCQ Questions and Answers Part – 3

101. An increase in selling price ________.
A. increases the break-even point.
B. decreases the break-even point.
C. does not affect the break-even point.
D. optimize the break-even point.
ANSWER: B
102. A high margin of safety indicates ______.
A. overproduction.
B. overcapitalization.
C. the soundness of the business.
D. undercapitalization.
ANSWER: C
103. Angle of incidence is ________.
A. the angle between the sales line and the total cost line.
B. the angle between the sales line and the y-axis.
C. the angle between the sale and the x-axis.
D. the angle between the sale and total.
ANSWER: A
104. CVP analysis is most important for the determination of _______.
A. relationship between revenues and costs at various levels of operations.
B. sales revenue necessary to equal fixed costs.
C. variable revenues necessary to equal fixed costs.
D. volume of operations necessary to Break even.
ANSWER: B
105. The capital of the company is divided into two categories ——— and fluctuating capital.
A. fixed
B. equity
C. preference
D. variable
ANSWER: A
106. 1f` fixed costs decrease while variable cost per unit remains constant, the new B.E.P in relation to the old B.E.P will be _______.
A. lower.
B. higher.
C. unchanged.
D. indeterminate.
ANSWER: B
107. If fixed costs decrease while the variable cost per unit remains constant, the new contribution margin in relation to the old contribution margin will be ______.
A. lower.
B. unchanged.
C. higher.
D. indeterminate.
ANSWER: B
108. Selling price per unit Rs. 10; Variable cost Rs. 8 per unit; Fixed cost Rs. 20,000; Break-even production
in units _______.
A. 10,000.
B. 16,300.
C. 2,000.
D. 2,500.
ANSWER: A
109. Sales Rs. 25,000; Variable cost Rs. 8,000; Fixed cost Rs. 5,000; Break-even sales in value ________.
A. Rs. 7,936.
B. Rs. 7,353.
C. Rs. 8,333.
D. Rs. 9,090.
ANSWER: B
110. Fixed cost Rs. 80,000; Variable cost Rs. 2 per unit; Selling price_Rs. 10 per unit; Turnover required for a
profit target of Rs. 60,000 will be _______.
A. Rs. 1,75,000.
B. Rs. 1,17,400.
C. Rs. .57,000.
D. Rs. 1,86,667.
ANSWER: A
111. Sales Rs. 25,000; Variable cost Rs. 15,000; Fixed cost Rs .4,000; P/V Ratio is ______.
A. 40 percent
B. 80 percent
C. 15 percent
D. 30 percent
ANSWER: A
112. Sales Rs. 50,000; Variable cost Rs. 30,000; Net profit Rs. 6,000; fixed cost is__________.
A. Rs. I0,000.
B. Rs.l4,000.
C. Rs. 12,000.
D. Rs. 8,000.
ANSWER: B
113. Actual sales Rs .4,00,000; Break-even sales Rs. 2,50,000; Margin of Safety in percentage is_______.
A. 33.3 percent
B. 66.67 percent
C. 37.5 percent
D. 76.33 percent
ANSWER: C
114. P/V Ratio 50%; Variable cost of the produce Rs. 25; Selling price is ________.
A. Rs. 50.
B. Rs. 40.
C. Rs. 30.
D. Rs. 55.
ANSWER: A
115. Fixed cost Rs. 2,00,000; Sales Rs. 8,00,000; P/V Ratio 30%; the amount of’ profit is________.
A. Rs. 50,000.
B. Rs. 40,000.
C. Rs. 35,000.
D. Rs. 45,000.
ANSWER: B
116. P/V Ratio is 25% and Margin of Safety is Rs; 3,00,000, the amount of profit is_____.
A. Rs. 1,00,000.
B. Rs. 80,000.
C. Rs. 75,000.
D. Rs. 60,000.
ANSWER: C
117. Total sales Rs. 20,00,000; Fixed expenses Rs. 4,00,000; P/V Ratio 40 percent Break-even capacity in
percentage is_______.
A. 40
B. 60
C. 50
D. 45
ANSWER: C
118. Break-even point occurs at 40 percent of total capacity, margin of safety will be _____ percent.
A. 40
B. 60
C. 80
D. 85
ANSWER: B
119. If the P/V Ratio of a product is 30 percent and selling price is Rs. 25 per unit, the marginal cost of the product would be ___________.
A. Rs.18.75.
B. Rs.16.
C. Rs. 15.
D. Rs.20.
ANSWER: A
120. Absorption costing is also known as ______.
A. historical costing.
B. real costing.
C. marginal costing.
D. real costing.
ANSWER: A
121. Under marginal costing, stock are valued at _________.
A. cost less
B. cost more.
C. variable cost.
D. market price.
ANSWER: C
122. Absorption costing lays emphasis on _____.
A. production.
B. sales.
C. marketing.
D. advertising.
ANSWER: A
123. Marginal costing lays emphasis on ___________.
A. production.
B. sales.
C. marketing.
D. advertising.
ANSWER: B
124. Selling price – marginal cost =____________.
A. fixed cost.
B. semi-variable cost.
C. contribution.
D. break-even point.
ANSWER: C
125. Total sales – total variable cost ________.
A. fixed cost.
B. semi-variable cost.
C. contribution.
D. break-even point.
ANSWER: C
126. Fixed cost + net profit =__________.
A. BEP
B. semi-variable cost.
C. margin of safety.
D. contribution.
ANSWER: D
127. A high P/V ratio indicates_____.
A. high profitability.
B. low profitability.
C. high loss.
D. break even.
ANSWER: A
128. Fixed cost / P/V ratio =___________.
A. Contribution
B. Margin of safety.
C. Break-even point.
D. Variable cost.
ANSWER: C
129. Profit / P/V ratio =_____________.
A. Break-even point.
B. Margin of safety.
C. Contribution.
D. Variable cost.
ANSWER: B
130. Marginal costing is a technique of _____.
A. cost reduction.
B. cost control.
C. budgeting.
D. standard costing.
ANSWER: B
131. The budget is a________.
A. post-mortem analysis.
B. substitute of management.
C. an aid to management.
D. calculation.
ANSWER: C
132. One of the most important tools of cost planning is_________.
A. budget.
B. direct cost.
C. unit cost.
D. cost sheet.
ANSWER: A
133. Sales budget is a______.
A. functional budget.
B. expenditure budget.
C. master budget.
D. flexible budget.
ANSWER: A
134. The budget which usually takes the form of budgeted profit and loss account and balance sheet is known as _________.
A. flexible budget.
B. master budget.
C. cash budget.
D. purchase budget.
ANSWER: B
135. Which of the following is usually a long-term budget?
A. Fixed budget.
B. Cash budget.
C. Sales budget.
D. Capital expenditure budget.
ANSWER: D
136. The fixed and variable cost classification has a special significance in the preparation of ______.
A. capital budget.
B. cash budget.
C. master budget.
D. flexible budget.
ANSWER: D
137. The budget, which is prepared first of all is_________.
A. master budget.
B. cash budget.
C. budget for key factor.
D. none of these.
ANSWER: C
138. Preparing budget figures for different levels of activity within a range under flexible budgeting is_____________.
A. formula method.
B. multi-activity method.
C. budget cost allowance method.
D. none of these.
ANSWER: B
139. What type of budget is designed to take into account forecast change in costs, prices, etc?
A. master budget.
B. rolling budget.
C. flexible budget.
D. functional budget.
ANSWER: B
140. Operation budgets normally cover a period of ________.
A. one to ten years.
B. one to two years.
C. one to five years.
D. one year or less.
ANSWER: D
141. The entire process of preparing the budgets is known as _______.
A. planning.
B. organizing.
C. budgeting.
D. controlling.
ANSWER: C
142. Budgetary control starts with ________.
A. planning.
B. organizing.
C. budgeting.
D. controlling.
ANSWER: C
143. Budgetary control ends with _______.
A. planning.
B. organizing.
C. budgeting.
D. control.
ANSWER: D
144. Budget designed to remain constant irrespective of the level of activity attained is called ________.
A. fixed budget.
B. flexible budget
C. sales budget.
D. production budget.
ANSWER: A
145. Long-term budgets are prepared for ________.
A. 1 year.
B. 1-3 years
C. 1-5 years.
D. 5-10 years.
ANSWER: D
146. The budget prepared for various levels of activity by classification of expenditure under fixed, variable and semi-fixed categories is __________.
A. fixed budget.
B. flexible budget.
C. sales budget.
D. production budget.
ANSWER: B
147. Budget which shows the quantity of finished products to be sold and the price at which they are to be sold is____________.
A. fixed budget.
B. flexible budget.
C. sales budget.
D. production budget.
ANSWER: C
148. The budget which shows the budgeted quantity of output to be produced during a specific period is_____________.
A. fixed budget
B. flexible budget.
C. sales budget.
D. production budget.
ANSWER: D
149. Material consumption budget is prepared on the basis of ________.
A. sales budget.
B. production budget.
C. fixed budget.
D. flexible budget.
ANSWER: B
150. Budget of indirect costs in the form of indirect wages, indirect material and indirect expenses in the factory is ______.
A. production overhead budget.
B. administration overhead budget.
C. selling and distribution overhead budget.
D. master budget.
ANSWER: A

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Author and Assistant Professor in Finance, Ardent fan of Arsenal FC. Always believe "The only good is knowledge and the only evil is ignorance - Socrates"