Certified Management Accountant (CMA)
Exam Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
Q&A | Instant Download Pdf
1. Which of the following best describes the primary purpose of
managerial accounting?
A. To report financial results to external stakeholders
B. To prepare tax returns for regulatory compliance
C. To provide information for internal decision-making
D. To audit financial statements for accuracy
C. To provide information for internal decision-making
Rationale: Managerial accounting focuses on providing information to
managers and internal decision-makers, rather than external
reporting or compliance purposes.
2. Which cost behavior pattern remains constant per unit regardless
of production volume?
, A. Variable cost
B. Fixed cost
C. Mixed cost
D. Step cost
A. Variable cost
Rationale: Variable costs change in total with production volume but
remain constant on a per-unit basis, such as direct materials.
3. In a flexible budget, which of the following is true?
A. Costs are fixed regardless of activity level
B. Budgeted costs adjust based on actual output
C. Revenues are ignored
D. Only fixed costs are included
B. Budgeted costs adjust based on actual output
Rationale: Flexible budgets are designed to adjust costs and revenues
based on actual activity levels, allowing performance evaluation
under different production scenarios.
4. Which of the following best represents a sunk cost?
A. Future labor cost for a new project
B. Equipment purchase already made and paid
C. Cost of raw materials for upcoming production
D. Expected advertising expenses for next month
,B. Equipment purchase already made and paid
Rationale: Sunk costs are costs that have already been incurred and
cannot be recovered. They should not influence future decisions.
5. Contribution margin per unit is calculated as:
A. Sales price – Variable cost per unit
B. Sales price – Fixed cost per unit
C. Total revenue – Total fixed costs
D. Total revenue – Total cost
A. Sales price – Variable cost per unit
Rationale: Contribution margin per unit represents the amount each
unit contributes toward covering fixed costs and generating profit.
6. Which inventory valuation method typically results in the highest
net income during periods of rising prices?
A. FIFO
B. LIFO
C. Weighted average
D. Specific identification
A. FIFO
Rationale: First-In, First-Out (FIFO) assigns older, lower costs to cost of
goods sold, leaving higher-cost inventory on the balance sheet,
resulting in higher net income when prices rise.
, 7. Which of the following is a key characteristic of decentralization in
management?
A. Decision-making authority is concentrated at the top
B. Decision-making is delegated to lower-level managers
C. Central office controls all operations directly
D. Departments do not have individual responsibility
B. Decision-making is delegated to lower-level managers
Rationale: Decentralization allows managers at different levels to
make decisions, enhancing responsiveness and accountability within
the organization.
8. Which of the following best defines the cost of capital?
A. The cost of acquiring inventory
B. The minimum return required on an investment
C. The total depreciation of assets
D. The direct labor rate for production
B. The minimum return required on an investment
Rationale: Cost of capital represents the required return needed to
justify an investment, reflecting the opportunity cost of funds.
9. Standard costing is primarily used to:
A. Determine tax liabilities
B. Control costs and evaluate performance
Exam Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
Q&A | Instant Download Pdf
1. Which of the following best describes the primary purpose of
managerial accounting?
A. To report financial results to external stakeholders
B. To prepare tax returns for regulatory compliance
C. To provide information for internal decision-making
D. To audit financial statements for accuracy
C. To provide information for internal decision-making
Rationale: Managerial accounting focuses on providing information to
managers and internal decision-makers, rather than external
reporting or compliance purposes.
2. Which cost behavior pattern remains constant per unit regardless
of production volume?
, A. Variable cost
B. Fixed cost
C. Mixed cost
D. Step cost
A. Variable cost
Rationale: Variable costs change in total with production volume but
remain constant on a per-unit basis, such as direct materials.
3. In a flexible budget, which of the following is true?
A. Costs are fixed regardless of activity level
B. Budgeted costs adjust based on actual output
C. Revenues are ignored
D. Only fixed costs are included
B. Budgeted costs adjust based on actual output
Rationale: Flexible budgets are designed to adjust costs and revenues
based on actual activity levels, allowing performance evaluation
under different production scenarios.
4. Which of the following best represents a sunk cost?
A. Future labor cost for a new project
B. Equipment purchase already made and paid
C. Cost of raw materials for upcoming production
D. Expected advertising expenses for next month
,B. Equipment purchase already made and paid
Rationale: Sunk costs are costs that have already been incurred and
cannot be recovered. They should not influence future decisions.
5. Contribution margin per unit is calculated as:
A. Sales price – Variable cost per unit
B. Sales price – Fixed cost per unit
C. Total revenue – Total fixed costs
D. Total revenue – Total cost
A. Sales price – Variable cost per unit
Rationale: Contribution margin per unit represents the amount each
unit contributes toward covering fixed costs and generating profit.
6. Which inventory valuation method typically results in the highest
net income during periods of rising prices?
A. FIFO
B. LIFO
C. Weighted average
D. Specific identification
A. FIFO
Rationale: First-In, First-Out (FIFO) assigns older, lower costs to cost of
goods sold, leaving higher-cost inventory on the balance sheet,
resulting in higher net income when prices rise.
, 7. Which of the following is a key characteristic of decentralization in
management?
A. Decision-making authority is concentrated at the top
B. Decision-making is delegated to lower-level managers
C. Central office controls all operations directly
D. Departments do not have individual responsibility
B. Decision-making is delegated to lower-level managers
Rationale: Decentralization allows managers at different levels to
make decisions, enhancing responsiveness and accountability within
the organization.
8. Which of the following best defines the cost of capital?
A. The cost of acquiring inventory
B. The minimum return required on an investment
C. The total depreciation of assets
D. The direct labor rate for production
B. The minimum return required on an investment
Rationale: Cost of capital represents the required return needed to
justify an investment, reflecting the opportunity cost of funds.
9. Standard costing is primarily used to:
A. Determine tax liabilities
B. Control costs and evaluate performance
