Certified Management Accountant Exam
Question and correct answers (verified answers
100%)
Q&A 2026/2027 INSTANT DOWNLOAD PDF
1. Which costing method assigns manufacturing overhead to products based on activities that
drive costs?
A. Job-order costing
B. Activity-based costing
C. Process costing
D. Absorption costing
Correct Answer: B. Activity-based costing
Rationale: Activity-based costing assigns overhead using activity cost pools and cost drivers,
providing a more refined allocation of indirect costs.
2. Which of the following is a period cost?
A. Direct materials
B. Direct labor
C. Manufacturing overhead
D. Selling expense
Correct Answer: D. Selling expense
Rationale: Selling expenses are expensed in the period incurred rather than being included in
product inventory costs.
3. A company's contribution margin is calculated as:
A. Sales minus fixed costs
B. Sales minus variable costs
C. Sales minus total costs
D. Gross profit minus fixed costs
,Correct Answer: B. Sales minus variable costs
Rationale: Contribution margin represents the amount available to cover fixed costs and then
generate operating profit.
4. If sales are $500,000 and variable costs are $300,000, what is the contribution margin ratio?
A. 20%
B. 30%
C. 40%
D. 60%
Correct Answer: C. 40%
Rationale: Contribution margin is $200,000 ($500,000 − $300,000). The ratio is $200,000 ÷
$500,000 = 40%.
5. Which budgeting approach requires managers to justify all expenditures from the
beginning?
A. Incremental budgeting
B. Flexible budgeting
C. Zero-based budgeting
D. Rolling budgeting
Correct Answer: C. Zero-based budgeting
Rationale: Zero-based budgeting starts from a zero base and requires activities and expenditures
to be justified.
6. A flexible budget is primarily useful because it:
A. Eliminates fixed costs
B. Adjusts budgeted costs and revenues for actual activity levels
C. Prevents unfavorable variances
D. Replaces the master budget
Correct Answer: B. Adjusts budgeted costs and revenues for actual activity levels
Rationale: A flexible budget adjusts expected revenues and variable costs according to the actual
level of activity.
, 7. Which variance measures the difference between actual material price and standard
material price?
A. Material quantity variance
B. Material price variance
C. Labor efficiency variance
D. Labor rate variance
Correct Answer: B. Material price variance
Rationale: Material price variance evaluates whether materials were purchased at a price
different from the standard price.
8. A favorable labor efficiency variance occurs when:
A. Actual hours exceed standard hours
B. Actual hours are less than standard hours for actual output
C. Actual labor rates exceed standard rates
D. Standard hours exceed actual output
Correct Answer: B. Actual hours are less than standard hours for actual output
Rationale: Using fewer labor hours than the standard allowed for actual production creates a
favorable efficiency variance.
9. Which financial statement reports revenues and expenses for a period?
A. Balance sheet
B. Income statement
C. Statement of cash flows
D. Statement of changes in equity
Correct Answer: B. Income statement
Rationale: The income statement summarizes revenues, expenses, gains, and losses over a
specified period.
10. Which financial statement reports assets, liabilities, and equity at a specific date?
A. Income statement
B. Balance sheet
Question and correct answers (verified answers
100%)
Q&A 2026/2027 INSTANT DOWNLOAD PDF
1. Which costing method assigns manufacturing overhead to products based on activities that
drive costs?
A. Job-order costing
B. Activity-based costing
C. Process costing
D. Absorption costing
Correct Answer: B. Activity-based costing
Rationale: Activity-based costing assigns overhead using activity cost pools and cost drivers,
providing a more refined allocation of indirect costs.
2. Which of the following is a period cost?
A. Direct materials
B. Direct labor
C. Manufacturing overhead
D. Selling expense
Correct Answer: D. Selling expense
Rationale: Selling expenses are expensed in the period incurred rather than being included in
product inventory costs.
3. A company's contribution margin is calculated as:
A. Sales minus fixed costs
B. Sales minus variable costs
C. Sales minus total costs
D. Gross profit minus fixed costs
,Correct Answer: B. Sales minus variable costs
Rationale: Contribution margin represents the amount available to cover fixed costs and then
generate operating profit.
4. If sales are $500,000 and variable costs are $300,000, what is the contribution margin ratio?
A. 20%
B. 30%
C. 40%
D. 60%
Correct Answer: C. 40%
Rationale: Contribution margin is $200,000 ($500,000 − $300,000). The ratio is $200,000 ÷
$500,000 = 40%.
5. Which budgeting approach requires managers to justify all expenditures from the
beginning?
A. Incremental budgeting
B. Flexible budgeting
C. Zero-based budgeting
D. Rolling budgeting
Correct Answer: C. Zero-based budgeting
Rationale: Zero-based budgeting starts from a zero base and requires activities and expenditures
to be justified.
6. A flexible budget is primarily useful because it:
A. Eliminates fixed costs
B. Adjusts budgeted costs and revenues for actual activity levels
C. Prevents unfavorable variances
D. Replaces the master budget
Correct Answer: B. Adjusts budgeted costs and revenues for actual activity levels
Rationale: A flexible budget adjusts expected revenues and variable costs according to the actual
level of activity.
, 7. Which variance measures the difference between actual material price and standard
material price?
A. Material quantity variance
B. Material price variance
C. Labor efficiency variance
D. Labor rate variance
Correct Answer: B. Material price variance
Rationale: Material price variance evaluates whether materials were purchased at a price
different from the standard price.
8. A favorable labor efficiency variance occurs when:
A. Actual hours exceed standard hours
B. Actual hours are less than standard hours for actual output
C. Actual labor rates exceed standard rates
D. Standard hours exceed actual output
Correct Answer: B. Actual hours are less than standard hours for actual output
Rationale: Using fewer labor hours than the standard allowed for actual production creates a
favorable efficiency variance.
9. Which financial statement reports revenues and expenses for a period?
A. Balance sheet
B. Income statement
C. Statement of cash flows
D. Statement of changes in equity
Correct Answer: B. Income statement
Rationale: The income statement summarizes revenues, expenses, gains, and losses over a
specified period.
10. Which financial statement reports assets, liabilities, and equity at a specific date?
A. Income statement
B. Balance sheet
