Management Accounting Exam Questions and
Answers
Which costing method separates fixed and variable costs?
A. Absorption costing
B. Marginal costing
C. Activity-based costing
D. Standard costing
Answer: B
Which of the following is a limitation of absorption costing?
A. Overheads allocated arbitrarily
B. Considers fixed and variable costs
C. Provides full cost per unit
D. Accepted for external reporting
Answer: A
Which of the following is a benefit of marginal costing?
A. Useful for short-term decision-making
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a feature of activity-based costing (ABC)?
A. Allocates overheads based on activities
B. Ignores cost drivers
C. Uses only volume-based allocation
D. Eliminates fixed costs
Answer: A
Which of the following is a limitation of standard costing?
A. Variances may be outdated in dynamic environments
B. Provides benchmarks for performance
C. Identifies efficiency levels
D. Encourages cost control
Answer: A
Which of the following is a benefit of budgeting?
A. Provides a benchmark for performance evaluation
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of break-even analysis?
,A. Assumes linear cost behavior
B. Identifies margin of safety
C. Calculates contribution per unit
D. Determines profit at different sales levels
Answer: A
Which of the following is a benefit of variance analysis?
A. Identifies reasons for differences between actual and budgeted results
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of payback period method?
A. Ignores time value of money
B. Considers cash flows
C. Considers profitability
D. Provides decision rule
Answer: A
Which of the following is a benefit of net present value (NPV)?
A. Considers time value of money
B. Ignores cash flows
C. Guarantees profit
D. Eliminates uncertainty
Answer: A
Section B – More MCQs (Questions 11–20)
Which of the following is a limitation of IRR method?
A. May give multiple values for non-conventional cash flows
B. Considers time value of money
C. Considers all cash flows
D. Provides clear decision rule
Answer: A
Which of the following is a benefit of contribution analysis?
A. Helps in decision-making for product mix
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of ratio analysis in management accounting?
A. Ignores qualitative factors
B. Easy to calculate
C. Compares performance over time
D. Highlights liquidity issues
, Answer: A
Which of the following is a benefit of responsibility accounting?
A. Assigns accountability to managers
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of traditional costing systems?
A. May distort product costs in complex environments
B. Provides accurate overhead allocation
C. Encourages cost control
D. Identifies efficiency levels
Answer: A
Which of the following is a benefit of balanced scorecard?
A. Provides a holistic view of performance
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of zero-based budgeting?
A. Time-consuming and resource-intensive
B. Provides justification for all expenses
C. Encourages efficiency
D. Identifies wasteful spending
Answer: A
Which of the following is a benefit of flexible budgeting?
A. Adjusts for changes in activity levels
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of cost-volume-profit (CVP) analysis?
A. Assumes constant selling price and costs
B. Identifies contribution per unit
C. Calculates margin of safety
D. Determines profit at different sales levels
Answer: A
Which of the following is a benefit of target costing?
A. Aligns product design with cost objectives
B. Guarantees profit
Answers
Which costing method separates fixed and variable costs?
A. Absorption costing
B. Marginal costing
C. Activity-based costing
D. Standard costing
Answer: B
Which of the following is a limitation of absorption costing?
A. Overheads allocated arbitrarily
B. Considers fixed and variable costs
C. Provides full cost per unit
D. Accepted for external reporting
Answer: A
Which of the following is a benefit of marginal costing?
A. Useful for short-term decision-making
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a feature of activity-based costing (ABC)?
A. Allocates overheads based on activities
B. Ignores cost drivers
C. Uses only volume-based allocation
D. Eliminates fixed costs
Answer: A
Which of the following is a limitation of standard costing?
A. Variances may be outdated in dynamic environments
B. Provides benchmarks for performance
C. Identifies efficiency levels
D. Encourages cost control
Answer: A
Which of the following is a benefit of budgeting?
A. Provides a benchmark for performance evaluation
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of break-even analysis?
,A. Assumes linear cost behavior
B. Identifies margin of safety
C. Calculates contribution per unit
D. Determines profit at different sales levels
Answer: A
Which of the following is a benefit of variance analysis?
A. Identifies reasons for differences between actual and budgeted results
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of payback period method?
A. Ignores time value of money
B. Considers cash flows
C. Considers profitability
D. Provides decision rule
Answer: A
Which of the following is a benefit of net present value (NPV)?
A. Considers time value of money
B. Ignores cash flows
C. Guarantees profit
D. Eliminates uncertainty
Answer: A
Section B – More MCQs (Questions 11–20)
Which of the following is a limitation of IRR method?
A. May give multiple values for non-conventional cash flows
B. Considers time value of money
C. Considers all cash flows
D. Provides clear decision rule
Answer: A
Which of the following is a benefit of contribution analysis?
A. Helps in decision-making for product mix
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of ratio analysis in management accounting?
A. Ignores qualitative factors
B. Easy to calculate
C. Compares performance over time
D. Highlights liquidity issues
, Answer: A
Which of the following is a benefit of responsibility accounting?
A. Assigns accountability to managers
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of traditional costing systems?
A. May distort product costs in complex environments
B. Provides accurate overhead allocation
C. Encourages cost control
D. Identifies efficiency levels
Answer: A
Which of the following is a benefit of balanced scorecard?
A. Provides a holistic view of performance
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of zero-based budgeting?
A. Time-consuming and resource-intensive
B. Provides justification for all expenses
C. Encourages efficiency
D. Identifies wasteful spending
Answer: A
Which of the following is a benefit of flexible budgeting?
A. Adjusts for changes in activity levels
B. Guarantees profit
C. Eliminates uncertainty
D. Ensures compliance with IFRS
Answer: A
Which of the following is a limitation of cost-volume-profit (CVP) analysis?
A. Assumes constant selling price and costs
B. Identifies contribution per unit
C. Calculates margin of safety
D. Determines profit at different sales levels
Answer: A
Which of the following is a benefit of target costing?
A. Aligns product design with cost objectives
B. Guarantees profit
