Management Accounting Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Management Accounting flashcards as text
Which type of cost center is evaluated solely on its ability to control costs without revenue responsibility?
Answer: Expense center (cost center)
A cost center manager is held responsible only for controlling costs; no revenue or asset decisions fall within their authority.
What is target costing?
Answer: Working backward from a target selling price to determine an allowable product cost
Target costing = Target selling price − Desired profit margin; it drives design and engineering teams to achieve the required cost structure.
In a make-or-buy decision, which of the following is NOT relevant?
Answer: Sunk costs already spent on existing equipment
Sunk costs have already been incurred and cannot be changed by any future decision, making them irrelevant to make-or-buy analysis.
What does a balanced scorecard measure beyond traditional financial metrics?
Answer: Performance across financial, customer, internal process, and learning/growth perspectives
The balanced scorecard (Kaplan & Norton) translates strategy into four perspectives: financial, customer, internal business processes, and learning & growth.
When using the high-low method to estimate a cost function, which data points are used?
Answer: The observations with the highest and lowest activity levels
The high-low method uses only the highest and lowest activity-level data points to calculate variable cost per unit and total fixed costs.
A fixed overhead volume variance arises because:
Answer: Actual production volume differed from the denominator volume used to set the fixed overhead rate
The fixed overhead volume variance reflects the difference between budgeted fixed overhead and applied fixed overhead due to actual output differing from planned output.
What is kaizen costing?
Answer: A continuous cost reduction approach applied during the production phase
Kaizen costing focuses on achieving small, continuous improvements in production costs after a product has been launched, unlike target costing which focuses on the design phase.