Certified Management Accountant Certified Management Accountant 2

Question 1

Which costing method assigns overhead based on activities that drive costs rather than a single plant-wide rate?

Accepted Answer

Activity-based costing

Answer

Activity-based costing (ABC) identifies cost drivers for each activity and assigns overhead accordingly, providing more accurate product costs.

Question 2

A company has fixed costs of $120,000, a selling price of $40 per unit, and variable costs of $25 per unit. What is the breakeven point in units?

Accepted Answer

8,000 units

Answer

Breakeven = Fixed Costs ÷ Contribution Margin per unit = $120,000 ÷ ($40 − $25) = 8,000 units.

Question 3

Under the weighted-average method of process costing, equivalent units are calculated by:

Accepted Answer

Combining beginning WIP work already done with current period work

Answer

The weighted-average method merges prior-period work in beginning WIP with current-period work, so EUP = units completed + (ending WIP × % complete).

Question 4

Which financial ratio best measures a company's ability to meet short-term obligations using only its most liquid assets?

Accepted Answer

Cash ratio

Answer

The cash ratio (cash + cash equivalents ÷ current liabilities) uses only the most liquid assets and is the most conservative short-term liquidity measure.

Question 5

In a standard cost system, an unfavorable labor efficiency variance means:

Accepted Answer

More labor hours were used than the standard hours allowed

Answer

Labor efficiency variance = (Actual hours − Standard hours allowed) × Standard rate; it is unfavorable when actual hours exceed standard hours.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Certified Management Accountant 2