Certified Management Accountant Certified Management Accountant MCQ 2

Question 1

Which budgeting approach requires managers to justify every expense from zero each period rather than using the prior period as a baseline?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting requires all expenses to be justified from scratch each period, eliminating the assumption that prior-year spending is automatically valid.

Question 2

Under absorption costing, fixed manufacturing overhead is treated as:

Accepted Answer

A product cost inventoried until goods are sold

Answer

Under absorption costing, fixed manufacturing overhead is included in the cost of inventory and only expensed (as COGS) when the related units are sold.

Question 3

A company's contribution margin ratio is 40% and fixed costs are $200,000. What is the break-even point in sales dollars?

Accepted Answer

$500,000

Answer

Break-even in sales dollars = Fixed costs / CM ratio = $200,000 / 0.40 = $500,000.

Question 4

Which of the following is an example of an internal failure cost in a quality cost framework?

Accepted Answer

Rework of defective products before shipment

Answer

Internal failure costs arise from defects caught before delivery, such as rework, scrap, and re-inspection of reworked items.

Question 5

The economic order quantity (EOQ) model minimizes the sum of which two costs?

Accepted Answer

Ordering costs and carrying costs

Answer

EOQ minimizes total inventory costs by finding the order quantity at which ordering costs equal carrying (holding) costs.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Certified Management Accountant MCQ 2