Certified Management Accountant Certified Management Accountant MCQ 5

Question 1

Which of the following best describes throughput in the Theory of Constraints (TOC)?

Accepted Answer

Sales revenue minus totally variable costs

Answer

In TOC, throughput is defined as sales revenue minus totally variable costs (primarily direct materials), representing money generated through sales.

Question 2

Under IFRS, development costs are capitalized when:

Accepted Answer

Specific feasibility and intention-to-complete criteria are met

Answer

IFRS requires capitalization of development costs only when technical feasibility, intention to complete, ability to use or sell, and other criteria are all demonstrated.

Question 3

A company's quick ratio is 0.8. This suggests the company:

Accepted Answer

May struggle to meet short-term obligations without selling inventory

Answer

A quick ratio below 1.0 indicates that liquid assets (cash, receivables, marketable securities) are insufficient to cover all current liabilities without liquidating inventory.

Question 4

Which variance arises when actual sales mix differs from the budgeted sales mix in a multi-product firm?

Accepted Answer

Sales mix variance

Answer

The sales mix variance isolates the profit impact of selling a different proportion of products than planned, separate from overall volume changes.

Question 5

Just-in-time (JIT) manufacturing primarily aims to reduce:

Accepted Answer

Inventory levels and associated carrying costs

Answer

JIT systems synchronize production with demand to minimize inventory on hand, reducing carrying costs, waste, and the risk of obsolescence.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Certified Management Accountant MCQ 5