Certified Management Accountant Trivia 4

Question 1

A company has fixed costs of $200,000, a selling price of $50 per unit, and variable costs of $30 per unit. What is the breakeven point in units?

Accepted Answer

10,000 units

Answer

Breakeven units = Fixed costs ÷ Contribution margin per unit = $200,000 ÷ ($50 − $30) = 10,000 units.

Question 2

Which type of variance measures the difference between actual hours worked and standard hours allowed, multiplied by the standard wage rate?

Accepted Answer

Labor efficiency variance

Answer

The labor efficiency variance = (Actual hours − Standard hours allowed) × Standard rate, measuring workforce productivity.

Question 3

Which concept describes the minimum return a company must earn on a new investment to satisfy its investors?

Accepted Answer

Weighted average cost of capital

Answer

The weighted average cost of capital (WACC) represents the minimum required return that must be earned to create value for all capital providers.

Question 4

In the context of the CMA exam, 'throughput' in Theory of Constraints refers to:

Accepted Answer

The rate at which the system generates money through sales

Answer

In Theory of Constraints, throughput is defined as sales revenue minus totally variable costs (primarily direct materials), representing the rate of generating money.

Question 5

Which of the following best describes 'management by exception'?

Accepted Answer

Managers focus attention on results that deviate significantly from planned performance

Answer

Management by exception directs managerial attention to significant variances from budgeted or standard performance, saving time on routine results.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Trivia 4