CGA Management Accounting & Strategy 2

Question 1

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

Accepted Answer

Activity-based costing (ABC)

Answer

Activity-based costing assigns overhead by identifying cost drivers for each activity pool, giving more accurate product costs than a single allocation base.

Question 2

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 break-even point in units?

Accepted Answer

10,000 units

Answer

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

Question 3

In the balanced scorecard framework, the 'internal business process' perspective primarily focuses on:

Accepted Answer

Efficiency and quality of key operational processes

Answer

The internal process perspective examines how well the company performs critical operations that create customer and shareholder value.

Question 4

A firm follows a cost leadership strategy. Which of the following actions is MOST consistent with that strategy?

Accepted Answer

Continuously improving production efficiency to lower unit costs

Answer

Cost leadership requires relentless focus on reducing costs below competitors while maintaining acceptable quality and margins.

Question 5

What does the term 'relevant cost' mean in managerial decision-making?

Accepted Answer

A future cost that differs between decision alternatives

Answer

Relevant costs are future-oriented and differ between alternatives, making them the only costs that should influence a decision.

(CGA) Certified General Accountant Practice Test

(CGA) Certified General Accountant Practice Test

CGA Management Accounting & Strategy 2