CPA CFE Management Accounting 6

Question 1

What is the key assumption underlying cost-volume-profit (CVP) analysis?

Accepted Answer

Costs can be accurately separated into fixed and variable components, and the relationship is linear within the relevant range

Answer

All costs are variable

Answer

Selling price increases proportionally with volume

Answer

Fixed costs change with each unit produced

Question 2

A company uses the reciprocal method for allocating service department costs. What makes this method different from the step-down method?

Accepted Answer

It fully recognizes the mutual services provided between all service departments simultaneously

Answer

It ignores inter-service department services entirely

Answer

It allocates costs in a predetermined sequential order

Answer

It only allocates variable costs

Question 3

In a just-in-time (JIT) manufacturing environment, which of the following is a primary goal?

Accepted Answer

Eliminating waste and reducing inventory to near-zero levels

Answer

Maintaining large safety stock to prevent stockouts

Answer

Maximizing batch sizes to achieve economies of scale

Answer

Centralizing all purchasing decisions at the corporate level

Question 4

What is the purpose of a master budget?

Accepted Answer

To provide a comprehensive financial plan integrating all operating and financial budgets for the planning period

Answer

To prepare only the cash budget for the upcoming year

Answer

To calculate the break-even point for each product

Answer

To allocate overhead costs to individual products

Question 5

Which of the following is an example of a leading indicator in a balanced scorecard?

Accepted Answer

Employee training hours

Answer

Revenue growth rate

Answer

Return on equity

Answer

Net income

Question 6

A company is deciding whether to process a joint product further beyond the split-off point. Which information is relevant to this decision?

Accepted Answer

Incremental revenue and incremental costs of further processing beyond the split-off point

Answer

Joint costs incurred before the split-off point

Answer

The total cost of all joint products

Answer

The method used to allocate joint costs