CIA Management Accounting

Question 1

What is the primary role of management accounting?

Accepted Answer

Answer

To prepare financial statements for external stakeholders.

Answer

To assist management in decision-making and control.

Answer

To calculate the company’s tax liability.

Answer

To audit the company's financial records.

Question 2

Which of the following is an example of a direct cost in management accounting?

Accepted Answer

Answer

Factory rent.

Answer

Raw materials used in production.

Answer

Depreciation of machinery.

Answer

Management salaries.

Question 3

What is a fixed cost in management accounting?

Accepted Answer

Answer

Cost of raw materials.

Answer

Wages of factory workers.

Answer

Factory rent.

Answer

Sales commissions.

Question 4

What is the contribution margin?

Accepted Answer

Answer

Sales revenue minus fixed costs.

Answer

Sales revenue minus variable costs.

Answer

Sales revenue minus total costs.

Answer

Total fixed costs divided by total sales.

Question 5

Which of the following is a key feature of cost-volume-profit (CVP) analysis?

Accepted Answer

Answer

It focuses only on fixed costs.

Answer

It helps determine the break-even point.

Answer

It only focuses on variable costs.

Answer

It excludes fixed costs from analysis.

Question 6

What does activity-based costing (ABC) allocate costs based on?

Accepted Answer

Answer

Total production volume.

Answer

The number of products produced.

Answer

The activities that cause costs to be incurred.

Answer

Direct labor hours.

Question 7

What is the primary purpose of budgeting in management accounting?

Accepted Answer

Answer

To control costs and maximize profits.

Answer

To allocate resources and plan for future performance.

Answer

To track actual performance.

Answer

To manage cash flow.

Question 8

What is job-order costing used for?

Accepted Answer

Answer

To allocate costs to departments.

Answer

To allocate costs to specific jobs or orders.

Answer

To calculate variable costs.

Answer

To allocate costs based on production volume.

Question 9

What is the difference between absorption costing and variable costing?

Accepted Answer

Answer

Absorption costing includes only fixed costs.

Answer

Absorption costing includes both fixed and variable costs.

Answer

Variable costing includes all manufacturing costs.

Answer

Variable costing is used for external financial reporting.