Multiple Choice Question and Answer for the chapter Current

Developments in Management Accounting

1. Cost drivers are used in which type of costing?

a) target costing
b) project costing
c) ABC costing
d) Life cycle costing

2. Cost drivers are also know as

a) cost activities
b) resource drivers
c) both a and b
d) none

3. ABC costing is based on a

a) future cost
b) historical cost
c) present cost
d) both a and b

4. cost incurred for adopting ABC costing when compared to

traditional costing

a) cheap
b) moderate
c) costly
d) all the above

Multiple Choice Questions on Current Developments in Management Accounting, 1

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.
 5. In target costing which is used to capture pre determined market
share

a) cost price
b) sale price
c) both
d) none

6. Equation of target cost is

a) target cost= desired profit-sale price

b) target cost=cost price+ desired profit
c) target cost= sale price- desired profit
d) none

7. What are the phases involve in target costing?

a) conception phase
b) development phase
c) profit phase
d) production phase
e) a,b & c

8. Under conception phase of target costing production design starts

at?

a) front end
b) back end
c) opposite end
d) none

9 under development of target costing which technique is used

ideas?
a) brain mapping
b) brain storming
c) selective opinion
d) none

Multiple Choice Questions on Current Developments in Management Accounting, 2

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.
 10. Which costing method cost is accumulated for inception to
abandonment of product?

e) ABC costing
f) Life cycle costing
g) Project costing
h) Target costing

11. How many phases are involved in product life cycle costing?

a) 4
b) 5
c) 6
d) 7
e) 8

12. In which phases of product life cycle costing promotional cost

will be high?

a) growth
b) decline
c) introduction
d) maturity

13. Product penetration takes place in which phase?

a) growth
b) decline
c) introduction
d) maturity

Multiple Choice Questions on Current Developments in Management Accounting, 3

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.
 14. Which of the factors is the cause for decline phase of life cycle
costing?

a) changing fashion and states

b) increase in revenue
c) non technological changes
d) all the above

15. product life cycle costing is useful for

a) capital intensive industries

b) labour intensive industries
c) both a and b
d) none

16. Which analysis provides frame work for managing cost and
performance of a product over the duration of life?

a) cost-volume-profit analysis
b) life cycle analysis
c) ABC analysis
d) None

17. Under which costing energy cost and utility cost falls?

a) operation cost
b) training cost
c) inventory cost
d) none

18 Under which cost of research falls

a) operation cost
b) acquisition cost
c) maintenance cost
d) none

Multiple Choice Questions on Current Developments in Management Accounting, 4

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.
 19. Which cost deals with the application of over head cost?

a) activity based costing

b) target costing
c) life cycle costing
d) product development costing

20. What is ABC?

a) Accounting based costing

b) Assets based costing
c) Activity based costing
d) Annual based costing

21. The events which cause work events activities are?

a) work drivers
b) cost drivers
c) costing activities
d) accounting drivers
e) event drivers

22. The costing which gives a brief picture of the costing of a

product ?

a) target costing
b) ABC costing
c) Life cycle costing
d) Product development costing

23. Which among the options is not a step in the ABC?

a) applying costing to the products

b) choose appropriate costing
c) choose cost drivers for each activity
d) promotion of product

Multiple Choice Questions on Current Developments in Management Accounting, 5

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.
 24. What are the usages of activity drivers?

a) manufacturing of the product

b) marketing
c) costing
d) distribution

25. Which drivers are called resource drivers?

a) Determining cost drivers

b) Cost drivers
c) Activity drivers
d) Production drivers

26. The innovation of a mew product and its degeneration into a

common product is termed as the _________?

a) life cycle costing

b) life cycle of cost of production
c) life cycle of a product
d) life cycle of profitability

27. With activity based costing (ABC) multiples are identified in the
production process that are associated with _________ ?

a) cost
b) purchase
c) sale
d) profit

28. Target costing is which type of methodology.

a) cost of production developed

b) sales price
c) market target design methodology
d) market driven design methodology

Multiple Choice Questions on Current Developments in Management Accounting, 6

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.
 29. Which cost is calculated for predetermined rate?

a) estimate cost
b) actual cost
c) standard cost
d) none of these

30. Which management is required to responsible for the cost of

activities?

a) higher management levels

b) middle management levels
c) lower management levels
d) none of the these

31. Which system requires a careful study of the total management

or services process of an organization?

a) planning
b) organizing
c) coordination
d) controlling

32. Under which stage the product % growth rate declining in the
market saturation?

a) introduction
b) growth
c) maturity
d) decline

33. The development of realistic project life cycle effective working

relationship involves with?

a) operation research
b) engineers
c) accountants
d) none of these

Multiple Choice Questions on Current Developments in Management Accounting, 7

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.
 34. activity based costing is based on?

a) fixed cost
b) variable cost
c) historical cost
d) none of these

35. ABC tends to more cheaply/ costly than the traditional methods
of applying costs to products?

a) growth phase
b) decline phase
c) maturity phase
d) introduction phase

36. Acquisition cost tends to

a) maintenance cost
b) transportation cost
c) Cost of research, design, testing etc,
d) all the above

37. Product life cycle costing begins with the?

a) inventory costs
b) on-going constructing program
c) identification of new consumer needs and the Invention of
new product
d) both a & b

38. Under ABC the events within the activities that course work are
called?

a) cost workers
b) cost drivers
c) cost conductor
d) cost makers

Multiple Choice Questions on Current Developments in Management Accounting, 8

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.
 39. The following step is not used to apply cost to products under an
ABC system?

a) choose appropriate activities

b) trace cost to activities
c) apply cost to products
d) cost drivers for each activity should be ignored

40. Activities used in ABC don’t include?

a) designing
b) scheduling
c) ordering
d) branding

41. Cost drivers for activities are called?

a) task drivers
b) cost drivers
c) price drivers
d) firm drivers

42. Which of the following is not an advantage of activity based

costing?

a) valuable planning
b) better performance measurements
c) high lights the causes of cost
d) based on historical cost

43. CAM stands for?

a) computer aided manufacturer

b) computed auditing machine
c) computer aided management
d) computer aided machine

Multiple Choice Questions on Current Developments in Management Accounting, 9

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.
 44. Which of the following is an advantage of target costing?

a) detailed information
b) performance measurement
c) planning
d) highlight the causes of cost

45. The next phase after growth phase is?

a) introduction phase
b) decline
c) saturation phase
d) maturity

46. Conception phase is also referred to?

a) planning phase
b) production phase
c) development phase
d) conception phase

47. Elements of a product cost over its life cycle don’t include the
following?

a) acquisition cost
b) production cost
c) transportation & handling cost
d) maintenance cost

48. Uses of project life cycle costing include?

a) capital intensive industries

b) planning
c) revenue intensive industries
d) performance measuring

Multiple Choice Questions on Current Developments in Management Accounting, 10

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.
 49. Project life cycle cost is incurred for?

a) fixed asset
b) current asset
c) working capital
d) long term investments

Multiple Choice Questions on Current Developments in Management Accounting, 11

prepared by the students of ICFAI national College- Mehdipatnam under the guidance
of Mr. Mohd. Nazeer Ahmed, Faculty for Finance.