Question 1

Budgets are a necessary component of financial decision making because they help provide a(n)

Options :

A : means to use all the firm-s resources

B : means to check managerial discretion

C : automatic corrective mechanism for errors

D : efficient allocation of resources

Answer: D

Question 2

A specialty instrument manufacturer is in the process of establishing a cost system. The company produces machines that are unique and distinctive. These machines are produced when purchase requests are received from customers. Although some common parts and sub-assemblies are to be held in inventory, no finished goods inventory is maintained since each purchase request is for a customized specialty instrument. The type of cost accumulation system that would be best suited for this type of environment would be

Options :

A : Batch-level costing.

B : Process costing.

C : Job-order costing.

D : Backflush costing.

Answer: C

Question 3

A company decided to implement life-cycle costing in order to achieve cost leadership in its industry. An accountant prepared a draft presentation explaining that life-cycle costing covers costs from the production stage to the sales and service stage of the product. After reviewing the draft, her supervisor asked the accountant to include a statement that life-cycle costing

Options :

A : capitalizes upstream product-related costs to highlight their value added.

B : also covers upstream preproduction costs since those lock in most downstream costs.

C : identifies the benefits of learning that reduce product costs over the product life cycle.

D : analyzes activities to help improve the value of products over their life cycle.

Answer: B

Question 4

Which one of the following is the best reason for using variable costing?

Options :

A : Variable costing is acceptable for income tax reporting purposes.

B : All costs are variable in the long term.

C : Fixed factory overhead is more closely related to the capacity to produce than to the production of specific units.

D : Variable costing usually results in higher operating income than if a company uses absorption costing.

Answer: C

Question 5

Which of the following statements is a responsibility for an IMA member regarding the "Integrity" standard of ethical conduct?

Options :

A : To refrain from using confidential information for unethical or illegal advantage.

B : Perform professional duties in accordance with relevant laws, regulations, and technical standards.

C : Provide all relevant information that could reasonably be expected to influence an intended user-s understanding of the reports,analyses, or recommendations.

D : Refrain from engaging in any conduct that would prejudice carrying out duties ethically.

Answer: D