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Created on May 08, 2026 By

CA Sonal Saboo

CMA Inter

Inter Management Accounting PN-12 Quiz 5

This quiz is based on the CMA Management Accounting paper.
Each question is multiple-choice with 4 options, and only 1 option is correct.
Attempt the quiz to test your understanding of CMA MA concepts.

1 / 25

Category: Management Accounting PN-12

Normal standards:

a. Allow for rest periods, machine breakdowns, and setup time

b. Represent levels of performance under perfect operating conditions

c. Are rarely used because managers believe they lower workforce morale

d. Are more likely than ideal standards to result in unethical practices

2 / 25

Category: Management Accounting PN-12

The advantages of standard costs include all of the following except:

a. Management by exception may be used

b. Management planning is facilitated

c. They may simplify the costing of inventories

d. Management must use a static budget

3 / 25

Category: Management Accounting PN-12

Standard Costs:

a. Are imposed by governmental agencies

b. Are predetermined unit costs which companies use as measures of performance

c. Can be used by manufacturing companies but not by service or not-for-profit companies

d. All of the above

4 / 25

Category: Management Accounting PN-12

Standards differ from budgets in that:

a. Budgets but not standards may be used in valuing inventories

b. Budgets but not standards may be journalized and posted

c. Budgets are a total amount and standards are a unit amount

d. Only budgets contribute to management planning and control

5 / 25

Category: Management Accounting PN-12

The standard cost card contains quantities and costs for

a. Direct material only

b. Direct labour only

c. Direct material and direct labour only

d. Direct material, direct labour, and overhead

6 / 25

Category: Management Accounting PN-12

Setting of standard involves effective utilization of ___.

a. Men

b. Material

c. Machines

d. All of the above

7 / 25

Category: Management Accounting PN-12

A standard cost is a carefully ____________ unit cost which is prepared for each cost unit.

a. Pre-determined

b. Absorbed

c. Apportioned

d. None

8 / 25

Category: Management Accounting PN-12

Which of the following activities is true under the Standard Costing System?

a. The overhead volume variance is always beneficial

b. The idle time variance is never favourable

c. To calculate the overall costs, a company can either use budgetary control or standard costing but not both of those techniques

d. The overhead efficiency variance plus overhead expense variance is equal to the overhead budget variance for variable overheads

9 / 25

Category: Management Accounting PN-12

Which of the following activities is the Standard Costing System used for?

a. It is a basis for implementing cost control and fixing the price of products through variance analysis

b. It helps to ascertain the cost-volume relationship between products manufactured by the business

c. It helps to establish the breakeven point for the products manufactured by the company

d. None of the above

10 / 25

Category: Management Accounting PN-12

Which of the following is a purpose of standard costing?

a. To determine profit at different levels

b. To determine break-even point

c. To control costs

d. To allocate cost with more accuracy

11 / 25

Category: Management Accounting PN-12

Which of the following is not likely to be a reason of unfavourable direct labour efficiency variance?

a. Increase in direct materials prices

b. Frequent break downs during production process

c. Lack of proper supervision

d. Use of old, outdated or faulty equipment

12 / 25

Category: Management Accounting PN-12

Which of the following equations can be used to calculate a material price variance?

a. (AQ × AP) - (AQ × SP)

b. (AP × SP) - (AQ × SP)

c. (AQ × SP) - (SQ × SP)

d. (AQ × SP) - (AQ × AP)

13 / 25

Category: Management Accounting PN-12

Which of the following equations can be used to calculate a material quantity variance?

a. (AQ × AP) - (AQ × SP)

b. (AP × SP) - (AQ × SP)

c. (AQ × SP) - (SQ × SP)

d. (AQ × SP) - (AQ × AP)

14 / 25

Category: Management Accounting PN-12

When more than one material is used in the manufacture of a product, which of the following variances arises:

a. Material yield variance

b. Material mix variance

c. Material price variance

d. Material usage variance

15 / 25

Category: Management Accounting PN-12

From cost control point of view the standard most commonly used is:

a. Expected standard

b. Theoretical standard

c. Normal standard

d. Basic standard

16 / 25

Category: Management Accounting PN-12

If standard cost ˃ actual, then it is:

a. Not favourable

b. Favourable

c. Neither favourable nor not favourable

d. None of the above

17 / 25

Category: Management Accounting PN-12

Standard costing is a tool, which replaces the bottleneck of the ___ costing.

a. Present

b. Future

c. Historical

d. None of the above

18 / 25

Category: Management Accounting PN-12

Cost variance is the difference between

a. The standard cost and marginal cost

b. The standards cost and budgeted cost

c. The standards cost and the actual cost

d. None of these

19 / 25

Category: Management Accounting PN-12

Who is most likely to be held responsible for a material price variance?

a. Line workers

b. Production supervisors

c. Purchasing managers

d. Production schedulers

20 / 25

Category: Management Accounting PN-12

Standards that can be attained only under the best circumstances are referred to as:

a. Attainable standards

b. Budget standards

c. Ideal standards

d. Practical standards

21 / 25

Category: Management Accounting PN-12

Which of the following is true of standards?

a. Standards represent a benchmark or a norm

b. Standards relate to input quantity

c. Standards relate to input cost

d. All of the above

22 / 25

Category: Management Accounting PN-12

Transfer pricing methods may be classfied

a. under 3 pricing method

b. under 4 pricing method

c. under 5 pricing method

d. under 7 pricing method

23 / 25

Category: Management Accounting PN-12

The _____ method of transfer pricing was introduced in order to overcome the problems caused by using marginal cost

a. dual price

b. Two-Part Transfer Pricing

c. Negotiated Transfer Pricing

d. none of them

24 / 25

Category: Management Accounting PN-12

BC Company fixes the inter-divisional transfer prices for its products on the basis of cost, plus a return on investmentin the division. The Budget for Division for Alpha for the year 2021-22 appears as under:Fixed Assets ₹5,00,000Current assets ₹3,00,000Debtors ₹2,00,000Annual Fixed Cost of the Division ₹8,00,000Variable Cost per unit of Product ₹10Budgeted Volume 4,00,000 units per year Desired ROI 28% on ₹10,00,000Determine the transfer Price for Alpha.

a. 12.7

b. 17.2

c. 27.1

d. 11.7

25 / 25

Category: Management Accounting PN-12

Minimax Ltd. fixes inter - divisional transfer prices for its products on the basis of cost plus a return on investment in the division. The budget for division X for 2022 – 23 appears as under -Fixed Assets ₹8,00,000Current Assets ₹5,00,000Debtors ₹2,00,000Annual fixed cost of the division ₹8,00,000Variable cost per unit of the product 10Budgeted volume ₹4,00,000 units per year Desired ROI 28%. Transfer price for division X is ________________

a. ₹ 13.05

b. ₹ 10.70

c. ₹ 8.70

d. ₹ 14.70

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Inter PN-12 Management Accounting Quiz 5

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