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Management Accounting

Last Update Nov 24, 2022
Total Questions : 180

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Management Accounting Questions and Answers

Questions 1

JDM is considering whether to go ahead with the launch of a new product. Profit from the new product is dependent on the level of demand.

The following table shows the estimated profits and their respective probabilities at different levels of demand.

The company could still cancel the launch of the product but would incur a cost of $7,000.

What is the maximum amount that the company should pay for perfect information about demand for the product?










Questions 2

Company LGF seeks to maximize profits and has a 'risk seeker' attitude when making decisions. The company has to choose between mutually exclusive projects. A range of possible profit outcomes has been estimated for each project along with their associated probabilities.

Company LGF would choose the project with the:



Best possible outcome irrespective of the standard deviation.


Highest expected value irrespective of the standard deviation.


Highest standard deviation irrespective of the best possible outcome.


Highest standard deviation irrespective of the expected value.

Questions 3

When classifying quality costs, which of the following is NOT likely to be an appraisal cost?



Cost of product liability insurance


Cost of supervision of testing and inspection activities


Performance testing costs


Cost of maintaining inspection equipment