MGT402 Final Term MCQs 2026 by VUBuddy

Q1. If one would prepare a graph with a horizontal axis representing units of production and a vertical axis representing per-unit production cost, how would a line representing fixed production cost is drawn?

1. As a straight line sloping upward to the right
2. As a straight line sloping downward to the right
3. As a horizontal line
4. As a vertical line

Correct answer: As a horizontal line

Q2. While constructing production budget, numbers of units manufactured are calculated by which of the following formula?

1. Number of units to be sold + closing units – opening units
2. Number of units to be sold - closing units + opening units
3. Number of units to be sold + closing units + opening units
4. Number of units to be sold - closing units – opening units

Correct answer: Number of units to be sold + closing units – opening units

Q3. While constructing a Break even chart, the gap between sales line and variable cost line shows which of the following?

1. Contribution margin
2. Fixed cost
3. Variable cost
4. Break even point

Correct answer: Contribution margin

Q4. Cost volume Profit analysis (CVP) is a behavior of how many variables?

1. 2
2. 5
3. 4
4. 3

Correct answer: 3

Q5. The point at which the cost line intersects the sales line will be called:

1. Contribution margin
2. Margin of safety
3. Budgeted sales
4. Break Even sales

Correct answer: Break Even sales

Q6. All of the following are assumptions in constructing a Break even chart EXCEPT:

1. Long term period will be considered
2. Price of cost factors remains constant
3. Cost is effected by volume
4. There is no change of time value of money

Correct answer: Long term period will be considered

Q7. Contribution margin is the result of which of the following two variables?

1. Variable and fixed costs
2. Sales and variable costs
3. Sales and operating profit
4. Sales and Fixed cost

Correct answer: Sales and variable costs

Q8. When a budget is administered wisely, it will

1. Eliminate coordination and communication between subunits
2. Provide a framework for performance evaluation
3. Discourage managers and employees
4. Discourage strategic planning

Correct answer: Provide a framework for performance evaluation

Q9. An assumption of CVP analysis is that a change in total costs is caused because of a change in which of the following factors?

1. Direct labor cost
2. Direct material cost
3. Sales commission per unit
4. The number of units sold

Correct answer: The number of units sold

Q10. Cost of Goods sold budget include(s) all of the following EXCEPT:

1. General & Administrative expenses budget
2. Production cost budget
3. Selling & distribution expenses budget
4. Cash budget

Correct answer: General & Administrative expenses budget

Q1. During the month if 12,500 units were completed, 1,500 (completed up to 35%) units remained in work in process, how many equivalent units are produced?

1. 1,500 units
2. 13,025 units
3. 12,500 units
4. None of the given options

Correct answer: 13,025 units

Q2. For adopting the process costing system, the industries must contain all of the following characteristics, EXCEPT:

1. mass production
2. production is made according to customer’s specific orders
3. production through interconnected operations
4. production of homogenous goods

Correct answer: production is made according to customer’s specific orders

Q3. Variable costing is also known as:

1. Both Direct Costing & Marginal Costing
2. Direct Costing
3. Indirect Costing
4. Marginal Costing

Correct answer: Both Direct Costing & Marginal Costing

Q4. Which of the following is/are reported in production cost report?

1. How the costs were assigned to the output?
2. The equivalent units of production by the department
3. The costs charged to the department
4. All of the given options

Correct answer: All of the given options

Q5. The difference between unit product costs under absorption costing as compared to variable costing is:

1. Fixed and variable portions of manufacturing overhead
2. Variable manufacturing overhead only
3. Direct materials and direct labor
4. Fixed manufacturing overhead only

Correct answer: Fixed manufacturing overhead only

Q6. Which of the following use process costing?

1. Textile industry
2. Pharmaceutical industry
3. Cement industry
4. All of the given use process costing

Correct answer: All of the given use process costing