A company has 18 Azure subscriptions. Production subscriptions must inherit stricter governance than sandbox subscriptions, and central IT wants one place to target future policy assignments to each group. What should the administrator do?

Create resource groups named Prod and Sandbox in each subscription

Resource groups do not provide a hierarchy for managing multiple subscriptions together.

Use tags on subscriptions to separate production from sandbox

Tags help with reporting, but they do not create inheritance for policy or access boundaries.

Apply a CanNotDelete lock to each subscription

Locks protect resources from deletion, but they do not organize subscriptions or establish governance boundaries.

What does this AZ-104 question test?

Read the scenario before looking for a memorised answer.

What is the correct answer to this question?

The correct answer is: Create management groups for Prod and Sandbox, then move subscriptions into them — Management groups are the correct tool for organizing multiple subscriptions into a governance hierarchy. By placing production and sandbox subscriptions into separate management groups, central IT can apply policy and RBAC once and have those settings inherit to the subscriptions below. This supports different administrative boundaries without repeating configuration in every subscription. It also makes future changes easier because the team targets a smaller number of containers instead of many individual subscriptions. Why others are wrong: Resource groups are useful within one subscription, but they do not create cross-subscription governance boundaries. Tags are good for classification and reporting, but they do not enforce inheritance. A CanNotDelete lock protects against deletion, yet it does not help central IT separate production from sandbox or apply shared controls. The management group structure is the right foundation for subscription organization and policy inheritance.

What should I do if I get this AZ-104 question wrong?

Then try more questions from the same exam bank and focus on understanding why the wrong options are tempting.