Your company wants one governance baseline to apply automatically to all current and future production subscriptions, and finance wants cost reporting by application across many resource groups. Which two design choices best satisfy the requirements? Select two.

Place all production workloads into one shared resource group so governance and reporting are simpler.

A single shared resource group is a poor design for a multi-application environment. It creates large administrative boundaries, complicates lifecycle management, and makes deployments riskier. It does not provide a scalable governance or reporting model for separate applications.

Use management groups instead of tags because tags are not useful for cost reporting.

Management groups help with hierarchical governance, but they do not replace tags for application-level chargeback. Tags are specifically useful for cost and ownership metadata. This answer incorrectly treats the two concepts as interchangeable.

Assign the baseline only at one subscription and copy the settings manually to every new subscription.

Manual copying creates drift and operational overhead, especially as subscriptions are added over time. The requirement calls for automatic inheritance, so this approach does not satisfy the need for a repeatable production baseline across current and future subscriptions.

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: Place the production subscriptions under a dedicated management group so inherited policy and RBAC can be applied once. — Management groups are the correct place to centralize governance for multiple subscriptions, because policy and RBAC assignments can be inherited by child scopes. Tags complement that model by providing flexible metadata for cost allocation and application reporting across resource groups and subscriptions. Together, they satisfy both enterprise-wide control and finance visibility without forcing all workloads into one boundary. Why others are wrong: A single resource group is too coarse and operationally risky. Tags do not replace management-group inheritance, and manual duplication does not scale or stay consistent. Those options fail the requirements for automatic baseline governance and reporting.

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.