AAT L3 Management Accounting: Costing 2

Question 1

Which of the following is a direct cost?

Accepted Answer

Raw materials used in production

Answer

Factory rent

Answer

Production supervisor's salary

Answer

Machine maintenance contract

Question 2

A cost centre is best defined as:

Accepted Answer

A centre where costs are incurred and collected for control and management purposes

Answer

A centre responsible for generating revenue

Answer

A centre measured on profit and return on investment

Answer

A centre that sets prices for products

Question 3

Which of the following is a fixed cost?

Accepted Answer

Factory rental payments

Answer

Direct materials

Answer

Commission paid to sales staff

Answer

Packing materials

Question 4

Step-fixed (stepped) costs are those that:

Accepted Answer

Remain fixed within a range of activity but jump to a higher level beyond that range

Answer

Remain constant at all levels of output

Answer

Increase proportionally with each unit of output

Answer

Decrease as output increases

Question 5

If selling price is £20 per unit, variable cost is £12 per unit, and fixed costs are £40,000, the breakeven point in units is:

Accepted Answer

5,000 units

Answer

2,000 units

Answer

3,333 units

Answer

8,000 units

Question 6

Apportionment of overhead costs means:

Accepted Answer

Sharing overhead costs across cost centres using an appropriate basis when they cannot be directly attributed

Answer

Directly tracing a cost to a cost centre

Answer

Charging overheads to products based on a rate

Answer

Writing off overheads as a period cost