AAT L3 Management Accounting: Costing

Question 1

Which costing method charges all production overheads to products, including fixed overheads?

Accepted Answer

Absorption costing

Answer

Marginal costing

Answer

Direct costing

Answer

Variable costing

Question 2

The overhead absorption rate (OAR) is calculated as:

Accepted Answer

Budgeted overheads / Budgeted activity level

Answer

Actual overheads / Actual activity level

Answer

Actual overheads / Budgeted activity level

Answer

Budgeted overheads / Actual activity level

Question 3

When actual overheads exceed overheads absorbed, the result is:

Accepted Answer

Under-absorption

Answer

Over-absorption

Answer

Favourable variance

Answer

Cost saving

Question 4

In marginal costing, which costs are included in the cost of a unit of production?

Accepted Answer

Variable production costs only

Answer

All costs including fixed and variable overheads

Answer

Direct materials and direct labour only

Answer

Fixed overheads only

Question 5

The contribution per unit is calculated as:

Accepted Answer

Selling price minus variable cost per unit

Answer

Selling price minus total cost per unit

Answer

Selling price minus fixed cost per unit

Answer

Gross profit per unit

Question 6

Breakeven point in units is calculated as:

Accepted Answer

Fixed costs / contribution per unit

Answer

Variable costs / contribution per unit

Answer

Total costs / selling price

Answer

Fixed costs / selling price per unit