Management Accounting: Costing Flashcards
6 cards from real AAT L3 practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Management Accounting: Costing flashcards as text
Which of the following is a direct cost?
Answer: Raw materials used in production
Direct costs are specifically traceable to a cost unit; raw materials used in production are a direct cost as they can be directly attributed to the product being manufactured.
A cost centre is best defined as:
Answer: A centre where costs are incurred and collected for control and management purposes
A cost centre is a department, section, or function where costs are accumulated; managers are held accountable only for the costs under their control.
Which of the following is a fixed cost?
Answer: Factory rental payments
Factory rental is a fixed cost — it does not change with the level of production output within the relevant range. Variable costs (materials, commission, packing) increase with output.
Step-fixed (stepped) costs are those that:
Answer: Remain fixed within a range of activity but jump to a higher level beyond that range
Step-fixed costs are constant within a range of activity but increase in steps when output exceeds a threshold — for example, supervision costs when an additional supervisor is required at higher production volumes.
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:
Answer: 5,000 units
Contribution per unit = £20 − £12 = £8. Breakeven = £40,000 / £8 = 5,000 units.
Apportionment of overhead costs means:
Answer: Sharing overhead costs across cost centres using an appropriate basis when they cannot be directly attributed
Overhead apportionment shares costs (such as rent, heating, or depreciation) between cost centres using a fair basis (e.g., floor area for rent, number of employees for canteen costs) when direct attribution is not possible.