ABA Cost Accounting and Budgeting 2

Question 1

A company uses activity-based costing (ABC). Which of the following best describes a cost driver in ABC?

Accepted Answer

A factor that causes costs to change in an activity cost pool

Answer

A cost driver is a factor that causes the costs of an activity to change, and it is used to allocate costs from a cost pool to products or services.

Question 2

Under a flexible budget, if actual production exceeds the budgeted production level, what happens to the variable cost budget?

Accepted Answer

It increases proportionally

Answer

Under a flexible budget, variable costs increase proportionally with production volume, so a higher output level results in a higher variable cost budget.

Question 3

Which costing method is most appropriate when products are unique and produced to customer specifications?

Accepted Answer

Job order costing

Answer

Job order costing is used when products are custom-made or produced in distinct batches, allowing costs to be tracked per individual job.

Question 4

The contribution margin ratio is calculated as:

Accepted Answer

Contribution margin divided by total sales revenue

Answer

The contribution margin ratio equals contribution margin (sales minus variable costs) divided by total sales revenue, expressing the percentage of each sales dollar available to cover fixed costs.

Question 5

A master budget typically begins with which of the following budgets?

Accepted Answer

Sales budget

Answer

The master budget starts with the sales budget because all other operating budgets—production, materials, labor—are driven by projected sales volume.

(ABA) Accredited Business Accountant Practice Test

(ABA) Accredited Business Accountant Practice Test

ABA Cost Accounting and Budgeting 2