ABA Cost Accounting and Budgeting 3

Question 1

A company has fixed costs of $120,000 and a contribution margin per unit of $30. What is the break-even point in units?

Accepted Answer

4,000 units

Answer

Break-even units = Fixed costs ÷ Contribution margin per unit = $120,000 ÷ $30 = 4,000 units.

Question 2

Under variable costing, which of the following is included in product cost?

Accepted Answer

Variable manufacturing overhead

Answer

Under variable (direct) costing, only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—are included in product cost.

Question 3

The difference between the static budget and the flexible budget at the actual level of activity is known as the:

Accepted Answer

Sales volume variance

Answer

The sales volume variance (or activity variance) measures the effect of the difference between actual and budgeted activity levels on revenues and costs.

Question 4

Which of the following is an example of a committed fixed cost?

Accepted Answer

Depreciation on factory building

Answer

Committed fixed costs arise from decisions about long-term investments, such as depreciation on buildings and equipment, which cannot easily be changed in the short run.

Question 5

In a process costing system, equivalent units of production are used to:

Accepted Answer

Measure the productive output of partially completed units

Answer

Equivalent units convert work-in-process into a measure of fully completed units, enabling cost per unit calculations when production is partially complete.

(ABA) Accredited Business Accountant Practice Test

(ABA) Accredited Business Accountant Practice Test

ABA Cost Accounting and Budgeting 3