ABA Managerial & Cost Accounting 2

Question 1

A company uses activity-based costing (ABC). Which of the following is an activity cost driver for a machine setup activity?

Accepted Answer

Number of setups

Answer

In ABC, setup costs are driven by the number of setups performed, not by volume-based measures like machine or labor hours.

Question 2

Under variable costing, fixed manufacturing overhead is treated as a:

Accepted Answer

Period cost expensed in the current period

Answer

Variable costing treats fixed manufacturing overhead as a period cost, expensing it in full in the period incurred rather than attaching it to inventory.

Question 3

The contribution margin ratio equals:

Accepted Answer

Contribution margin divided by sales

Answer

The contribution margin ratio (CMR) is contribution margin (sales minus variable costs) divided by sales, showing the portion of each sales dollar available to cover fixed costs.

Question 4

When actual overhead exceeds applied overhead, the manufacturing overhead account has a:

Accepted Answer

Debit balance indicating under-applied overhead

Answer

A debit balance in manufacturing overhead means actual costs exceeded what was applied to production, resulting in under-applied overhead.

Question 5

In a standard cost system, a favorable direct labor efficiency variance results when:

Accepted Answer

Standard hours allowed exceed actual hours worked

Answer

A favorable labor efficiency variance occurs when actual hours used are less than the standard hours allowed for actual output, meaning workers were more efficient than expected.

(ABA) Accredited Business Accountant Practice Test

(ABA) Accredited Business Accountant Practice Test

ABA Managerial & Cost Accounting 2