ABA Managerial & Cost Accounting 3

Question 1

A manufacturer produces 10,000 units and sells 8,000. Under absorption costing versus variable costing, which statement is true?

Accepted Answer

Absorption costing shows higher net income because some fixed overhead is deferred in ending inventory

Answer

When production exceeds sales, absorption costing defers some fixed overhead in ending inventory, resulting in higher net income than variable costing, which expenses all fixed overhead immediately.

Question 2

Which of the following is a characteristic of a relevant cost in decision-making?

Accepted Answer

It differs between decision alternatives and will occur in the future

Answer

Relevant costs are future costs that differ between alternatives; sunk costs and costs identical across alternatives are irrelevant to the decision.

Question 3

A company's breakeven point in sales dollars is $500,000 and its contribution margin ratio is 40%. What are the company's total fixed costs?

Accepted Answer

$200,000

Answer

Fixed costs equal breakeven sales multiplied by CMR: $500,000 × 40% = $200,000.

Question 4

The term 'throughput costing' treats which costs as period costs?

Accepted Answer

All costs except direct materials

Answer

Throughput costing (super-variable costing) treats all costs except direct materials as period costs, expensing them immediately rather than attaching them to inventory.

Question 5

In process costing using the weighted-average method, equivalent units are calculated by:

Accepted Answer

Adding units completed to ending WIP equivalent units without adjusting for beginning WIP

Answer

The weighted-average method combines beginning WIP work already done with current period work, so equivalent units = units transferred out + (ending WIP × % complete), without removing beginning WIP work.

(ABA) Accredited Business Accountant Practice Test

(ABA) Accredited Business Accountant Practice Test

ABA Managerial & Cost Accounting 3