Cost Accounting and Management Accounting Flashcards
7 cards from real BEC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cost Accounting and Management Accounting flashcards as text
Activity-based costing (ABC) differs from traditional costing primarily because ABC:
Answer: Assigns overhead using multiple cost drivers linked to specific activities
ABC assigns overhead costs by identifying cost pools for each activity and using specific cost drivers for each pool, providing more accurate product costing than a single-rate method.
When making a make-or-buy decision, which costs are most relevant to the analysis?
Answer: Avoidable costs and opportunity costs
Avoidable costs (costs eliminated by outsourcing) and opportunity costs (benefits foregone) are the relevant costs in a make-or-buy decision.
The Theory of Constraints (TOC) primarily focuses on:
Answer: Maximizing throughput by identifying and managing bottleneck resources
TOC focuses on identifying the bottleneck (constraint) that limits throughput and making decisions to maximize output through that constraint.
Under variable costing, which of the following is treated as a period cost rather than a product cost?
Answer: Fixed manufacturing overhead
Under variable costing, fixed manufacturing overhead is a period cost expensed in the period incurred and is never included in inventory valuation.
Process costing is best suited for which type of production environment?
Answer: Petroleum refining
Process costing is best suited for continuous mass production of homogeneous products like petroleum refining, where costs are accumulated by process rather than by individual job.
The break-even point in units is calculated as:
Answer: Total fixed costs ÷ Contribution margin per unit
Break-even units = Total fixed costs ÷ Contribution margin per unit, because at break-even the total contribution margin exactly equals total fixed costs.
Which of the following is a characteristic of a relevant cost for decision-making purposes?
Answer: It is a future cost that differs between the alternatives being evaluated
A relevant cost must be (1) a future cost and (2) differ between the alternatives being considered; costs that are the same across alternatives or already incurred are irrelevant.