Cost Accounting Flashcards
7 cards from real CA 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 flashcards as text
Activity-based costing (ABC) differs from traditional costing primarily because it:
Answer: Uses multiple cost drivers that reflect actual resource consumption
ABC identifies multiple activity cost pools and assigns costs using cost drivers that best reflect how each activity's resources are consumed by products.
Which of the following is a unit-level activity in ABC?
Answer: Drilling a hole in each individual unit produced
Unit-level activities are performed each time a single unit is produced; drilling a hole per unit is a classic unit-level activity.
The FIFO method in process costing differs from the weighted-average method in that FIFO:
Answer: Keeps current-period costs separate from beginning WIP costs
FIFO isolates the work done in the current period on beginning WIP units from new units started, preventing cost blending between periods.
Overapplied overhead occurs when:
Answer: Applied overhead exceeds actual overhead incurred
Overapplied overhead means the amount of overhead charged to production (applied) is more than the overhead actually incurred during the period.
Under standard costing, the fixed overhead volume variance measures:
Answer: The difference between budgeted fixed overhead and fixed overhead applied to standard hours
The fixed overhead volume variance = Budgeted fixed overhead − Fixed overhead applied (standard rate × standard hours for actual output), reflecting utilization of capacity.
Throughput costing (super-variable costing) treats which costs as period costs?
Answer: All costs except direct materials
Throughput costing considers only direct materials as inventoriable costs; all other costs (including direct labor and variable overhead) are expensed immediately as period costs.
Which scenario represents a favorable labor efficiency variance?
Answer: Workers completed the job using fewer hours than the standard hours allowed
Labor efficiency variance is favorable when actual hours used are less than the standard hours allowed for actual output, indicating productive use of labor.