CA Cost Accounting 2

Question 1

Which costing method is most appropriate when products are manufactured in continuous, homogeneous batches?

Accepted Answer

Process costing

Answer

Process costing accumulates costs by department or process and averages them across homogeneous units produced continuously.

Question 2

In a process costing system using the weighted-average method, equivalent units of production include:

Accepted Answer

Units completed plus equivalent units in ending WIP, ignoring beginning WIP percentage

Answer

Under weighted-average, equivalent units = units transferred out + (ending WIP units × completion %). Beginning WIP's prior-period work is merged in without separate tracking.

Question 3

A company has a favorable material quantity variance. This MOST likely means:

Accepted Answer

Less material was used than the standard quantity allowed for actual output

Answer

A favorable quantity variance means actual usage was less than the standard quantity allowed for actual production, indicating efficient material use.

Question 4

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

Accepted Answer

Depreciation on factory equipment

Answer

Committed fixed costs arise from long-term investment decisions and cannot be easily changed in the short run; depreciation on factory equipment is a classic example.

Question 5

Under absorption costing, when production exceeds sales, net income compared to variable costing will be:

Accepted Answer

Higher

Answer

When production exceeds sales, fixed overhead is deferred in ending inventory under absorption costing, causing higher net income compared to variable costing.

(CA) Certified Accountant Practice Test

(CA) Certified Accountant Practice Test

CA Cost Accounting 2