CA Cost Accounting 4

Question 1

Activity-based costing (ABC) differs from traditional costing primarily because it:

Accepted Answer

Uses multiple cost drivers that reflect actual resource consumption

Answer

ABC identifies multiple activity cost pools and assigns costs using cost drivers that best reflect how each activity's resources are consumed by products.

Question 2

Which of the following is a unit-level activity in ABC?

Accepted Answer

Drilling a hole in each individual unit produced

Answer

Unit-level activities are performed each time a single unit is produced; drilling a hole per unit is a classic unit-level activity.

Question 3

The FIFO method in process costing differs from the weighted-average method in that FIFO:

Accepted Answer

Keeps current-period costs separate from beginning WIP costs

Answer

FIFO isolates the work done in the current period on beginning WIP units from new units started, preventing cost blending between periods.

Question 4

Overapplied overhead occurs when:

Accepted Answer

Applied overhead exceeds actual overhead incurred

Answer

Overapplied overhead means the amount of overhead charged to production (applied) is more than the overhead actually incurred during the period.

Question 5

Under standard costing, the fixed overhead volume variance measures:

Accepted Answer

The difference between budgeted fixed overhead and fixed overhead applied to standard hours

Answer

The fixed overhead volume variance = Budgeted fixed overhead − Fixed overhead applied (standard rate × standard hours for actual output), reflecting utilization of capacity.

(CA) Certified Accountant Practice Test

(CA) Certified Accountant Practice Test

CA Cost Accounting 4