CAA CAA Cost Accounting & Management 2

Question 1

Under activity-based costing (ABC), what is the primary driver for assigning overhead costs to products?

Accepted Answer

Activities that cause costs to be incurred

Answer

Direct labor hours only

Answer

Machine hours only

Answer

Units produced

Question 2

The difference between budgeted fixed overhead and applied fixed overhead is called the:

Accepted Answer

Volume variance

Answer

Spending variance

Answer

Efficiency variance

Answer

Price variance

Question 3

Which of the following is NOT a characteristic of process costing?

Accepted Answer

Each job has a separate cost record

Answer

Used for homogeneous products

Answer

Costs are averaged over all units

Answer

Work-in-process inventory uses equivalent units

Question 4

In CVP analysis, the margin of safety represents:

Accepted Answer

The excess of budgeted sales over breakeven sales

Answer

Total variable costs below the breakeven point

Answer

The contribution margin per unit

Answer

Fixed costs divided by selling price

Question 5

Which inventory valuation method typically results in lower taxable income during periods of rising prices?

Accepted Answer

LIFO

Answer

FIFO

Answer

Weighted average

Answer

Specific identification

Question 6

A cost that has already been incurred and cannot be recovered regardless of future decisions is called a:

Accepted Answer

Sunk cost

Answer

Differential cost

Answer

Opportunity cost

Answer

Controllable cost