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

ABC assigns overhead based on the activities (and their cost drivers) that actually cause costs, providing more accurate product costing.

Question 2

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

Accepted Answer

Volume variance

Answer

The fixed overhead volume variance measures the difference between budgeted fixed overhead and the overhead applied based on standard hours for actual output.

Question 3

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

Accepted Answer

Each job has a separate cost record

Answer

Separate cost records per job is a feature of job-order costing; process costing accumulates costs by department across all units.

Question 4

In CVP analysis, the margin of safety represents:

Accepted Answer

The excess of budgeted sales over breakeven sales

Answer

Margin of safety = Budgeted (or actual) sales − Breakeven sales, showing how much sales can drop before losses occur.

Question 5

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

Accepted Answer

LIFO

Answer

LIFO assigns the most recent (higher) costs to cost of goods sold, resulting in lower net income and lower taxable income during inflationary periods.

(CAA) Certified Accounting Analyst Practice Test

(CAA) Certified Accounting Analyst Practice Test

CAA CAA Cost Accounting & Management 2