CAA CAA Cost Accounting & Management

Question 1

Which costing method assigns all manufacturing costs (fixed and variable) to products?

Accepted Answer

Absorption costing

Answer

Absorption costing (full costing) assigns both fixed and variable manufacturing overhead to each unit produced.

Question 2

A company has fixed costs of $120,000 and a contribution margin ratio of 40%. What is its breakeven sales revenue?

Accepted Answer

$300,000

Answer

Breakeven sales = Fixed costs ÷ Contribution margin ratio = $120,000 ÷ 0.40 = $300,000.

Question 3

In job-order costing, which document accumulates all costs for a specific job?

Accepted Answer

Job cost sheet

Answer

A job cost sheet tracks direct materials, direct labor, and applied overhead for each individual job.

Question 4

What is the primary purpose of a standard cost system?

Accepted Answer

To set benchmarks for performance measurement and cost control

Answer

Standard costs provide predetermined cost benchmarks against which actual costs are compared to identify variances and control operations.

Question 5

A favorable labor efficiency variance indicates that:

Accepted Answer

Fewer labor hours were used than standard hours allowed

Answer

A favorable labor efficiency variance means actual hours worked were less than the standard hours allowed for actual output.

(CAA) Certified Accounting Analyst Practice Test