Accounting Technician Budgeting & Cost Control Flashcards
7 cards from real CAT practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Accounting Technician Budgeting & Cost Control flashcards as text
Which of the following would cause an adverse labour rate variance?
Answer: Actual wage rate was higher than the standard wage rate
An adverse labour rate variance occurs when the actual hourly wage rate paid exceeds the standard rate, regardless of the number of hours worked.
A principal budget factor (limiting factor) should be identified:
Answer: Before the budgeting process begins, to sequence budget preparation correctly
The principal budget factor must be identified first so that the budget for that limiting resource (e.g., sales demand, machine capacity) is prepared before all other budgets.
Under marginal costing, closing inventory is valued at:
Answer: Variable production cost per unit
Marginal costing values inventory at variable production cost only; fixed production overheads are treated as period costs and expensed in full.
A company has budgeted overhead of $120,000 and budgeted machine hours of 6,000. If actual machine hours were 5,500, the overhead absorbed is:
Answer: $110,000
Overhead absorption rate = $120,000 ÷ 6,000 = $20 per hour; absorbed overhead = 5,500 × $20 = $110,000.
Which of the following is NOT a benefit of budgeting?
Answer: Guarantees that actual results will match the plan
Budgets are plans and targets, not guarantees; actual results almost always differ from budget due to changes in business conditions.
In a manufacturing company, the production budget (in units) is calculated as:
Answer: Sales budget − Opening inventory + Closing inventory
Production required = Budgeted sales + Required closing inventory − Opening inventory, ensuring enough units are manufactured to meet sales and inventory targets.
An investment center is distinguished from a profit center primarily because an investment center manager also controls:
Answer: The capital assets and capital investment decisions of their division
An investment center manager has authority over revenues, costs, AND the capital base employed, and is evaluated using metrics like Return on Investment (ROI) or Residual Income (RI).