CBS Expense Management & Cost Control 2

Question 1

A company notices its overhead absorption rate is significantly higher than actual overhead incurred. This situation is known as:

Accepted Answer

Over-absorbed overhead

Answer

Over-absorbed overhead occurs when the absorbed (applied) overhead exceeds actual overhead costs incurred during the period.

Question 2

Which cost control technique involves setting detailed standards for materials, labor, and overhead and then measuring deviations from those standards?

Accepted Answer

Standard costing

Answer

Standard costing establishes predetermined benchmarks and measures actual performance against them through variance analysis.

Question 3

A department's actual material cost was $45,000 versus a budgeted $40,000. The $5,000 difference is called a:

Accepted Answer

Adverse (unfavorable) variance

Answer

When actual costs exceed budgeted costs, the resulting variance is unfavorable (adverse) because it negatively impacts profit.

Question 4

The 'economic order quantity' (EOQ) model is primarily used to minimize which combination of costs?

Accepted Answer

Ordering and holding (carrying) costs

Answer

EOQ finds the optimal order quantity that minimizes the total of ordering costs and inventory holding (carrying) costs.

Question 5

Which expense reporting practice helps organizations identify and eliminate 'expense creep' over time?

Accepted Answer

Rolling 12-month trend analysis of expense categories

Answer

Rolling 12-month trend analysis reveals gradual cost increases (expense creep) that single-period comparisons might miss.

(CBS) Certified Budget Specialist Practice Test

(CBS) Certified Budget Specialist Practice Test

CBS Expense Management & Cost Control 2