CCA Cost Accounting & Management Flashcards

Which cost behavior pattern remains constant in total regardless of changes in activity level within the relevant range?

Answer: Fixed cost

Fixed costs do not change in total with activity level within the relevant range, though per-unit fixed costs decrease as volume increases.

The contribution margin ratio is calculated as:

Answer: Contribution Margin ÷ Sales

The contribution margin ratio equals contribution margin (Sales minus variable costs) divided by sales, showing what percentage of each dollar contributes to covering fixed costs and profit.

A manufacturer uses process costing. What does the concept of 'equivalent units' represent?

Answer: The conversion of partially completed units into a whole-unit equivalent

Equivalent units convert partially completed units into their equivalent in fully completed units to allocate costs accurately in process costing.

Which of the following best describes a sunk cost?

Answer: A cost already incurred that cannot be recovered

Sunk costs are historical costs that have already been incurred and are irrelevant for future decision-making.

In a standard costing system, the labor efficiency variance is calculated as:

Answer: (Actual hours – Standard hours) × Standard rate

Labor efficiency variance measures the difference between actual hours worked and standard hours allowed, multiplied by the standard labor rate.

Which of the following is an example of an indirect manufacturing cost?

Answer: Factory supervisor salary

A factory supervisor's salary is overhead — it supports production but cannot be directly traced to individual units and is therefore an indirect manufacturing cost.