CAA Cost Accounting & Management Flashcards
6 cards from real CAA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CAA Cost Accounting & Management flashcards as text
When using the high-low method to separate mixed costs, what are the two data points used?
Answer: Highest and lowest activity levels
The high-low method uses the highest and lowest activity levels (and their corresponding costs) to estimate variable and fixed cost components.
In a make-or-buy decision, which costs are most relevant to the analysis?
Answer: Differential costs and opportunity costs
Make-or-buy decisions should focus on incremental (differential) costs and any opportunity costs foregone by choosing one alternative.
Which transfer pricing method sets the internal price equal to the selling price in the external market?
Answer: Market-based transfer pricing
Market-based transfer pricing uses the external market price as the internal transfer price, preserving competitive signals within the firm.
Equivalent units of production in process costing are used to:
Answer: Convert partially completed units into a whole-unit equivalent for cost averaging
Equivalent units express partially completed inventory in terms of fully completed units so that unit costs can be accurately calculated.
A company's operating leverage factor is 5. If sales increase by 10%, operating income will increase by:
Answer: 50%
Operating leverage factor × % change in sales = % change in operating income; 5 × 10% = 50%.
Which of the following best describes a responsibility center where managers are accountable for both revenues and costs?
Answer: Profit center
A profit center manager controls both revenues and costs, making them responsible for the resulting profit or loss.