Certified Management Accountant Cost Management 2

Question 1

A company uses activity-based costing. The machine setup activity has a cost pool of $120,000 and 400 setups. If Product X requires 60 setups, what is the setup cost allocated to Product X?

Accepted Answer

$18,000

Answer

$120,000 / 400 setups = $300/setup × 60 setups = $18,000.

Question 2

Which costing method is most appropriate when a company produces heterogeneous products that are customized to individual customer specifications?

Accepted Answer

Job order costing

Answer

Job order costing tracks costs per unique job, making it ideal for customized products.

Question 3

Under variable costing, fixed manufacturing overhead is treated as a:

Accepted Answer

Period cost expensed in the current period

Answer

Variable costing treats fixed manufacturing overhead as a period cost, not a product cost.

Question 4

A manufacturer's equivalent units of production for conversion costs are 50,000 units. Total conversion costs are $375,000. Beginning WIP had $45,000 in conversion costs. Using the weighted-average method, what is the cost per equivalent unit?

Accepted Answer

$7.50

Answer

Weighted-average cost per EU = Total costs ÷ EU = $375,000 ÷ 50,000 = $7.50.

Question 5

The theory of constraints focuses on:

Accepted Answer

Maximizing throughput by managing bottleneck resources

Answer

TOC identifies and exploits the system's binding constraint (bottleneck) to maximize throughput.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Cost Management 2