Certified Management Accountant Cost Management 3

Question 1

Joint product costs incurred before the split-off point are best allocated using which of the following methods for decision-making purposes?

Accepted Answer

They are irrelevant for sell-or-process-further decisions

Answer

Joint costs are sunk at the split-off point and irrelevant to sell-or-process-further decisions.

Question 2

A firm applies overhead at $8 per direct labor hour. Actual overhead was $96,000 and actual direct labor hours were 11,500. Applied overhead was $92,000. The overhead variance is:

Accepted Answer

$4,000 underapplied

Answer

Actual OH $96,000 − Applied OH $92,000 = $4,000 underapplied (actual > applied).

Question 3

Under kaizen costing, cost reduction targets are applied to:

Accepted Answer

Existing products during the manufacturing phase

Answer

Kaizen costing focuses on continuous incremental cost reductions during ongoing production of existing products.

Question 4

Which cost behavior pattern describes a cost that remains constant per unit but varies in total as output changes?

Accepted Answer

Variable cost

Answer

Variable costs are constant per unit but increase in total proportionally with production volume.

Question 5

A company's margin of safety is $150,000 and its break-even sales are $600,000. What is the margin of safety ratio?

Accepted Answer

20%

Answer

Margin of safety ratio = $150,000 ÷ ($600,000 + $150,000) = $150,000 ÷ $750,000 = 20%.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Cost Management 3