Certified Management Accountant Cost Management 4

Question 1

In a standard costing system, the materials price variance is calculated as:

Accepted Answer

(Actual price − Standard price) × Actual quantity purchased

Answer

Materials price variance = (AP − SP) × AQ purchased, isolating the price effect at point of purchase.

Question 2

A favorable labor efficiency variance indicates that:

Accepted Answer

Workers used fewer hours than the standard allowed for actual output

Answer

Labor efficiency variance = (AH − SH) × SR; a favorable result means AH < SH allowed.

Question 3

A company produces two products sharing a constrained machine with 1,000 available hours. Product A has a contribution margin of $30 and requires 3 machine hours. Product B has a CM of $20 and requires 1 machine hour. Which product should be prioritized?

Accepted Answer

Product B, because its CM per machine hour ($20) exceeds Product A's ($10)

Answer

Product B yields $20/machine hour vs. Product A's $10/machine hour, so B maximizes constrained resource output.

Question 4

The high-low method uses which data points to estimate the variable cost per unit?

Accepted Answer

The highest and lowest activity levels and their corresponding total costs

Answer

The high-low method uses only the highest and lowest activity levels to estimate the variable cost slope.

Question 5

Under absorption costing, when production exceeds sales, net income is generally:

Accepted Answer

Higher than variable costing net income because fixed OH is deferred in inventory

Answer

When production > sales, absorption costing carries fixed OH in ending inventory, increasing income vs. variable costing.

Certified Management Accountant Practice Test

Certified Management Accountant Practice Test

Certified Management Accountant Cost Management 4