CFC Cost Accounting & Management 4

Question 1

A company is evaluating whether to drop a product line. Which of the following would make dropping the line most justifiable?

Accepted Answer

The product's segment margin is negative

Answer

A negative segment margin means the product cannot cover its own avoidable fixed costs, making it a candidate for elimination.

Question 2

Which of the following statements about weighted-average process costing is correct?

Accepted Answer

It merges beginning WIP costs with current period costs

Answer

Weighted-average process costing blends beginning WIP costs with current period costs to compute a single average cost per equivalent unit.

Question 3

Kaizen costing differs from standard costing in that it:

Accepted Answer

Focuses on continuous cost reduction targets during production

Answer

Kaizen costing sets ongoing reduction targets for current production processes rather than fixed standards established annually.

Question 4

An unfavorable labor efficiency variance indicates that:

Accepted Answer

More hours were worked than the standard hours allowed for actual output

Answer

Labor efficiency variance = (Actual hours − Standard hours allowed) × Standard rate; an unfavorable result means excess hours were used.

Question 5

Target costing starts with:

Accepted Answer

A market-driven selling price and subtracts the required profit margin

Answer

Target costing derives the allowable cost by subtracting the target profit margin from the competitive market price.

(CFC) Certified Financial Controller Practice Test