CFM CFM Cost Accounting & Management

Question 1

Which costing method assigns overhead costs to products based on the activities that drive those costs?

Accepted Answer

Activity-based costing (ABC)

Answer

Job order costing

Answer

Process costing

Answer

Standard costing

Question 2

Contribution margin is calculated as:

Accepted Answer

Revenue - Variable Costs

Answer

Revenue - Fixed Costs

Answer

Gross Profit - Operating Expenses

Answer

Net Income + Depreciation

Question 3

At the break-even point, a company's:

Accepted Answer

Net income equals zero and total revenue equals total costs

Answer

Gross profit margin equals 50%

Answer

Variable costs exceed fixed costs

Answer

Revenue exceeds total costs

Question 4

Which type of cost remains constant in total regardless of changes in production volume within a relevant range?

Accepted Answer

Fixed cost

Answer

Variable cost

Answer

Semi-variable cost

Answer

Step cost

Question 5

What is a 'sunk cost' and how should it affect future business decisions?

Accepted Answer

A cost already incurred that cannot be recovered; it should be ignored in future decisions

Answer

A future cost that has not yet been incurred; it should be included in all decisions

Answer

A variable cost that changes with production; always include it in marginal analysis

Answer

An opportunity cost representing the next best alternative; always consider it

Question 6

In standard costing, a favorable variance means:

Accepted Answer

Actual cost was less than standard cost, benefiting profitability

Answer

Actual cost exceeded standard cost

Answer

The budget was revised upward

Answer

Production volume exceeded the planned amount