CIA Cost Accounting 2

Question 1

Which costing method assigns manufacturing overhead to products based on multiple cost drivers rather than a single plant-wide rate?

Accepted Answer

Activity-based costing

Answer

Activity-based costing (ABC) uses multiple cost drivers to more accurately assign overhead costs to products or services.

Question 2

A company produces 10,000 units with fixed costs of $50,000 and variable costs of $3 per unit. What is the total cost per unit?

Accepted Answer

$8.00

Answer

Total cost = $50,000 + (10,000 × $3) = $80,000; cost per unit = $80,000 ÷ 10,000 = $8.00.

Question 3

Under variable costing, which of the following is treated as a period cost rather than a product cost?

Accepted Answer

Fixed manufacturing overhead

Answer

Under variable costing, fixed manufacturing overhead is expensed as a period cost and not included in inventory valuation.

Question 4

The contribution margin ratio is best defined as:

Accepted Answer

Contribution margin divided by sales revenue

Answer

The contribution margin ratio equals contribution margin divided by sales revenue, showing the percentage of each sales dollar available to cover fixed costs.

Question 5

Which of the following best describes a sunk cost?

Accepted Answer

A cost that has already been incurred and cannot be recovered

Answer

A sunk cost is a past expenditure that cannot be recovered and is therefore irrelevant to future decision-making.

(CIA) Certified Industrial Accountant Practice Test

(CIA) Certified Industrial Accountant Practice Test

CIA Cost Accounting 2