CIA Management Accounting 2

Question 1

A company uses a job-order costing system. During the period, actual overhead was $180,000 and applied overhead was $165,000. How should the $15,000 difference be treated at year-end?

Accepted Answer

Debit Cost of Goods Sold for $15,000

Answer

When overhead is underapplied (actual > applied), Cost of Goods Sold is debited to eliminate the debit balance in Manufacturing Overhead.

Question 2

Which transfer pricing method sets the internal price equal to the variable cost of the producing division plus an opportunity cost?

Accepted Answer

Marginal cost transfer price

Answer

The marginal cost (or variable cost plus opportunity cost) method captures both the out-of-pocket cost and the foregone contribution margin from external sales.

Question 3

A firm's operating leverage factor is 5. If sales increase by 8%, what is the expected percentage increase in operating income?

Accepted Answer

40%

Answer

Operating leverage factor multiplied by the percentage change in sales equals the percentage change in operating income: 5 × 8% = 40%.

Question 4

Which of the following costs is most likely classified as a discretionary fixed cost?

Accepted Answer

Advertising expenditures

Answer

Discretionary fixed costs, like advertising, arise from periodic management decisions and can be adjusted in the short run without impairing core operations.

Question 5

Under throughput costing, which costs are expensed in the period incurred rather than inventoried?

Accepted Answer

All manufacturing costs except direct materials

Answer

Throughput costing treats only direct materials as inventory costs; all other manufacturing costs (labor, overhead) are period expenses.

(CIA) Certified Industrial Accountant Practice Test

(CIA) Certified Industrial Accountant Practice Test

CIA Management Accounting 2