Cost Management and Analysis Flashcards
7 cards from real CPFM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cost Management and Analysis flashcards as text
Under absorption costing, fixed manufacturing overhead is:
Answer: Treated as a product cost and inventoried
Absorption costing capitalizes fixed manufacturing overhead into inventory as a product cost.
When production exceeds sales, absorption costing income compared to variable costing income will be:
Answer: Higher
Deferring fixed overhead in rising inventory makes absorption income higher than variable costing income.
A favorable variable overhead spending variance most directly indicates:
Answer: Lower actual rates paid for overhead resources
The variable overhead spending variance is favorable when actual overhead rates are below standard.
Which of the following is a value-added activity?
Answer: Assembling a product the customer ordered
Assembly transforms inputs into something the customer values, making it value-added.
A company is deciding whether to accept a special order at a price below normal. The order should be accepted if the price exceeds:
Answer: Relevant incremental costs per unit
A special order is profitable when its price covers the incremental (relevant) costs it triggers.
The margin of safety is the excess of:
Answer: Budgeted sales over breakeven sales
Margin of safety measures how far sales can drop before reaching breakeven.
Which cost classification would direct labor most commonly fall under in a manufacturing setting?
Answer: Prime cost and conversion cost
Direct labor is both a prime cost (with direct materials) and a conversion cost (with overhead).