CPP Costing and Profitability Analysis 2

Question 1

A company uses activity-based costing (ABC). Which of the following is the BEST cost driver for a machine setup activity?

Accepted Answer

Number of setups

Answer

Number of units produced

Answer

Direct labor hours

Answer

Machine hours

Question 2

Which costing method treats fixed manufacturing overhead as a period cost rather than a product cost?

Accepted Answer

Variable costing

Answer

Absorption costing

Answer

Standard costing

Answer

Job-order costing

Question 3

A firm's operating profit margin is 12% and its total asset turnover is 2.5. What is its return on assets (ROA)?

Accepted Answer

30%

Answer

4.8%

Answer

14.5%

Answer

20.8%

Question 4

When calculating the cost-to-serve for a customer segment, which of the following costs should be INCLUDED?

Accepted Answer

Order processing and delivery costs specific to the segment

Answer

Corporate headquarters rent

Answer

CEO compensation

Answer

R&D expenditures

Question 5

A product has a selling price of $80, variable cost of $50, and allocated fixed overhead of $20. At what minimum price should the company accept a special one-time order if capacity is available?

Accepted Answer

Any price above $50

Answer

Any price above $80

Answer

Any price above $70

Answer

Any price above $30

Question 6

Which metric measures the profit generated per unit of a scarce resource (constraint)?

Accepted Answer

Contribution margin per unit of constrained resource

Answer

Gross margin per unit

Answer

Net profit margin

Answer

Return on investment

Question 7

A customer generates $500,000 in revenue with a 35% gross margin but requires $200,000 in selling and service costs. What is the customer's net profitability?

Accepted Answer

-$25,000 loss

Answer

$175,000 profit

Answer

$125,000 profit

Answer

$300,000 profit