IAB Management Accounting & Analysis 3

Question 1

When using activity-based costing (ABC), cost drivers are used to:

Accepted Answer

Allocate overhead to products based on their consumption of activities

Answer

ABC assigns overhead costs to products by identifying activities and using cost drivers that reflect each product's actual resource consumption.

Question 2

A company's sales budget shows 10,000 units. Beginning inventory is 500 units and desired ending inventory is 800 units. How many units should the production budget show?

Accepted Answer

10,300

Answer

Production = Sales + Ending inventory − Beginning inventory = 10,000 + 800 − 500 = 10,300 units.

Question 3

Which variance measures the difference between actual labor hours worked and standard hours allowed, multiplied by the standard rate?

Accepted Answer

Labor efficiency variance

Answer

Labor efficiency variance = (Standard hours − Actual hours) × Standard rate, reflecting workforce productivity.

Question 4

Under the net present value (NPV) method, a project should be accepted when:

Accepted Answer

NPV is positive

Answer

A positive NPV means the project's returns exceed the required rate, adding value to the firm.

Question 5

Transfer pricing is primarily used to:

Accepted Answer

Assign costs between departments or divisions within the same organization

Answer

Transfer prices establish the internal price at which goods or services are exchanged between segments of the same entity.

(IAB) International Association of Bookkeepers Certification Practice Test

(IAB) International Association of Bookkeepers Certification Practice Test

IAB Management Accounting & Analysis 3