CPA CPA Cost Accounting & Budgeting

Question 1

Which costing method assigns manufacturing overhead to products based on the activities that drive overhead costs?

Accepted Answer

Activity-based costing (ABC)

Answer

Activity-based costing (ABC) identifies cost drivers and assigns overhead to products based on the activities consumed, improving accuracy over volume-based methods.

Question 2

In a standard cost system, an unfavorable direct labor efficiency variance indicates:

Accepted Answer

Actual labor hours exceeded standard hours allowed for actual output

Answer

An unfavorable labor efficiency variance means more actual hours were used than the standard hours allowed for the actual production level achieved.

Question 3

Which of the following costs would be included in a product's cost under absorption costing but NOT under variable costing?

Accepted Answer

Fixed manufacturing overhead

Answer

Absorption costing treats fixed manufacturing overhead as a product cost, while variable costing treats it as a period cost expensed immediately.

Question 4

A company uses a flexible budget. If actual output is higher than budgeted, the flexible budget will show:

Accepted Answer

Higher variable costs but the same fixed costs

Answer

A flexible budget adjusts variable costs proportionally to actual output while keeping budgeted fixed costs constant.

Question 5

The contribution margin ratio is calculated as:

Accepted Answer

Contribution margin divided by sales revenue

Answer

The contribution margin ratio equals contribution margin (sales minus variable costs) divided by sales revenue, showing what percentage of each sales dollar covers fixed costs and profit.

(CPA) Certified Practicing Accountant Practice Test

(CPA) Certified Practicing Accountant Practice Test

CPA CPA Cost Accounting & Budgeting