QFC Cost Accounting & Management 2

Question 1

A company uses a job-order costing system. Actual overhead incurred was $480,000 and applied overhead was $450,000. How should the $30,000 difference be treated?

Accepted Answer

Debit Cost of Goods Sold

Answer

Under-applied overhead (actual > applied) is typically closed by debiting Cost of Goods Sold, increasing expense.

Question 2

Which costing method assigns both variable and fixed manufacturing costs to products?

Accepted Answer

Absorption costing

Answer

Absorption (full) costing includes all manufacturing costs—variable and fixed—in the product cost.

Question 3

A firm's relevant range is 5,000–10,000 units. Fixed costs total $60,000 within this range. If output rises to 12,000 units, what is most likely true?

Accepted Answer

Fixed costs may step up to a new level

Answer

Outside the relevant range, fixed costs can step up as additional capacity resources (equipment, supervisors) are required.

Question 4

The economic order quantity (EOQ) model minimizes which combination of costs?

Accepted Answer

Ordering costs and carrying costs

Answer

EOQ minimizes total inventory cost by balancing ordering costs (decrease with larger orders) and carrying costs (increase with larger orders).

Question 5

Under standard costing, a favorable material price variance occurs when:

Accepted Answer

Actual price paid is less than standard price

Answer

Material price variance = (Standard Price − Actual Price) × Actual Quantity; a positive result is favorable.

(QFC) Quantitative Finance Certification Practice Test

(QFC) Quantitative Finance Certification Practice Test

QFC Cost Accounting & Management 2