QFC Cost Accounting & Management 3

Question 1

Which of the following is a characteristic of a relevant cost in decision-making?

Accepted Answer

It differs between decision alternatives and occurs in the future

Answer

Relevant costs are future costs that differ between alternatives; sunk costs and identical costs are irrelevant.

Question 2

Activity-based costing (ABC) improves cost accuracy primarily by:

Accepted Answer

Using multiple cost drivers linked to specific activities

Answer

ABC uses multiple activity cost pools and cost drivers that better reflect the consumption of resources by each product.

Question 3

A company is deciding whether to make or buy a component. The relevant costs for the make option include all EXCEPT:

Accepted Answer

Allocated corporate overhead unchanged by the decision

Answer

Allocated corporate overhead that will not change regardless of the decision is a sunk/unavoidable cost and is irrelevant.

Question 4

The transfer price that allows a selling division to recover variable costs plus an opportunity cost represents:

Accepted Answer

Minimum acceptable transfer price

Answer

The minimum transfer price = Variable cost per unit + Opportunity cost per unit lost by the selling division.

Question 5

Which variance measures the difference between budgeted fixed overhead and standard fixed overhead absorbed by actual output?

Accepted Answer

Fixed overhead volume variance

Answer

The fixed overhead volume variance = Absorbed fixed overhead − Budgeted fixed overhead, reflecting under/over-absorption due to output volume.

(QFC) Quantitative Finance Certification Practice Test