Q. In cost-volume-profit (CVP) analysis, what does the break-even point represent?
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A.
Total revenue equals total costs
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B.
Total profit is maximized
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C.
Total fixed costs are covered
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D.
Total variable costs are minimized
Solution
The break-even point is where total revenue equals total costs, resulting in zero profit.
Correct Answer:
A
— Total revenue equals total costs
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Q. What is the main advantage of using activity-based costing (ABC)?
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A.
Simplicity in calculations
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B.
More accurate product costing
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C.
Lower administrative costs
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D.
Easier to implement
Solution
ABC provides more accurate product costing by assigning costs based on actual activities.
Correct Answer:
B
— More accurate product costing
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Q. Which budgeting method involves preparing budgets based on previous periods' performance?
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A.
Zero-based budgeting
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B.
Incremental budgeting
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C.
Flexible budgeting
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D.
Activity-based budgeting
Solution
Incremental budgeting uses previous periods' budgets as a base and adjusts for expected changes.
Correct Answer:
B
— Incremental budgeting
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Q. Which costing method is most appropriate for a company producing custom-made products?
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A.
Job order costing
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B.
Process costing
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C.
Activity-based costing
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D.
Standard costing
Solution
Job order costing is suitable for custom-made products as it tracks costs for each individual job.
Correct Answer:
A
— Job order costing
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