Q. A company has a budgeted direct material cost of $30,000 but incurs $32,000. What is the direct material variance?
-
A.
$2,000 Favorable
-
B.
$2,000 Unfavorable
-
C.
$1,000 Favorable
-
D.
$1,000 Unfavorable
Solution
Direct Material Variance = Actual Cost - Budgeted Cost = $32,000 - $30,000 = $2,000 Unfavorable.
Correct Answer:
B
— $2,000 Unfavorable
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Q. A company has a total cost of $100,000, with fixed costs of $40,000. What is the variable cost if 4,000 units are produced?
-
A.
$15,000
-
B.
$20,000
-
C.
$25,000
-
D.
$30,000
Solution
Total Cost = Fixed Costs + Variable Costs; Variable Costs = Total Cost - Fixed Costs = $100,000 - $40,000 = $60,000. Variable Cost per Unit = $60,000 / 4,000 = $15.
Correct Answer:
C
— $25,000
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Q. A company incurs a total cost of $50,000 for producing 5,000 units. What is the average cost per unit?
-
A.
$8
-
B.
$10
-
C.
$12
-
D.
$15
Solution
Average Cost per Unit = Total Cost / Number of Units = $50,000 / 5,000 = $10.
Correct Answer:
B
— $10
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Q. If a company has a budgeted profit of $50,000 and actual profit of $45,000, what is the profit variance?
-
A.
$5,000 Favorable
-
B.
$5,000 Unfavorable
-
C.
$10,000 Favorable
-
D.
$10,000 Unfavorable
Solution
Profit Variance = Actual Profit - Budgeted Profit = $45,000 - $50,000 = -$5,000, which is Unfavorable.
Correct Answer:
B
— $5,000 Unfavorable
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Q. If a company has a budgeted sales revenue of $200,000 and actual sales revenue of $180,000, what is the sales variance?
-
A.
$20,000 Favorable
-
B.
$20,000 Unfavorable
-
C.
$10,000 Favorable
-
D.
$10,000 Unfavorable
Solution
Sales Variance = Actual Sales - Budgeted Sales = $180,000 - $200,000 = -$20,000, which is Unfavorable.
Correct Answer:
B
— $20,000 Unfavorable
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Q. If a company has a total variable cost of $80,000 for producing 4,000 units, what is the variable cost per unit?
-
A.
$15
-
B.
$20
-
C.
$25
-
D.
$30
Solution
Variable Cost per Unit = Total Variable Cost / Number of Units = $80,000 / 4,000 = $20.
Correct Answer:
B
— $20
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Q. If a product has a selling price of $50, variable costs of $30, and fixed costs of $10, what is the contribution margin?
-
A.
$10
-
B.
$20
-
C.
$30
-
D.
$40
Solution
Contribution Margin = Selling Price - Variable Costs = $50 - $30 = $20.
Correct Answer:
B
— $20
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Q. If the contribution margin per unit is $20 and fixed costs are $40,000, how many units must be sold to break even?
-
A.
1,500
-
B.
2,000
-
C.
2,500
-
D.
3,000
Solution
Break-even Point (Units) = Fixed Costs / Contribution Margin per Unit = $40,000 / $20 = 2,000 units.
Correct Answer:
B
— 2,000
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Q. In a flexible budget, how are variable costs treated?
-
A.
They remain constant regardless of activity level
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B.
They change in total with changes in activity level
-
C.
They are ignored in the budget
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D.
They are fixed at the highest level of activity
Solution
Variable costs in a flexible budget change in total with changes in activity level.
Correct Answer:
B
— They change in total with changes in activity level
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Q. In marginal costing, which of the following costs is included in product costs?
-
A.
Fixed manufacturing overhead
-
B.
Variable manufacturing overhead
-
C.
Selling and administrative expenses
-
D.
All of the above
Solution
In marginal costing, only variable manufacturing costs are included in product costs.
Correct Answer:
B
— Variable manufacturing overhead
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Q. What is the break-even point in sales dollars if the break-even point in units is 1,000 and the selling price per unit is $25?
-
A.
$15,000
-
B.
$20,000
-
C.
$25,000
-
D.
$30,000
Solution
Break-even Sales = Break-even Units * Selling Price per Unit = 1,000 * $25 = $25,000.
Correct Answer:
C
— $25,000
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Q. What is the contribution margin in CVP analysis?
-
A.
Sales revenue minus fixed costs
-
B.
Sales revenue minus variable costs
-
C.
Total costs minus total revenue
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D.
Net income before taxes
Solution
The contribution margin is calculated as sales revenue minus variable costs.
Correct Answer:
B
— Sales revenue minus variable costs
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Q. What is the primary benefit of using activity-based costing (ABC)?
-
A.
It simplifies the costing process
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B.
It provides more accurate product costing
-
C.
It reduces the number of cost pools
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D.
It eliminates the need for variance analysis
Solution
Activity-based costing (ABC) provides more accurate product costing by assigning costs based on actual activities.
Correct Answer:
B
— It provides more accurate product costing
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Q. What is the total cost if fixed costs are $10,000, variable cost per unit is $5, and 1,000 units are produced?
-
A.
$10,000
-
B.
$15,000
-
C.
$20,000
-
D.
$25,000
Solution
Total Cost = Fixed Costs + (Variable Cost per Unit * Number of Units) = $10,000 + ($5 * 1,000) = $10,000 + $5,000 = $15,000.
Correct Answer:
C
— $20,000
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Q. Which of the following costs would be classified as a direct cost?
-
A.
Factory rent
-
B.
Direct materials used in production
-
C.
Administrative salaries
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D.
Depreciation on office equipment
Solution
Direct materials used in production are directly traceable to the product and classified as direct costs.
Correct Answer:
B
— Direct materials used in production
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Q. Which of the following is a limitation of traditional costing systems?
-
A.
They provide accurate product costing
-
B.
They may lead to overcosting or undercosting of products
-
C.
They are easy to implement
-
D.
They focus on direct costs only
Solution
Traditional costing systems can lead to overcosting or undercosting of products due to their simplistic allocation methods.
Correct Answer:
B
— They may lead to overcosting or undercosting of products
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