Cost Accounting & Management Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cost Accounting & Management flashcards as text
What does a negative (favorable) sales volume variance indicate in standard costing?
Answer: Actual sales volume exceeded budgeted sales volume
A favorable sales volume variance means the company sold more units than budgeted, contributing more profit than planned.
Life cycle costing is primarily concerned with:
Answer: Tracking product costs from R&D through disposal across its entire life
Life cycle costing captures all costs associated with a product from design and development through manufacture, use, and end-of-life disposal.
In the context of transfer pricing, the 'opportunity cost approach' sets the transfer price at:
Answer: Variable cost plus contribution margin foregone by the supplying division
The opportunity cost transfer price equals the supplying division's variable cost plus any contribution margin it gives up by transferring internally instead of selling externally.
Which performance measure is MOST closely associated with the Balanced Scorecard's 'learning and growth' perspective?
Answer: Employee training hours per staff member
The learning and growth perspective focuses on organizational capabilities such as employee skills, training, and knowledge management that underpin future performance.
When using regression analysis to separate mixed costs, the 'b' coefficient represents:
Answer: Variable cost per unit of activity
In the equation y = a + bx, 'b' is the slope representing variable cost per unit of activity, while 'a' is the fixed cost intercept.
An investment center manager is BEST evaluated using:
Answer: Return on investment (ROI) or residual income (RI)
Investment center managers control assets as well as revenues and costs, so ROI or RI—which relate profit to the capital employed—are the most appropriate measures.
The 'labour efficiency variance' is calculated as:
Answer: (Standard hours for actual output – Actual hours worked) × Standard wage rate
The labour efficiency variance isolates the cost impact of using more or fewer hours than the standard allowed for actual production.