CPA Cost Accounting & Budgeting Flashcards

Which costing method assigns manufacturing overhead to products based on the activities that drive overhead costs?

Answer: Activity-based costing (ABC)

Activity-based costing (ABC) identifies cost drivers and assigns overhead to products based on the activities consumed, improving accuracy over volume-based methods.

In a standard cost system, an unfavorable direct labor efficiency variance indicates:

Answer: Actual labor hours exceeded standard hours allowed for actual output

An unfavorable labor efficiency variance means more actual hours were used than the standard hours allowed for the actual production level achieved.

Which of the following costs would be included in a product's cost under absorption costing but NOT under variable costing?

Answer: Fixed manufacturing overhead

Absorption costing treats fixed manufacturing overhead as a product cost, while variable costing treats it as a period cost expensed immediately.

A company uses a flexible budget. If actual output is higher than budgeted, the flexible budget will show:

Answer: Higher variable costs but the same fixed costs

A flexible budget adjusts variable costs proportionally to actual output while keeping budgeted fixed costs constant.

The contribution margin ratio is calculated as:

Answer: Contribution margin divided by sales revenue

The contribution margin ratio equals contribution margin (sales minus variable costs) divided by sales revenue, showing what percentage of each sales dollar covers fixed costs and profit.

Under job order costing, which document accumulates all costs (direct materials, direct labor, and overhead) for a specific job?

Answer: Job cost sheet

The job cost sheet is the primary document that accumulates direct materials, direct labor, and applied overhead for each specific job order.