Management Accounting & Strategy Flashcards

Which costing method allocates overhead using multiple cost drivers to better reflect cause-and-effect relationships?

Answer: Activity-based costing

Activity-based costing (ABC) uses multiple cost drivers tied to specific activities, improving overhead allocation accuracy.

A company has fixed costs of $200,000, a selling price of $50, and variable cost per unit of $30. What is the break-even point in units?

Answer: 10,000 units

Break-even = Fixed costs / Contribution margin per unit = $200,000 / ($50 - $30) = 10,000 units.

The balanced scorecard's 'learning and growth' perspective focuses primarily on:

Answer: Employee skills and organizational capability

The learning and growth perspective addresses human capital, information capital, and organizational capital that enable strategy execution.

When a company uses the theory of constraints (TOC), the primary goal is to:

Answer: Maximize throughput while managing inventory and operating expense

TOC focuses on maximizing throughput (sales minus truly variable costs) while controlling inventory and operating expenses.

A strategic business unit (SBU) with high market share in a slow-growth industry is classified in the BCG matrix as a:

Answer: Cash cow

Cash cows have high relative market share in low-growth markets, generating excess cash with minimal investment needed.

Which transfer pricing method uses the price that an unrelated party would charge for a comparable transaction?

Answer: Comparable uncontrolled price method

The comparable uncontrolled price (CUP) method benchmarks transfer prices against actual market transactions between independent parties.

Under a standard costing system, a favorable materials price variance occurs when:

Answer: Actual price paid is less than the standard price

Materials price variance = (Standard price - Actual price) × Actual quantity; it is favorable when actual price is below standard.