CPFM Cost Management and Analysis 2

Question 1

A company allocates fixed manufacturing overhead based on machine hours. If actual production exceeds the budgeted level, what is the most likely overhead variance result?

Accepted Answer

Favorable volume variance

Answer

Unfavorable volume variance

Answer

Zero spending variance

Answer

Unfavorable efficiency variance

Question 2

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

Accepted Answer

Activity-based costing

Answer

Job-order costing

Answer

Process costing

Answer

Standard costing

Question 3

A relevant cost for a decision must be:

Accepted Answer

Future-oriented and differs between alternatives

Answer

Already incurred and unrecoverable

Answer

Allocated equally to all products

Answer

Recorded in the general ledger

Question 4

What does the contribution margin represent?

Accepted Answer

Sales revenue minus variable costs

Answer

Sales revenue minus fixed costs

Answer

Net income after taxes

Answer

Gross profit minus depreciation

Question 5

In a make-or-buy decision, which cost should generally be ignored?

Accepted Answer

Unavoidable allocated fixed overhead

Answer

Avoidable variable production costs

Answer

The supplier's purchase price

Answer

Opportunity cost of freed capacity

Question 6

The high-low method is used primarily to:

Accepted Answer

Separate mixed costs into fixed and variable components

Answer

Allocate joint costs

Answer

Calculate the breakeven point

Answer

Determine transfer prices

Question 7

A favorable direct materials price variance combined with an unfavorable quantity variance might indicate:

Accepted Answer

Purchasing low-quality materials that caused waste

Answer

Overpaying for premium materials

Answer

Efficient use of standard materials

Answer

An error in labor rates