Cost Accounting Quiz

Which of the following is an advantage of using absorption costing?

• It avoids overstatement of inventory costs

• It separates variable and fixed costs clearly

• It complies with external financial reporting standards

• It provides better information for internal decision-making

A company estimates total fixed costs to be $150,000 and the contribution margin per unit is $50. What is the breakeven point in units?

• 2,500 units

• 3,000 units

• 4,000 units

• 5,000 units

Which internal control component is primarily concerned with assessing risk and responding appropriately?

• Control Activities

• Monitoring

• Risk Assessment

• Control Environment

Which of the following is not a limitation of internal controls?

• Collusion among employees

• Management override

• External auditor independence

• Cost-benefit constraints

What is the main purpose of variance analysis?

• To replace standard costing

• To reward managers based on budget targets

• To determine standard prices for materials

• To identify reasons for deviations from planned performance

A company has budgeted sales of $800,000 and expects to collect 70% in the month of sale and 30% the following month. What is the expected cash collection in the month of sale?

• $560,000

• $240,000

• $800,000

• $560,000 plus previous month’s 30%

Which financial statement shows changes in equity during a reporting period?

• Balance Sheet

• Income Statement

• Statement of Cash Flows

• Statement of Changes in Equity

A flexible budget is best used for:

• Planning fixed costs

• Evaluating performance based on actual activity levels

• Preparing static variance reports

• Determining depreciation methods

The primary purpose of a balanced scorecard is to:

• Measure inventory turnover

• Focus only on financial performance

• Align business activities with the organization’s strategy

• Replace budgeting

Which of the following is classified as a non-financial performance indicator?

• Gross margin ratio

• Earnings per share

• Customer satisfaction rating

• Return on assets