Cost Accounting — Cost sheet, marginal costing, cost‑volume‑profit analysis, standard costing and variance analysis. - One Line Questions

1. The sales volume variance for profit is calculated as: — (Actual Units Sold - Budgeted Units Sold) * Standard Contribution Margin per Unit
2. A company has fixed costs of $50,000 and a contribution margin ratio of 40%. What is the break-even point in sales dollars? — $125,000
3. A favorable fixed overhead expenditure variance occurs when: — Actual fixed overhead costs are less than budgeted fixed overhead costs
4. The standard labor rate variance measures the difference between: — Actual labor rate and standard labor rate for actual hours worked
5. A favorable labor rate variance occurs when: — Actual wages paid are less than standard wages for the hours worked
6. If a company's break-even point decreases, it could be due to: — An increase in selling price per unit
7. Variance analysis involves: — Comparing actual results with standard costs
8. The difference between the selling price per unit and the variable cost per unit is known as: — Contribution margin
9. What does a favorable variance generally indicate? — Costs were lower than expected or revenues were higher than expected
10. What does an unfavorable variance generally indicate? — Costs were higher than expected or revenues were lower than expected
11. Cost-Volume-Profit (CVP) analysis is primarily concerned with the relationship between: — Sales volume, costs, and profits
12. In standard costing, the purpose of setting standards is to provide a basis for: — Measuring performance and controlling costs
13. Indirect costs that are not directly traceable to a specific product are known as: — Overheads
14. Which of the following is NOT a component of prime cost? — Factory rent
15. The main objective of standard costing is to: — Control costs and measure performance
16. Which cost is the sum of direct materials, direct labor, and direct expenses? — Prime cost
17. Which of the following is a direct cost? — Wages paid to machine operators
18. If actual hours worked exceed standard hours allowed for the actual output, the labor efficiency variance is: — Unfavorable
19. Which of the following is a key component of marginal cost? — Variable manufacturing overhead
20. When is marginal costing most useful? — For short-term decision making like accepting a special order
21. A higher contribution margin ratio generally indicates: — Greater profitability for each sales dollar
22. Standard costing is a technique of: — Management accounting
23. Which of the following is a controllable cost variance? — Material price variance
24. Standard costing helps in: — All of the above
25. The primary goal of variance analysis is to: — Identify deviations from planned performance and investigate their causes
26. Which of the following is a type of material variance? — Material price variance
27. Which variance measures the difference between the actual overhead cost and the overhead cost applied to production? — Overhead variance
28. Which variance is calculated as (Actual Rate - Standard Rate) * Actual Hours? — Labor rate variance
29. Which costing method is preferred for external financial reporting under GAAP/IFRS? — Absorption costing
30. Which of the following is an example of an overhead variance? — Variable overhead spending variance
31. An unfavorable material quantity variance suggests that: — More material was used than the standard allowed for the output
32. The cost sheet typically presents: — Direct costs, direct expenses, and allocated overheads
33. In marginal costing, the selling price of a product must cover at least: — Prime costs and variable overheads
34. Variable overhead variances are typically analyzed into: — Rate and efficiency variances
35. Factory overheads include: — Indirect factory wages
36. Which formula correctly calculates the contribution margin? — Sales Revenue - Variable Costs
37. Which assumption is NOT typically made in CVP analysis? — Fixed costs change in total with changes in volume
38. Fixed overhead variances are usually analyzed into: — Budget and volume variances
39. What is a standard cost? — A predetermined cost that should be incurred under efficient operating conditions
40. What is the margin of safety? — The difference between actual sales and break-even sales
41. What does the break-even point (BEP) represent? — The level of sales where total revenue equals total costs
42. The 'relevant range' in CVP analysis refers to: — The range of sales volume for which cost and revenue behavior patterns are assumed to be linear
43. In marginal costing, what is the treatment of fixed costs? — They are treated as period costs and charged against revenue
44. What is the primary purpose of preparing a cost sheet? — To summarize the costs incurred in manufacturing a product or rendering a service
45. In CVP analysis, the term 'contribution margin ratio' is defined as: — Total Contribution Margin / Total Sales
46. The break-even point in units can be calculated as: — Total Fixed Costs / Contribution Margin per Unit
47. The break-even point in sales dollars can be calculated using the contribution margin ratio as: — Total Fixed Costs / Contribution Margin Ratio
48. In absorption costing, fixed factory overheads are: — Included in the cost of goods sold
49. If the actual selling price is higher than the standard selling price, it results in: — Favorable sales price variance
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