CPA Business Environment and Concepts (BEC) : CPA Business Environment and Concepts (BEC)
Study concepts, example questions & explanations for CPA Business Environment and Concepts (BEC)
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Example Questions
Example Question #1 : Variable Vs Fixed Costs
A cost that is fixed per unit is an example of a:
Mixed cost
Fixed cost
Direct cost
Variable cost
Variable cost
A variable cost is one that varies in total but is fixed per unit.
Example Question #2 : Variable Vs Fixed Costs
There are a variety of ways of classifying costs of an object as either fixed or variable. The most accurate method is considered to be:
The high-low method
The account analysis method
The regression analysis method
The engineering method
The regression analysis method
The most accurate method and method mentioned within the AICPA text is the regression analysis method.
Example Question #3 : Variable Vs Fixed Costs
An example of an internal failure cost is:
Rework
Product recalls
Maintenance
Inspection
Rework
Rework is an internal failure cost.
Example Question #1 : Variable Vs Fixed Costs
Which of the following statements is correct regarding the difference between the absorption costing and variable costing methods?
When production equals sales, absorption costing income is less than variable costing income.
When production equals sales, absorption costing income is greater than variable costing income.
When production is greater than sales, absorption costing income is greater than variable costing income.
When production is less than sales, absorption costing income is greater than variable costing income.
When production is greater than sales, absorption costing income is greater than variable costing income.
When production is greater than sales, absorption costing income is greater than variable costing income.
Example Question #5 : Variable Vs Fixed Costs
Using the variable costing method, which of the following costs are assigned to inventory?
A: Variable selling and admin costs B: Variable factory overhead costs
Neither
B
A
Both
B
Under variable costing, only the variable manufacturing costs are assigned to inventory.
Example Question #6 : Variable Vs Fixed Costs
Which of the following would be classified as a fixed cost?
Direct materials
Both
Annual warehouse insurance
Neither
Annual warehouse insurance
No matter how much production occurs at the warehouse each year, insurance will remain fixed whereas the more production, the more direct materials cost.
Example Question #1 : Operations Management: Budgeting
A budget that accommodates many levels of production volume is a:
Flexible budget
Cash budget
Sales budget
Zero based budget
Flexible budget
A flexible budget allows for many levels of production volume.
Example Question #2 : Operations Management: Budgeting
Which of the following statements about flexible budgets is true? They are:
designed to accommodate changes in the activity level
similar to static budgets but are adjusted for inflation
designed to accommodate changes in the inflation rate
budgets used to evaluate capacity utilization
designed to accommodate changes in the activity level
A flexible budget would be chosen when a manager expects changes in activity level of production.
Example Question #3 : Operations Management: Budgeting
The most direct way to prepare a cash budget for a manufacturing firm is to include:
Projected sales and purchases, percentage of collections, and terms of payments
Projected purchases, percentages of purchases paid, and net income
Projected sales, credit terms, and net income
Projected net income, depreciation, and goodwill amortization
Projected sales and purchases, percentage of collections, and terms of payments
The simplest cash budget would include the components of cash collections and cash disbursements.
Example Question #4 : Operations Management: Budgeting
A plan that is created using budgeted revenue and costs but is based on the actual units of output is known as a:
Static budget
Master budget
Continuous budget
Flexible budget
Flexible budget
A flexible budget uses budgeted revenue and costs per unit, but it is adjusted based on actual units of output.
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