CPA Business Environment and Concepts (BEC) : Operations Management: Cost Accounting
Study concepts, example questions & explanations for CPA Business Environment and Concepts (BEC)
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Example Questions
Example Question #3 : Absorption Costing
In situations when management must decide on accepting or rejecting one time only special orders, where there is sufficient idle capacity, which one of the following is not relevant to the decision?
Direct costs
Absorption costs
Variable costs
Incremental costs
Incremental costs
Incremental costs are the only costs not relevant to the make or buy special order decision.
Example Question #4 : Absorption Costing
A cost that bears an observable and known relationship to a quantifiable activity base is a:
Target cost
Engineered cost
Fixed cost
Indirect cost
Engineered cost
An engineered cost bears an observable and known relationship to a quantifiable activity base.
Example Question #5 : Absorption Costing
Costs are allocated to cost objectives in many ways and for many reason. Which of the following is a purpose of cost allocation?
Implementing ABC
Evaluating revenue center performance
Aiding in variable costing for internal reporting
Measuring income and assets for external reporting
Measuring income and assets for external reporting
Cost allocation is essential for measuring income and assets for external reporting.
Example Question #6 : Absorption Costing
Which of the following is another name for Activity Based Costing?
Cost driver costing
Absorption costing
Cost center costing
Transaction based costing
Transaction based costing
When the cost driver is the number of transactions involved in a particular activity, ABC is referred to as transaction-based costing.
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