CPA Business Environment and Concepts (BEC) : Operations Management: Performance Management
Study concepts, example questions & explanations for CPA Business Environment and Concepts (BEC)
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Example Questions
Example Question #118 : Cpa Business Environment And Concepts (Bec)
Conversion costs do not include:
Direct labor
Indirect labor
Direct materials
Indirect materials
Direct materials
Conversion costs consist of direct labor and overhead. Thus, conversion costs include all product costs except direct materials.
Example Question #119 : Cpa Business Environment And Concepts (Bec)
Of the following, which would be not included as period expenses?
G&A expenses
Abnormal spoilage
Sales and marketing expenses
Normal spoilage
Normal spoilage
Normal spoilage is an inventory cost rather than a period cost.
Example Question #11 : Operations Management: Performance Management
A cost that is fixed per unit is an example of a:
Direct cost
Mixed cost
Variable cost
Fixed 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:
Inspection
Rework
Product recalls
Maintenance
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 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 equals sales, absorption costing income is less 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
B
A
Both
Neither
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
Neither
Both
Annual warehouse insurance
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.
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