PM B Specialist cost and management accounting techniques

Setup costs are $60,000 for 100 setups. A product needs 30 setups. What setup cost is charged to the product?

• 1 $18,000
• 2 $2,000
• 3 $18
• 4 $60,000

Which statement about ABC is correct?

• 1 It ignores overheads
• 2 It uses one overhead rate for the whole factory
• 3 It is quicker and cheaper to set up than absorption costing
• 4 It assigns overheads to products using the activities that cause the costs

The market will pay $50 and the required margin is 20 percent of the selling price. What is the target cost?

• 1 $30
• 2 $10
• 3 $40
• 4 $60

Why does life-cycle costing matter for design decisions?

• 1 It ignores costs after the sale
• 2 Many of a product's costs are committed at the design stage
• 3 It only measures production costs
• 4 Design costs are not important

In throughput accounting, throughput is:

• 1 Sales revenue less labour cost
• 2 The number of units produced
• 3 Sales revenue less all costs
• 4 Sales revenue less direct material cost

A product earns a return per bottleneck hour of $50. The cost per factory hour is $30. What is the throughput accounting ratio?

• 1 0.60
• 2 1.67
• 3 1.00
• 4 20.00

A throughput accounting ratio below 1 for a product means that:

• 1 The product earns less from the bottleneck than the cost of using it
• 2 The product is the most profitable
• 3 The product has no direct materials
• 4 There is no bottleneck

Which technique tracks the flow of materials and the cost of waste through a process?

• 1 Flow cost accounting
• 2 Zero-based budgeting
• 3 Cost-plus pricing
• 4 Target costing

A cost driver is:

• 1 The factor that causes the cost of an activity to change
• 2 The total overhead cost
• 3 The selling price
• 4 The cost of direct materials