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CA Inter Activity Based Costing — practice questions

Explore 54 free Activity Based Costing questions in CA Inter Cost and Management Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Activity Based Costing questions and exercises with answers

Showing questions 1–30 of 54.

ABC assigns the cost of each activity to products according to what?Read the answer and worked solution →Overhead costs assigned to one activity together form an activity cost what?Read the answer and worked solution →What does a cost driver represent in costing?Read the answer and worked solution →Traditional costing usually allocates indirect cost using which driver?Read the answer and worked solution →For the activity of running machinery, the likely cost driver isRead the answer and worked solution →Marketing cost drivers include which of the following?Read the answer and worked solution →A customer service activity is most closely driven byRead the answer and worked solution →Cooper and Kaplan wrote 1988 ABC articles in which journal?Read the answer and worked solution →Which consortium formalised ABC principles during the 1970s and 1980s?Read the answer and worked solution →Which pioneer's 1911 work first demonstrated practices later systematised by ABC?Read the answer and worked solution →A broad overhead percentage on all products risks what?Read the answer and worked solution →Increased automation reduces labour cost but raises which cost?Read the answer and worked solution →ABC lost ground in the 1990s to which Kaplan-linked metric?Read the answer and worked solution →Which approach was developed as an alternative to complex manual ABC?Read the answer and worked solution →ABC methodology first helps to segregate which cost groups?Read the answer and worked solution →Which costs are relatively easy to trace directly to products?Read the answer and worked solution →Where products use common resources differently, cost allocation needs what?Read the answer and worked solution →Which use of ABC information is listed among its applications?Read the answer and worked solution →ABC can help a firm to do which of these with unprofitable products?Read the answer and worked solution →ABC has mainly supported which type of decisions?Read the answer and worked solution →Which is the first listed step when implementing ABC?Read the answer and worked solution →When did the US Marine Corps start using ABC?Read the answer and worked solution →UK Police use of ABC has been mandated since which tax year?Read the answer and worked solution →A key criticism of ABC is that it treats fixed costs as if they wereRead the answer and worked solution →Why can allocating fixed costs under ABC mislead decisions?Read the answer and worked solution →In ABC, a CEO salary that no activity explains is usually treated how?Read the answer and worked solution →ABC's only purpose is stated to be providing what?Read the answer and worked solution →The usefulness of ABC is bound mainly to the cost of what?Read the answer and worked solution →What lowers the cost of performing ABC, as a prerequisite?Read the answer and worked solution →Per CIMA, ABC involves tracing resource consumption and costing what?Read the answer and worked solution →

Worked practice questions

ABC assigns the cost of each activity to products according to what?

  1. Their final selling price
  2. Their direct labour hours alone
  3. An equal share per product
  4. Their actual use of the activity
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Correct answer: D. Their actual use of the activity

ABC links each activity cost to a product by how much of that activity the product really consumes.

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Overhead costs assigned to one activity together form an activity cost what?

  1. budget
  2. variance
  3. pool
  4. ledger
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Correct answer: C. pool

The overhead gathered against a single activity is called its cost pool, which is later spread over products by a driver.

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What does a cost driver represent in costing?

  1. A tax on production overheads
  2. The selling price of output
  3. A factor driving activity cost
  4. A fixed salary component
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Correct answer: C. A factor driving activity cost

A cost driver is whatever factor creates or drives the cost of an activity, so it links activity cost to output.

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More Cost and Management Accounting topics

Cost SheetProcess CostingCost AccountingMarginal CostingEmployee CostInventory ValuationBudgets and Budgetary ControlJob Costing