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CA Inter Total Absorption Costing — practice questions — page 2

Explore 50 free Total Absorption 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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Total Absorption Costing questions and exercises with answers

Showing questions 31–50 of 50.

A firm covers its variable costs but not its overheads in the short run. What should it do?Read the answer and worked solution →What does activity-based costing aim to do with the share of costs treated as overheads?Read the answer and worked solution →Which items does sales overhead cover?Read the answer and worked solution →Which overhead group includes the cost of office staff?Read the answer and worked solution →Factory staff costs fall under which overhead group?Read the answer and worked solution →How does activity-based costing assign the cost of each activity?Read the answer and worked solution →Compared with conventional costing, ABC turns more of which cost into direct cost?Read the answer and worked solution →In ABC, what is a cost driver?Read the answer and worked solution →For bank tellers, what is the cost driver used to attach cost to each product?Read the answer and worked solution →In ABC, what is formed by the overhead costs assigned to one activity?Read the answer and worked solution →In which year was ABC first clearly defined by Kaplan and Bruns?Read the answer and worked solution →Broad overhead percentages on common costs risk what outcome among products?Read the answer and worked solution →How does ABC assign costs, rather than using broad arbitrary percentages?Read the answer and worked solution →Why did indirect costs rise relative to direct costs in modern factories?Read the answer and worked solution →The chief executive's salary stays unassigned in ABC. What are such costs termed?Read the answer and worked solution →What is a danger of ABC, like other cost allocation approaches?Read the answer and worked solution →What limits the use of ABC, especially in services?Read the answer and worked solution →Drucker said ABC also records the cost of what?Read the answer and worked solution →In which journal did Cooper and Kaplan publish ABC articles from 1988?Read the answer and worked solution →In the CIMA description of ABC, activities are assigned to what?Read the answer and worked solution →

Worked practice questions

A firm covers its variable costs but not its overheads in the short run. What should it do?

  1. Shut down at once
  2. Sell all assets
  3. Raise debt to expand
  4. Remain in business
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Correct answer: D. Remain in business

Revenue above variable cost contributes towards overheads, so staying open loses less than closing.

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What does activity-based costing aim to do with the share of costs treated as overheads?

  1. Reduce it
  2. Double it
  3. Hide it
  4. Freeze it
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Correct answer: A. Reduce it

By assigning costs to activities, ABC cuts the pool of costs left as general overhead.

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Which items does sales overhead cover?

  1. Factory rent costs
  2. Catalogues, advertising
  3. Raw material stores
  4. Audit fee payments
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Correct answer: B. Catalogues, advertising

Sales overhead covers selling items such as catalogues, advertising, exhibitions and sales staff.

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More Cost and Management Accounting topics

Cost SheetProcess CostingCost AccountingMarginal CostingEmployee CostInventory ValuationActivity Based CostingBudgets and Budgetary Control