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IIA CIA Exam
Certified Internal Auditor Exam (Page 24 )

Updated On: 12-Jan-2026
Page 24 of 342
PDF with 1702 Questions

Using variable costing, the company's operating profit was

  1. US $750.000
  2. US $840, 000
  3. US $915, 000
  4. US $975, 000

Answer(s): B

Explanation:

Under variable costing, the product cost includes only variable manufacturing costs. All fixed costs are expensed in the period incurred. Unit product cost under variable costing is US $6 $600.000 100, 000 units produced).



Using absorption costing, the company's operating profit was

  1. US $750.000
  2. US $900, 000
  3. US $975, 000
  4. US $1, 020, 000

Answer(s): B

Explanation:

Under absorption costing, product costs include fixed and variable manufacturing costs. The unit product cost under absorption costing is US $10 [ $600, 000 + $400, 000) - 100, 000 units produced]. All nonmanufacturing costs are expensed in the period incurred.
Thus. operating profit is US $900.000.




The company sold 85.000 units of product at a selling price of US $30 per unit.



In relation to the monetary unit amount of sales, which of the following cost classifications is appropriate for advertising and sales salaries costs?

  1. Option A
  2. Option B
  3. Option C
  4. Option D

Answer(s): D

Explanation:

Both advertising and sales salaries should be classified as fixed costs. The advertising was constant for 3 of the 4 months and would be considered fixed in terms of monetary unit sales. Sales salaries also did not vary with monetary unit sales. A company manufactures and sells a single product. Planned and actual production in its first year of operation was 100, 000 units. Planned and actual costs for that year were as

The company sold 85, 0u0 units of product at a selling price of US $30 per unit.



Which of the following most appropriately describes the classification and behavior of shipping costs?

  1. Option A
  2. Option B
  3. Option C
  4. Option D

Answer(s): B

Explanation:

Using the high-low method, the variable and fixed costs for shipping can be calculated. The difference in cost levels divided by the difference in unit volume equals the variable cost per unit of US $1.40 [ $1 14, 000 $93, 000) - 70, 000 - 55, 000)]. The variable cost for 70, 000 units is US $98, 000 70, 000 x $1 40). Subtracting the variable cost from total shipping cost results in the fixed cost of US $16, 000 $114, 000 - $98, 000). A company wants to determine its marketing costs for budgeting purposes. Activity measures and costs incurred for 4 months of the current year are presented in the table below_ Advertising is considered to be a discretionary cost. Salespersons are paid monthly salaries plus commissions. The sales force was increased from 20 to 21 individuals during the month of May.



A company is attempting to determine if there is a cause-and-effect relationship between scrap value and output produced. The following exhibit presents the company's scrap data for the last fiscal year:

The company's scrap value in relation to the standard monetary value of output produced appears to be

  1. A variable cost.
  2. A fixed cost.
  3. A semi-fixed cost
  4. Unrelated to the standard monetary value of output.

Answer(s): D

Explanation:

There is no systematic relationship bee en standard monetary units shipped and the percentage of scrap. A company wants to determine its marketing costs for budgeting purposes. Activity measures and costs incurred for 4 months of the current year are presented in the table below. Advertising is considered to be a discretionary cost. Salespersons are paid monthly salaries plus commissions. The sales force was increased from 20 to 21 individuals during the month of May.



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