Activity Based Costing Practice Exam

About Activity Based Costing
Activity-based costing (ABC) is mostly used in the manufacturing industry since it enhances the reliability of cost data, hence producing nearly true costs and better classifying the costs incurred by the company during its production process.

This costing system is used in target costing, product costing, product line profitability analysis, customer profitability analysis, and service pricing. Activity-based costing is used to get a better grasp on costs, allowing companies to form a more appropriate pricing strategy.  

Why is Activity Based Costing important?
Activity-based costing (ABC) is mostly used in the manufacturing industry since it enhances the reliability of cost data, hence producing nearly true costs and better classifying the costs incurred by the company during its production process.

Advantages of Activity-Based Costing
•    Provides realistic costs of manufacturing for specific products
•    Allocates manufacturing overhead more accurately to products and processes that use the activity
•    Identifies inefficient processes and target for improvements
•    Determines product profit margins more precisely
•    Discovers which processes have unnecessary and wasted costs
•    Offers better understanding and justification of costs in manufacturing overhead

Who should take the Activity Based Costing Exam?
•    Finance or Costing or Accounting professionals
•    Business owners
•    Entrepreneurs
•    Innovators
•    Anyone who wants to assess their Costing skills
•    Finance or Costing or Accounting managers and senior executives
•    Finance or Costing or Accounting consultants
•    Anyone interested in Activity Based Costing
•    Anyone who wants to learn Activity Based Costing
•    Students

Knowledge and Skills required for the Activity Based Costing

Candidates gain quick success if they have skills of critical thinking and communication skills.

Activity Based Costing Practice Exam Objectives

Activity Based Costing exam validates your skills and knowledge in costing basics, direct expenses and overheads.

Activity Based Costing Practice Exam Pre-requisite

There are no prerequisites for the Activity Based Costing exam. Candidates who are well versed  in costing can easily clear the exam.

Activity Based Costing Certification Course Outline

1. Introduction to Cost and Management Accounting
1.1 Concepts of Cost
1.2 Costing, Cost Accounting and Cost Accountancy
1.3 Objectives of Cost Accounting
1.4 Importance of Cost Accounting
1.5 Scope of Cost Accounting
1.6 Classification of Costs
1.7 Cost Centre and Cost Unit
1.8 Methods of Costing
1.9 Techniques of Costing
1.10 Installation of a Costing System
1.11 Difference between Financial Accounting and Cost Accounting
1.12 Difference between Financial Accounting and Management Accounting

2. Material Cost
2.1 Inventory Control (Material Control)
2.2 Objectives of Inventory Control
2.3 Techniques of Inventory Control
2.4 Store-Keeping
2.5 Functions of Store-Keeping
2.6 Method of Pricing of Material Issues
2.7 Accounting of Material Losses
2.8 Control of Material Losses
2.9 Inventory Management

3. Labour Cost
3.1 Introduction to Labour Cost
3.2 Classification of Labour Cost
3.3 Accounting and Control of Labour Cost
3.4 Time Recording
3.5 Time-Keeping
3.6 Time Keeping
3.7 Overtime
3.8 Idle Time
3.9 Labour Turnover
3.10 Labour Remuneration System
3.11 Basic Methods of Remuneration System
3.12 Incentive schemes

4. Direct Expenses and Overheads
4.1 Direct expenses
4.2 Indirect expenses
4.3 Overheads
4.4 Collection of Overheads
4.5 Classification of Overheads
4.6 Allocation and apportionment of overheads (depart-metallization of overheads)
4.7 Allocation of Overheads
4.8 Apportionment of Overheads
4.9 Absorption of overheads
4.10 Methods of Absorbing Production Overheads
4.11 Over or Under Absorption Of Overheads
4.12 Treatment of Factory Overheads
4.13 Treatment of Administrative Overheads
4.14 Treatment of Selling And Distribution Overheads
4.15 Control of Overheads
4.16 Preparation of Cost Sheet

5. Activity Based Costing
5.1 Introduction
5.2 Meaning of Activity Based Costing
5.3 Basics of Activity Based Costing
5.4 Distinction Between Traditional Absorption Costing and Activity Based Costing
5.5 Objectives of Activity Based Costing
5.6 Terminology of Activity Based Costing
5.7 Stages in Developing Activity Based Costing System
5.8 Different Types of Activities


Exam Format and Information
Certification name – Activity Based Costing Certification
Exam duration – 60 minutes
Exam type - Multiple Choice Questions
Eligibility / pre-requisite - None
Exam language - English
Exam format - Online
Passing score - 25
Exam Fees  - INR 1199