Cost Accounting – Practice Exam 1 (Conceptual Questions) – Flashcards

Comparing budgeted costs to actual costs helps managers to improve ________. A) coordination B) control C) implementation D) planning

Which of the following is true of management accounting information? A) It focuses on documenting past business actions of a firm. B) It is prepared based on SEC rules and FASB accounting principles. C) It is prepared for shareholders. D) It co-ordinates product design, production, and marketing decisions.

________ describes the flow of goods, services, and information from the purchase of materials to the delivery of products to consumers, regardless of whether those activities occur in the same organization or with other organizations. A) Supply chain B) Production process C) Quality control D) Customer relationship management

A budget serves as much as a control tool as a planning tool because ________. A) it aids in the coordination and communication among various business functions B) it helps to evaluate customer needs and feedback C) it is a benchmark against which actual performance can be compared D) it helps.to make predictions about the future

Which of the following factors affect the direct/indirect classification of a cost? A) the level of budgeted profit for the next year B) the estimation of time required to complete the order C) the ability to execute an order in the most cost-efficient manner D) the design of the operation

Outside the relevant range, variable costs, such as direct material costs ________. A) will decrease proportionately with changes in sales volumes B) will remain the same with changes in production volumes C) will not change proportionately with changes in production volumes D) will increase proportionately with changes in sales volumes

When 20,000 units are produced, fixed costs are $16 per unit. Therefore, when 16,000 units are produced, fixed costs will ________. A) increase to $20 per unit B) remain at $16 per unit C) decrease to $10 per unit D) total $160,000

A plant manufactures several different products. The wages of the plant supervisor can be classified as a(n) ________. A) direct cost B) inventoriable cost C) variable cost D) period cost

Which of the following is true of CVP analysis? A) Costs may be separated into separate inventoriable and period components with respect to the level of output. B) Total revenues and total costs are linear in relation to output units. C) Unit selling price, unit variable costs, and unit fixed costs are known and remain constant. D) Proportion of diffe

A ________ is anything for which a measurement of costs is desired. A) cost-allocation base B) cost pool C) cost object D) cost-application base

A ________ links an indirect cost to a cost object. A) cost-allocation base B) cost pool C) cost assignment D) cost tracing

Which of the following differentiates job costing from process costing? A) Job costing is used when each unit of output is identical, and process costing deals with unique products. B) Job costing is used when each unit of output is identical and not produced in batches, and process costing deals with unique products produced on large scale. C) Process costing is used when each unit of output is identical, and job costing deals with unique products not produced in batches. D) Job costing is used by manufacturing industries, and process costing is used by service industries.

The budgeted indirect-cost rate for each cost pool is computed as ________. A) budgeted annual indirect costs divided by budgeted annual quantity of cost allocation base B) budgeted annual quantity of cost allocation base divided by budgeted annual indirect costs C) actual annual indirect costs divided by budgeted annual quantity of cost allocation base D) budgeted annual indirect costs divided by budgeted actual quantity of cost allocation base

Product-cost cross-subsidization ________. A) exists when one overcosted product results in more than one other product being overcosted B) means that if a company undercosts more than one of its products, it will overcost more than one of its other products C) means that if a company undercosts one of its products, it will overcost at least one of its other products D) exists only when one overcosted product results in all other products being overcosted

Refining a cost system includes ________. A) classifying as many costs as indirect costs as is feasible B) creating as many cost pools as possible C) identifying the activities involved in a process D) seeking a lesser level of detail

Demand for refinements to the costing system has accelerated due to ________. A) increase in direct costs B) decrease in product diversity C) decrease in indirect costs D) competition in product markets

Which of the following statements is true of activity-based costing? A) In activity-based costing, direct labor-hours is always the best allocation base to allocate all non-manufacturing indirect costs. B) Activity based costing is more suited to companies with high product diversity than companies with single product line. C) Activity based costing broadly averages or spreads the cost of resources uniformly to cost objects such as products or services. D) The main advantage of activity-based costing over peanut-butter costing is the accurate distribution of all direct costs to the products.

Place the five steps in the decision − making process in the correct order: A = Obtain information B = Make decisions by choosing among alternatives C = Identify the problem and uncertainties D = Implement the decision, evaluate performance, and learn E = Make predictions about the future A. C A E B D B. A E B D C C. E D A B C D. C D B E A

Which of the following is not a concern for management accountants in formulating a strategy? A. identifying the most important warehouse location for the distribution of goods B. maintaining adequate fixed assets available to implement the strategy C. strategizing compliance with GAAP (Generally Accepted Accounting Principles) D. substituting products that exist in the marketplace

Which of the following statements concerning an organization's strategy is true? A. Cost accountants formulate strategy in an organization since they have more inputs about costs. B. Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives. C. Businesses usually follow one of two broad strategies: offering a quality product at a high price, or offering a unique product or service priced lower than the competition. D. A good strategy will always overcome poor implementation

________ describes the flow of goods, services, and information from the purchase of materials to the delivery of products to consumers, regardless of whether those activities occur in the same organization or with other organizations. A. Customer relationship management B. Production process C. Supply chain D. Quality control

A budget serves as much as a control tool as a planning tool because ________. A. it helps.to make predictions about the future B. it is a benchmark against which actual performance can be compared C. it aids in the coordination and communication among various business functions D. it helps to evaluate customer needs and feedback

Which of the following differentiates cost accounting and financial accounting? A. The primary users of cost accounting are the investors, whereas the primary users of financial accounting are the managers. B. Cost accounting measures information related to the costs of acquiring or using resources in an organization, whereas financial accounting measures a financial position of a company to investors, banks, and external parties. C. Cost accounting deals with product design, production, and marketing strategies, whereas financial accounting deals mainly with pricing of the products. D. Cost accounting measures only the financial information related to the costs of acquiring fixed assets in an organization, whereas financial accounting measures financial and nonfinancial information of a company's business transactions

Which of the following groups would be least likely to receive detailed management accounting reports? A. stockholders B. sales managers C. distribution managers D. production supervisors

The value chain is the sequence of business functions in which ________. A. value is deducted from the products or services of an organization B. producing and delivering the product or service is of prime importance C. usefulness is added to the products or services of an organization D. products and services are evaluated with respect to their value to the supply chain