Cost Accounting Exam 1 & 2 – Flashcards

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

Financial accounting provides the primary source of information for ________. A) decision making in the finishing department B) improving customer service C) preparing the income statement for shareholders D) planning next year's operating budget

Place the four business functions in the order they appear along the value chain: Customer service Design Marketing Production A) Customer Service, Design, Production, Marketing B) Customer Service, Marketing, Production, Design C) Design, Production, Marketing, Customer Service D) Design, Customer Service, Production, Marketing

Which of the following statements about a company's supply chain is true? A) A company's supply chain is always internal to a firm. B) A company's supply chain is always external to a firm. C) A company's supply chain is the same thing as a company's value chain. D) Management accountants provide information to enhance a company's supply chain.

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

Period costs ________. A) are directly traceable to products B) are treated as expenses in the following period they are incurred C) are treated as expenses in the period they are incurred D) are also referred to as manufacturing overhead costs

When 15,000 units are produced, fixed costs are $30 per unit. Therefore, when 12,000 units are produced, fixed costs will ________. A) increase to $37.5 per unit B) remain at $30 per unit C) decrease to $24 per unit D) total $360,000

Costs that are initially recorded as assets and expensed when goods sold are called ________. A) period costs B) inventoriable costs C) irrelevant costs D) research and development costs

Cost-volume-profit analysis examines A) the difference between the selling price and variable cost per unit. B) how much a company can charge for its products over and above the cost of acquiring or producing them. C) the "what-if" technique that managers use to examine how an outcome will change if the original predicted data are not achieved or if an underlying assumption changes. D) the behavior of total revenues, total costs, and operating income as changes occur in the output level, selling price, variable cost per unit, or fixed costs of a product.

The cost allocation base ________. A) is a grouping of individual indirect cost items B) are costs related to a particular cost object that cannot be traced to that cost object in an economically feasible way C) is anything for which a measurement of costs is desired D) is a systematic way to link an indirect cost or group of indirect costs to cost objects

The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is ________. A) cost accumulation B) cost assignment C) cost tracing D) conversion costing

Job costing is ________. A) used by businesses to price identical products B) used by businesses to price unique products for different jobs C) used to calculate equivalent units D) used to calculate the percentage of work completed

Top management compensation cost is an example of ________ in the cost hierarchy. A) unit-level costs B) batch-level costs C) product-sustaining costs D) facility-sustaining costs

Uniformly assigning the costs of resources to cost objects when those resources are actually used in a nonuniform way is called ________. A) activity-based costing B) uniform costing C) peanut-butter costing D) department costing

Which of the following is true of refinement of a costing system? A) While refining a costing system, companies should identify as many indirect costs as is economically feasible. B) A homogeneous cost pool will use multiple cost drivers to allocate costs. C) It reduces the use of broad averages for assigning the cost of resources to cost objects. D) It is likely to yield the most decision-making benefits when direct costs are a high percentage of total costs.

Which of the following is a reason that has accelerated the demand for refinements to the costing system? A) The declining demand for customized products has led managers to decrease the variety of products and services their companies offer. B) The use of product and process technology has led to an increase in indirect costs and a decrease in direct costs. C) The increased of automated processes has led to the increase in direct manufacturing cost leading to a decrease in breakeven point. D) The increasing competition in product markets has led to an increase in contribution margin resulting in a decrease of breakeven point.

Which of the following statements is true of activity-based costing? A) Activity-based costing ignores the allocation of marketing and distribution costs. B) Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. C) Activity-based costing classifies some of the indirect costs as direct costs. D) Chances of product-cost cross-subsidization are higher in activity-based costing compared to traditional costing systems.

The degree to which a predetermined objective or target is met is known as ________. A) efficiency B) variance C) effectiveness D) benchmarking

Compared to variable overhead costs planning, fixed overhead costs planning have an additional strategic issue of ________. A) eliminating activities that do not add value B) increasing the linearity between total costs and volume of production C) choosing the appropriate level of investment D) identifying essential value-adding activities

An unfavorable sales-volume variance could result from ________. A) an inappropriate assignment of labor or machines to specific jobs B) weaker than anticipated demand C) an inefficiency of a purchasing manager in bargaining with suppliers D) a decrease in actual selling price compared to anticipated selling price

Which of the following is a component of sales-volume variance? A) Net-income volume variance B) Budgeted revenue variance C) Taxable-income volume variance D) Operating-income volume variance

In general, if inventory decreases during an accounting period, ________. A) variable costing will report less operating income than absorption costing B) absorption costing will report less operating income than variable costing C) variable costing and absorption costing will report the same operating income D) both variable costing and absorption costing will show losses

Which of the following is true in a decision to keep or replace existing equipment? A) The book value of the old equipment is relevant. B) The disposal value of the old equipment is relevant. C) Property taxes is relevant. D) Depreciation on the new equipment is relevant.

Which of the following costs always differ among future alternatives? A) fixed costs B) historical costs C) relevant costs D) variable costs