Cost Final – Flashcards

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

5) Cost tracing is ________. A) the assignment of direct costs to the chosen cost object B) a function of cost allocation C) the process of tracking both direct and indirect costs associated with a cost object D) the process of determining the actual cost of the cost object

In making product mix and pricing decisions, managers should focus on ________. A) total costs B) unit costs C) variable costs D) manufacturing costs

10) The breakeven point revenues is calculated by dividing ________. A) fixed costs by total revenues B) fixed costs by contribution margin percentage C) total revenues by fixed costs D) contribution margin percentage by fixed costs

17) 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

12) 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 deals with product design, production, and marketing strategies, whereas financial accounting deals mainly with pricing of the products. C) 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. D) 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.

17) Management accounting information helps managers calculate a target cost for a product ________. A) by subtracting from the target price the operating income per unit of product that the company wants to earn B) by subtracting from the target price the net income per unit of product that the company wants to earn C) by subtracting profit margin per unit from the target price of product that the company wants to earn D) by adding the operating income per unit and the contribution margin per unit

16) Within the relevant range, if there is a change in the level of the cost driver, then ________. A) total fixed costs and total variable costs will change B) total fixed costs and total variable costs will remain the same C) total fixed costs will remain the same and total variable costs will change D) total fixed costs will change and total variable costs will remain the same

1) Companies should only produce and sell units as long as ________. A) there is customer demand for the product B) the competition allows it C) the revenue from an additional unit exceeds the cost of producing it D) there is a generous supply of low cost direct materials

2) To apply CVP analysis in the hotel industry, which of the following is the most important measure of output? A) number of room-nights occupied B) number of visitors C) number of dishes on the menu D) number of employees

8) ________ identifies an estimated price customers are willing to pay and then computes the cost to be achieved to earn the desired profit. A) Cost plus pricing B) Target costing C) Kaizen costing D) Peak load costing

26) Which of the following is explains the cost plus approach to pricing decisions? A) arriving at a price for the product based on the competitive pricing prevalent in the market B) arriving at a price based on the perceived value to a customer given the cost of design and added features C) arriving at a price based on the demand and supply trends in the market D) arriving at a price that earns a specific return given the cost of the product

1) Which of the following is true of target pricing? A) It is used for short term pricing decisions. B) It is one form of cost based pricing. C) Its estimates are based on customers perceived value of the product. D) It is calculated by adding a markup component to the cost base.

If CM increases by $6 per unit, then

9) Which of the following statements is true of budgets? A) Master budgets express management s operating and financial plans. B) Financial budgets are prepared before the master budget is prepared. C) Operating budgets are prepared independently of the master budget. D) Financial budgets are working documents at the core of the budgeting process.

4) Which of the following is true of master budgets? A) They include only financial aspects of a plan and exclude nonfinancial aspects. B) They aid in coordinating what needs to be done to implement a plan. C) They aid in quantifying the expectations of all stakeholders. D) They must be administered rigidly after they are committed to.

7) A master budget ________. A) is the initial plan of what the company intends to accomplish in the period and evolves from both the operating and financing decisions B) is a substitute for the management functions of planning and coordination C) improves companies market capitalization and evolves from both the investing and financing decisions D) provides an ethical framework for decision making

10) Participation of employees in the budgeting process helps ________. A) create greater commitment towards the budget B) create demanding but achievable budget C) decrease deviations from the budget D) secure communication of sensitive information

10) A master budget forces managers to examine the business as they plan, so they can ________. A) detect inaccurate historical records to avoid errors in budgets B) set expectations against which actual results can be compared C) complete the budgeting task on time D) ensure that only financial risks and opportunities are incorporated

1. An efficiency variance reflects the difference between

1. A price variance reflects the difference between

Which of the following is a reason why top managers want lower level managers to participate in the budgeting process?

When variances are immaterial, which of the following statements is true of the journal entry to write off the variable overhead variance accounts?

Which of the following is true of variance?

Compared to variable overhead costs planning, fixed overhead costs planning have an additional strategic issue of

Effective planning of variable overhead costs means that a company performs those variable overhead costs that primarily

Which of the following statements is true of variable overhead costs?

The variable overhead spending variance measures the difference between , multiplied by the actual quantity of variable overhead cost-allocation base used.

The variable efficiency variance measures the difference between the , multiplied by the budgeted variable overhead cost per unit of the cost allocation base.

Which of the following statements is true of fixed overhead cost variances?

In a flexible budget

A limitation of using past performance as a basis for judging actual results is that

A variance is

1. Management by exception is a practice whereby managers focus more closely on

1. An unfavorable variance indicates that

1. A favorable variance indicates that

1. Which of the following elements are used in calculating revenue in a flexible budget?

1. The flexible budget variance for direct cost inputs can be further subdivided into a