Cost and Management Accounting

Wich of the following descriptors refers to management accounting information?. a. it is verifiable and reliable. b. it is driven by rules. c. it is prepared for shareholders. d. it provides reasonable and timely estimates.

Linking rewards to performance: a. helps to motivate managers. b. allows companies to charge premium prices. c. should only be based on financial information. d. does all the above.

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.

4. Manufacturing overhead costs are also referred to as: a. indirect manufacturing costs. b. prime costs. c. period costs. d. conversion costs.

5. A job-cost record uses information from: a. materials requisition record to record raw material purchases from suppliers. b. a receiving report that indicates the type and quantity of each item received in an order from supplier. c. a labor-time card to record an employee´s wage rate and hours spent on a particular job. d. all of the above.

6. During an accounting period, job costs are computed on an ongoing basis by the use of: a. actual allocation rates. b. budgeted indirect-cost rates. c. overallocated indirect-cost rates. d. underallocated indirect-cost rates.

7. An example of a business wich would have no beginning or ending inventory but could use process costing to compute unit costs would be: a. a clothing manufacturer. b. a corporation whose sole business activity in processing the customer deposits of several banks. c. a manufacturer of custom houses. d. a manufacturer of large TVs.

8. The weighted-average process-costing method calculates the equivalent units by: a. considering only the work done during the current period. b. the units started during the current period minus the units in ending inventory. c. the units started during the current period plus the units in ending inventory. d. the equivalent units completed during the current period plus the equivalent units in ending inventory.

9. It only makes sense to implement an ABC system when ______. a. a single product is produced in bulk. b. its benefits exceed its implementation costs. c. it traces more costs as direct costs. d. production process is labor-intensive.

10. Wich of the following is a disadvantage of an activity-based costing system?. a. it classifies some indirect costs as direct costs. b. it assumes all costs as direct costs. c. it needs activity-cost rates to be updated regularly. d. it ignores direct costs of a product.

11. Cost-volume-profit (CVP) analysis is mainly used by managers. a. to support decision-making and planning activities. b. to monitor employee performance. c. to comply with financial reporting standards. d. to ensure precise historical cost reporting.

12. Cost-volume-profit analysis assumes. a. all costs are variable or fixed. b. units manufactured differ from the units sold. c. total variable costs remain the same over the relevant range. d. unit fixed costs remain the same over the relevant range.

13. Wich of the following is an assumption of CVP analysis?. a. total costs can be divided into a market component and a component that is incremental with respect to the level of output. b. when graphed, total costs curve upward. c. the units-selling price is unknown. d. all revenues and costs can be added and compared taking into account the time value of money.

14. What does a flexible budget allow managers to do?. a. Compare actual results with expected results at the actual level of activity. b. Eliminate all variances in overhead costs. c. Predict long-term investment returns. d. Moderate standard costing systems.

15. Wich situation would most likely lead to an unfavorable variable overhead spending variance?. a. paying more than expected for indirect materials. b. producing more units than planned. c. reducing fixed overhead costs. d. increasing selling prices.

16. Wich method of cost estimation classifies account costs as fixed,mixed, or variable using qualitative judgments. a. the account analysis method. b. the industrial engineering method. c. the conference method. d. all of the above.

17. A computer system installed last year is an example of. a. a sunk cost. b. a relevant cost. c. a differential cost. d. an avoidable cost.

18. In evaluating different alternatives, it is useful to concentrate on. a. variable costs. b. fixed costs. c. total costs. d. relevant costs.

19. Historical costs are helpful. a. for making future predictions. b. for decision making. c. because they are quantitative. d. the are never useful.

20. Cost-based transfer prices are helpful. a. when a market exists for the product. b. when a price is easy to obtain. c. when the product is unique. d. for all of the above.