Advanced Cost Accounting
Mock Exam
Course Introduction
Advanced Cost Accounting delves into the sophisticated techniques and methodologies used to analyze, control, and manage business costs. The course explores topics such as activity-based costing, standard costing, variance analysis, process costing, joint and by-product costing, and the strategic use of cost information for managerial decision-making. Emphasis is placed on how advanced cost accounting concepts support budgeting, performance evaluation, and profitability analysis in various types of organizations. Through case studies and practical exercises, students develop the analytical skills required to implement effective cost management strategies and support organizational goals in competitive business environments.
Recommended Textbook
Horngrens Cost Accounting A Managerial Emphasis 16th Edition by Srikant M. Datar
Available Study Resources on Quizplus
23 Chapters
4116 Verified Questions
4116 Flashcards
Source URL: https://quizplus.com/study-set/241 Page 2
Chapter 1: The Manager and Management Accounting
Available Study Resources on Quizplus for this Chatper
195 Verified Questions
195 Flashcards
Source URL: https://quizplus.com/quiz/3753
Sample Questions
Q1) 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) enhances agency costs
Answer: A
Q2) Which of the following statements concerning an organization's strategy is true?
A) Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives.
B) Cost accountants formulate strategy in an organization since they have more inputs about costs.
C) A good strategy will always overcome poor implementation.
D) 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.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: An Introduction to Cost Terms and Purposes
Available Study Resources on Quizplus for this Chatper
223 Verified Questions
223 Flashcards
Source URL: https://quizplus.com/quiz/3754
Sample Questions
Q1) In the cost classification system used by manufacturing firms, assembly workers' wages would be included in ________.
A) irrelevant cost
B) direct manufacturing costs
C) indirect manufacturing costs
D) period cost
Answer: B
Q2) R&D costs are treated as period costs because ________.
A) these costs may increase revenues in the current period
B) these costs may increase revenues in the future period
C) these costs may decrease revenues in the current period
D) these costs are expensed when the goods are sold
Answer: B
Q3) Cost behavior refers to ________.
A) how costs react to a change in the level of activity
B) whether a cost is incurred in a manufacturing, merchandising, or service company
C) classifying costs as either perpetual or period costs
D) whether a particular expense is expensed in the same or the following period
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Cost-Volume-Profit Analysis
Available Study Resources on Quizplus for this Chatper
211 Verified Questions
211 Flashcards
Source URL: https://quizplus.com/quiz/3755
Sample Questions
Q1) Rosewood company sells wooden carvings for $300 each. The direct materials cost per unit is $160 and the direct labor is 2 hours at a rate of $26 per hour. Manufacturing overhead is applied on the basis of labor hours at a rate of $36 per hour. Rosewood makes and sells 1,000 units per period. How many units must Rosewood sell to breakeven?
A) 409 units
B) 450 units
C) 240 units
D) 818 units
Answer: D
Q2) A firm operating at breakeven point will pay an income tax of 10%.
A)True
B)False
Answer: False
Q3) There is a difference between a good decision and a good outcome and one can exist without the other.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Job Costing
Available Study Resources on Quizplus for this Chatper
203 Verified Questions
203 Flashcards
Source URL: https://quizplus.com/quiz/3756
Sample Questions
Q1) In a job-costing system, a manufacturing firm typically uses an indirect-cost rate to estimate the ________ allocated to a job.
A) direct materials
B) direct labor
C) manufacturing overhead costs
D) total costs
Q2) Overhead costs allocated each month are expected to equal actual overhead costs incurred each month.
A)True
B)False
Q3) Oil refining companies primarily use job costing to estimate costs.
A)True
B)False
Q4) In job costing, only direct costs are used to determine the cost of a job.
A)True
B)False
Q5) Indirect manufacturing costs should be allocated equally to each job.
A)True
B)False
Q6) Differentiate between a cost pool and a cost-allocation base.
Page 6
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Activity-Based Costing and Activity-Based Management
Available Study Resources on Quizplus for this Chatper
176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/3757
Sample Questions
Q1) ABC systems help managers to ________.
A) value ending inventory more accurately
B) identify new designs to reduce costs
C) evaluate direct material costs more efficiently
D) improve the inventory turnaround time
Q2) Uniformly assigning the costs of resources to cost objects when those resources are actually used in a nonuniform way is called activity based costing.
A)True
B)False
Q3) Which of the following ordering of the levels best depicts the cost hierarchy within an ABC system?
A) batch-level, output unit-level, product-sustaining level, and facility-sustaining level
B) batch-level, output unit-level, facility-sustaining levels, product-sustaining levels
C) output unit-level, batch-level, product-sustaining level, and facility-sustaining level
D) facility-sustaining level, output unit-level, batch-level, product-sustaining level
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Master Budget and Responsibility Accounting
Available Study Resources on Quizplus for this Chatper
226 Verified Questions
226 Flashcards
Source URL: https://quizplus.com/quiz/3758
Sample Questions
Q1) A company's actual performance should be compared against budgeted amounts for the same accounting period so that ________.
A) adjustments for future conditions can be included
B) to avoid any feedback from the budgets due to past miscues
C) inefficiencies of the past year can be included
D) a rolling budget can be implemented
Q2) Variances that are calculated frequently and in a timely manner can provide early warnings to management so corrective action can be taken.
A)True
B)False
Q3) Activity-based budgeting, with its focus on cost drivers and the cost of activities, provides better decision-making information than budgeting based solely on output-based cost drivers (units produced, units sold, or revenues).
A)True
B)False
Q4) Describe the benefits of preparing an operating budget to an organization.
Q5) How is budgeting for a multinational corporation different than budgeting for a corporation that is strictly domestic?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Flexible Budgets, Direct-Cost Variances, and Management Control
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/3759
Sample Questions
Q1) Which of the following could be a reason for a favorable material price variance?
A) the purchasing manager bargaining effectively with suppliers
B) the purchasing manager giving orders for small quantity to reduce storage cost
C) the purchasing manager accepting a bid from the highest-priced supplier to ensure the quality of material
D) the personnel manager hiring underskilled workers
Q2) A flexible-budget variance is $600 favorable for unit-related costs. This indicates that costs were ________.
A) $600 more than the master budget
B) $600 less than for the planned level of activity
C) $600 more than standard for the achieved level of activity
D) $600 less than standard for the achieved level of activity
Q3) The degree to which a predetermined objective or target is met is known as
A) efficiency
B) variance
C) effectiveness
D) marking
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Flexible Budgets, Overhead Cost Variances, and Management Control
Available Study Resources on Quizplus for this Chatper
176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/3760
Sample Questions
Q1) Prorated allocation of production-volume variance has the effect of approximating the allocation of fixed costs based on actual costs and actual output.
A)True
B)False
Q2) Explain why there is no efficiency variance for fixed manufacturing overhead costs.
Q3) The variable overhead efficiency variance is computed ________ and interpreted ________ the direct-cost efficiency variance.
A) the same as; the same as B) the same as; differently than C) differently than; the same as D) differently than; differently than
Q4) An unfavorable production-volume variance always infers that management made a bad planning decision regarding the plant capacity.
A)True
B)False
Q5) Define variable overhead spending variance. Briefly explain why a favorable variable overhead spending variance may not always be desirable.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Inventory Costing and Capacity Analysis
Available Study Resources on Quizplus for this Chatper
209 Verified Questions
209 Flashcards
Source URL: https://quizplus.com/quiz/3761
Sample Questions
Q1) When production quantity exceeds sales, throughput costing results in reporting lower operating income than variable costing.
A)True
B)False
Q2) In absorption costing, fixed manufacturing overhead is treated as a period cost.
A)True
B)False
Q3) Explain how using master-budget capacity utilization for setting prices can lead to a downward demand spiral.
Q4) At the end of the accounting period, Armstrong Corporation reports operating income of $30,000. Which of the following statements is true, if Armstrong's inventory levels decrease during the 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 since the cost of goods sold is the same.
D) Variable costing and absorption costing will report the same operating income since the total costs are the same.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Determining How Costs Behave
Available Study Resources on Quizplus for this Chatper
192 Verified Questions
192 Flashcards
Source URL: https://quizplus.com/quiz/3762
Sample Questions
Q1) Goodness of fit has meaning only if the relationship between the cost drivers and costs is economically plausible.
A)True
B)False
Q2) The dependent variable is a cost to be predicted and managed, whereas an independent variable or cost driver is the factor used to predict the dependent variable.
A)True
B)False
Q3) When using the high-low method, the two observations used are the high and low observations of the ________.
A) cost driver
B) fixed cost component
C) slope coefficient
D) direct cost
Q4) The learning-curve models presented in the text examine ________.
A) how quality increases over time
B) how efficiency increases as more units are produced
C) how setup costs decline as more workers are added
D) the change in variable costs when quantity discounts are available
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Decision Making and Relevant Information
Available Study Resources on Quizplus for this Chatper
218 Verified Questions
218 Flashcards
Source URL: https://quizplus.com/quiz/3763
Sample Questions
Q1) A company is considering adding a fourth product to use available capacity. A relevant factor to consider is that corporate costs can now be allocated over four products rather than only three.
A)True
B)False
Q2) Activity based costing (ABC) systems are less useful than the theory of constraints (TOC) for long-run pricing, cost control, and capacity management.
A)True
B)False
Q3) Each of the following are true of relevant information except:
A) Past costs are helpful when making predictions but not relevant when making decisions
B) Different alternatives can be compared by examining differences in expected future revenues and expected total future costs
C) significant past investment amounts are relevant to decision making
D) Not all future revenues and expenses are relevant
Q4) For decision making, differential costs assist in choosing between alternatives.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Strategy, Balanced Scorecard, and Strategic
Profitability Analysis
Available Study Resources on Quizplus for this Chatper
172 Verified Questions
172 Flashcards
Source URL: https://quizplus.com/quiz/3764
Sample Questions
Q1) Managers can reduce capacity-based fixed costs by measuring and managing
A) unused capacity
B) variable costs
C) engineered costs
D) discretionary costs
Q2) Direct material cost is an example of ________.
A) conversion costs
B) discretionary costs
C) engineered costs
D) downsized costs
Q3) The employee turnover rates is an example of the ________ measure of a balanced-scorecard.
A) internal business process perspective
B) customer perspective
C) learning and growth perspective
D) financial perspective
Q4) Engineered costs contain a higher level of uncertainty than discretionary costs.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Pricing Decisions and Cost Management
Available Study Resources on Quizplus for this Chatper
210 Verified Questions
210 Flashcards
Source URL: https://quizplus.com/quiz/3765
Sample Questions
Q1) Which of the following is an advantage of using full cost of the product as the cost base?
A) Managers are informed regarding the minimum long-run cost they need to recover to stay in business.
B) Using the full cost of the product as a basis for pricing increases the temptation to cut prices below full costs.
C) Fixed cost allocations can be arbitrary while using full cost of the product as the cost base.
D) It requires a detailed analysis of cost behavior for computations and hence promotes a better understanding of the cost behavior.
Q2) Managing environmental costs is an example of life-cycle costing and value engineering.
A)True
B)False
Q3) Value engineering entails improvements in product designs, and changes in materials specifications.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/3766
Sample Questions
Q1) Which of the following criteria has the presumption that the more-profitable divisions have a greater ability to absorb corporate administration costs?
A) the fairness or equity criterion
B) the ability to bear criterion
C) the cause-and-effect criterion
D) the benefits-received criterion
Q2) An activity-based costing system may focus on customers rather than products.
A)True B)False
Q3) The sales-mix variance will be favorable when ________.
A) the actual contribution margin is greater than the static-budget contribution margin
B) actual unit sales are more than budgeted unit sales
C) the actual sales mix shifts toward the less profitable units
D) the budgeted contribution margin for actual sales mix is greater than for the budgeted mix
Q4) A customer cost hierarchy may include customer-sustaining costs.
A)True B)False
16
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: Allocation of Support-Department Costs,
Common Costs, and Revenues
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/3767
Sample Questions
Q1) Which of the following statements is true about the step-down method?
A) it partially recognizes the services provided among support departments
B) it does not recognize the total services that support departments provide to each other
C) it is conceptually the most precise method
D) it results in allocating only the support costs used by operating departments
Q2) The Pitt Corporation has been outsourcing data processing in the belief that such outsourcing would reduce costs and increase corporate profitability. In spite of this, there has been no meaningful increase in corporate profitability.
Previously, Pitt used a single-rate method to allocate data processing costs. A per unit cost for data processing was computed and compared to the price of the outside supplier. The price of the outside supplier was lower and thus, the outside bid was accepted.
Required:
Formulate a possible reason why Pitt's profitability has not shown improvement in terms of the cost allocation method used.
Q3) Why do organizations use budgeted rates instead of actual rates to allocate the costs of support departments to each other and to user departments and divisions?
Explain.
Page 17
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Cost Allocation: Joint Products and Byproducts
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/3768
Sample Questions
Q1) What are the two methods to account for byproducts. Which is the more appropriate method to use and why?
Q2) The net realizable value (NRV) method method allocates joint costs to joint products produced during the accounting period in such a way that each individual product achieves an identical gross-margin percentage.
A)True
B)False
Q3) Which of the following statements best define split off point in joint costing?
A) It is the point at which managers decide to discontinue one or more of the products.
B) It is the point at which the managers decide to outsource some of its production processes.
C) It is the juncture in a joint production process when two or more products become separately identifiable.
D) It is the juncture at which decisions determining joint costs of various products to be produced are taken.
Q4) Explain the difference between a joint product and a byproduct. Can a byproduct ever become a joint product? Also, can a joint product ever become a byproduct?
To view all questions and flashcards with answers, click on the resource link above.
18
Chapter 17: Process Costing
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/3769
Sample Questions
Q1) In a period of rising prices, the weighted-average method will result in higher tax payments.
A)True
B)False
Q2) Which of the following steps are part of the first-in, first-out (FIFO) process-costing method?
A) assignment of costs of the current period's equivalent units to the first units completed and transferred out of the process
B) assumes as part of its first step that the most recently worked on units are completed and transferred out first
C) assumes as part of its first step that there is no beginning work-in-process
D) assignment of costs of the previous period's equivalent units in beginning work-in-process inventory to the first units completed and transferred out of the process
Q3) Underestimating the degree of completion of ending work in process leads to increase in operating income.
A)True
B)False
Q4) List and describe the five steps in process costing.
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Spoilage, Rework, and Scrap
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/3770
Sample Questions
Q1) Costs of abnormal spoilage are NOT considered to be inventoriable costs and are written off as costs of the accounting period in which the abnormal spoilage is detected.
A)True
B)False
Q2) If the rework is abnormal ________.
A) it is debited to Wages Payable Control
B) it is credited to Wages Payable Control
C) it is credited to Loss from Abnormal Rework
D) it is debited to Loss from Abnormal Rework
Q3) The unit costs of normal and abnormal spoilage are the same when the two are detected at the same inspection point.
A)True
B)False
Q4) The first step in the five-step procedure for process costing with spoilage is to compute the output in terms of equivalent units.
A)True
B)False
Q5) What is the advantage and disadvantage of early inspections?
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Balanced Scorecard: Quality and Time
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/3771
Sample Questions
Q1) Which of the following is a financial measure of quality?
A) operating income growth
B) percentage of highly satisfied customers
C) number of defective units shipped to customers as a percentage of total units shipped
D) interest costs
Q2) A time driver is any factor that causes a change in the speed of an activity when the factor changes.
A)True
B)False
Q3) COQ measures such as measures of customer satisfaction and employee satisfaction are useful indicators of long-run performance.
A)True
B)False
Q4) Warranty repair cost is an example of which of the following?
A) prevention costs
B) appraisal costs
C) internal failure costs
D) external failure costs
Q5) Manufacturing cycle times affect both revenues and costs. Explain.
Page 21
To view all questions and flashcards with answers, click on the resource link above.
Chapter 20: Inventory Management, Just-in-Time, and Simplified Costing Methods
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/3772
Sample Questions
Q1) A system that comprises a single database that collects data and feeds it into software applications supporting all of a company's business activities is known as a(n)
A) economic order quantity (EOQ) system
B) enterprise resource planning (ERP) system
C) just-in-time (JIT) system
D) material requirements planning (MRP) system
Q2) Which of the following statements best defines manufacturing cells?
A) They are manufacturing areas that use a "push-through" approach whereby finished goods are manufactured on the basis of demand forecasts.
B) They are manufacturing centers which focuses on production of a single product and in which workers focus on master one skill so as to be efficient and effective in their work
C) They are work areas with different types of equipment grouped together to make related products and to minimize handling costs
D) They are production centers positioned in various areas throughout a production facility, close to the associated talent (direct laborers) in which goods are manufactured only after receiving customer orders.
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 21: Capital Budgeting and Cost Analysis
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/3773
Sample Questions
Q1) Deducting depreciation from operating cash flows would result in counting the initial investment twice in a discounted cash flow analysis.
A)True
B)False
Q2) Which of the following is a stage of the capital budgeting process that determines which investment
Yields the greatest benefit and the least cost to an organization?
A) make decisions by choosing among alternatives stage
B) make predictions stage
C) identify projects stage
D) implement the decision, evaluate performance, and learn stage
Q3) Which of the following is the first stage to the capital budgeting process?
A) forecast all potential cash flows attributable to the alternative projects
B) determine which investment yields the greatest benefit and the least cost to the organization
C) obtain funding and make the investments selected
D) identify potential capital investments that agree with the organization's strategy
Q4) What are the relevant cash inflows and outflows for capital budgeting decisions?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 22: Management Control Systems, Transfer
Pricing, and Multinational Considerations
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/3774
Sample Questions
Q1) A transfer-pricing method leads to goal congruence when ________.
A) there is a price difference in different markets due to market inefficiencies
B) managers do no act for their own best interest and work for the long-term best interest of the manager's subunit
C) managers act in their own best interest and the decision is in the long-term best interest of the company
D) there is a low degree of centralization
Q2) The full cost plus a markup transfer-pricing method can sometimes lead to goal incongruence.
A)True
B)False
Q3) In markets that are not perfectly competitive, ________.
A) the selling division will not have any unused capacity
B) companies can increase their capacity utilization only by decreasing their prices
C) minimum transfer price will equal the incremental cost per unit incurred up to the point of transfer
D) the opportunity cost will equal the minimum contribution margin
Q4) Dual pricing is not widely used. Explain its disadvantages.
Page 24
To view all questions and flashcards with answers, click on the resource link above.
Chapter 23: Performance Measurement, Compensation, and Multinational Considerations
Available Study Resources on Quizplus for this Chatper
149 Verified Questions
149 Flashcards
Source URL: https://quizplus.com/quiz/3775
Sample Questions
Q1) Higher inflation will lead to higher prices for goods or services, which will increase a company's operating income and lead to a higher ROI.
A)True
B)False
Q2) An example of a performance measure with a long time horizon is ________.
A) direct materials efficiency variances
B) overhead spending variances
C) number of new patents developed
D) quality of room service
Q3) Zenith Corporation's net income is $80,000. What is the return on investment if the amount of the investment is $510,000?
A) 18.60%
B) 13.56%
C) 15.69%
D) 27.12%
Q4) To evaluate overall performance, return on investment and residual income measures are more appropriate than return on sales.
A)True
B)False
25
To view all questions and flashcards with answers, click on the resource link above.