Cost Accounting Exam Bank
Course Introduction
Cost Accounting is a specialized branch of accounting that focuses on the process of recording, classifying, analyzing, and allocating costs associated with producing goods or providing services. This course covers essential concepts such as cost behavior, cost allocation methods, standard costing, activity-based costing, and budgeting. Students will learn how to prepare cost reports, analyze cost variances, and use cost information for planning, control, and decision-making purposes within an organization. Emphasis is placed on real-world applications of cost accounting to support efficient resource management and improve organizational profitability.
Recommended Textbook
Introduction to Management Accounting 15th Edition by Charles T. Horngren
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17 Chapters
2396 Verified Questions
2396 Flashcards
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Page 2
Chapter 1: Managerial Accounting, the Business Organization
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) What is the set of business functions called that are necessary to create the goods or services that an organization sells?
Answer: Value chain
Q2) Which of the following is a major factor causing changes in management accounting today?
A)decreased global competition
B)advances in technology
C)shift to manufacturing-based economy
D)expansion of the value chain
Answer: B
Q3) A telephone hotline is established for customers to call with questions about a new electronic device.This is an example of the ________ function in the ________.
A)marketing; value chain
B)distribution; value chain
C)customer service; value chain
D)marketing; product life cycle
Answer: C
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Page 3
Chapter 2: Introduction to Cost Behavior and Cost-Volume Relationships
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152 Flashcards
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Sample Questions
Q1) The CVP graph uses the assumption that expenses are linear over the relevant range. A)True
B)False
Answer: True
Q2) Highly leveraged companies have low fixed costs and high variable costs.
A)True
B)False
Answer: False
Q3) If the variable cost per unit increases,what is the effect on the break-even point?
(Assume no other changes.)
A)The break-even point increases.
B)The break-even point decreases.
C)The break-even point remains the same.
D)The break-even point is zero.
Answer: A
Q4) Selling expenses are found in the cost of goods sold. A)True
B)False
Answer: False
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Chapter 3: Measurement of Cost Behavior
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Sample Questions
Q1) In a linear cost function,the constant or intercept measures variable cost per unit of the cost driver.
A)True
B)False
Answer: False
Q2) Managers cannot eliminate discretionary fixed costs.
A)True
B)False
Answer: False
Q3) The cost of a final product may have several cost drivers.
A)True
B)False
Answer: True
Q4) The high-low method uses estimated cost data to approximate the cost function.
A)True
B)False
Answer: False
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Chapter 4: Cost Management Systems and Activity-Based
Costing
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) Costs can be classified as direct or indirect with respect to a particular cost object.
A)True
B)False
Q2) Storing inventories and transporting incomplete products in a plant are examples of value-added activities.
A)True
B)False
Q3) Most cost allocation bases are not cost drivers.
A)True
B)False
Q4) Which of the following statements is FALSE?
A)Traditional cost systems generally assign only production costs to products.
B)Only one cost driver is acceptable when indirect manufacturing costs are a large proportion of total costs.
C)Traditional cost systems work well with simple production and operating systems.
D)Cost drivers can be expressed in dollar amounts.
Q5) List and explain five reasons why more firms are adopting activity-based costing systems.
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Chapter 5: Relevant Information for Decision Making With a Focus
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128 Verified Questions
128 Flashcards
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Sample Questions
Q1) Which item is usually NOT important to special order decisions?
A)affect of special order on regular business
B)whether idle capacity is available
C)antitrust issues concerning price discrimination
D)all are important
Q2) In imperfect competition,a firm must increase the sales price to generate additional sales.
A)True
B)False
Q3) In the decision process,________ is the process of putting a decision into action.
A)Prediction
B)Feedback
C)Implementation
D)Evaluation by performance
Q4) In perfect competition,additional sales will be profitable if ________.
A)the marginal cost is less than marginal revenue
B)sales price exceeds the variable product cost
C)total variable cost is less than sales price
D)the fixed cost equals the contribution margin
Chapter 6: Relevant Information for Decision Making With a Focus
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) The gain or loss on the disposal of equipment is determined by ________.
A)adding the book value of the old equipment to the cost of the new equipment
B)adding the disposal value of the old equipment to the book value of the old equipment
C)subtracting the book value of the old equipment from the cash received from the old equipment
D)subtracting the book value of the old equipment from the cost of the new equipment
Q2) Triple Corporation has a joint process that produces two products: A and B.Each product may be sold at the split-off point or processed further and then sold.Joint-processing costs for a year are $25,000. Product A can be sold at the split-off point for $32,000.Alternatively,Product A can be processed further and sold for $40,000.Additional processing costs are $5,000. When deciding whether to sell Product A at the split-off point or to process further,the ________ is NOT relevant.
A)joint processing cost of $25,000
B)sales value at split-off of $32,000
C)sales value at completion of $40,000
D)additional processing cost of $5,000
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Chapter 7: Introduction to Budgets and Preparing the Master Budget
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Sample Questions
Q1) A budget is an example of an informal business plan.
A)True
B)False
Q2) Financial planning models ________.
A)focus on the budgeted balance sheet
B)focus on the budgeted income statement
C)allow managers to assess the predicted impacts of various alternatives before final decisions are selected
D)allow managers to assess the predicted impacts of the master budget
Q3) Haggle Company has a sales budget for next month of $400,000.Cost of goods sold is expected to be 35% of sales.All units are paid for in the month following purchase.The beginning inventory is $10,000 and an ending inventory of $12,000 is desired.Beginning accounts payable is $76,000.The cost of goods sold for next month is ________.
A)$140,000
B)$162,000
C)$172,000
D)$220,000
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Page 9
Chapter 8: Flexible Budgets and Variance Analysis
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Sample Questions
Q1) The sales activity variance for ________ will always be zero.
A)sales
B)contribution margin
C)variable costs
D)fixed costs
Q2) Black Company planned to produce and sell 900 units at a total cost of $180,000.Actual production and sales were 900 units at a cost of $170,000.Black Company was ________.
A)efficient and ineffective
B)inefficient and ineffective
C)inefficient and effective
D)efficient and effective
Q3) In a manufacturing area of a firm,poor product design and problems with the quality of materials will,more than likely,result in a(n)________ variance or ________ variance.
A)unfavorable material efficiency; unfavorable labor usage
B)favorable material efficiency; unfavorable labor price
C)unfavorable material price; unfavorable labor rate
D)unfavorable material price; unfavorable labor usage
Q4) What are two possible interpretations of "currently attainable standards"?
Page 10
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Chapter 9: Management Control Systems and Responsibility Accounting
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Sample Questions
Q1) The entire firm may be a responsibility center for the firm's president.
A)True
B)False
Q2) The ________ report is a report that displays the financial impact of quality.
A)Performance
B)Cost of quality
C)Cycle time
D)Production control
Q3) ________ performance measures are often ________ indicators that arrive too late to prevent problems in organizations.
A)Nonfinancial; leading
B)Nonfinancial; lagging
C)Financial; leading
D)Financial; lagging
Q4) A profit center can exist in a nonprofit organization.
A)True
B)False
Q5) The vast majority of employees are motivated by the same thing. A)True
B)False
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Chapter 10: Management Control in Decentralized Organizations
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Sample Questions
Q1) The most popular systems for transfer pricing in practice are ________.
A)market-based transfer prices
B)cost-based transfer prices based on variable costs
C)cost-based transfer prices based on full costs
D)all of the above
Q2) Employees have a higher incentive to work when the bonus portion of an employment contract is larger than the guaranteed portion of the contract.
A)True
B)False
Q3) Cost of capital is the company's cost of inventory multiplied by the amount of investment.
A)True
B)False
Q4) Higher-level managers have the best information concerning local conditions.
A)True
B)False
Q5) Return on investment equals return on sales divided by capital turnover.
A)True
B)False
Q6) Define decentralization and identify its expected benefits. Page 12
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Chapter 11: Capital Budgeting
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Sample Questions
Q1) Discounted-cash-flow models are not based on the theory of compound interest.
A)True
B)False
Q2) The phases of capital budgeting do NOT include ________.
A)a post-audit of the investment
B)the selection of the investment to undertake
C)the identification of potential investments
D)awarding bonuses to managers for good investment decisions
Q3) In net present value analysis,the minimum desired rate of return for an investment project depends on the ________ of a proposed project.
A)expected return
B)desired return
C)risk
D)payback period
Q4) The marginal tax rate for a company is the ________.
A)average tax rate for the company
B)highest possible tax rate that may be imposed on the company by IRS
C)lowest tax rate that may be imposed on the company by IRS
D)tax rate paid on additional amounts of pretax income
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Chapter 12: Cost Allocation
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Sample Questions
Q1) When using the "ability to bear" philosophy in allocating central service costs,actual sales are preferred over budgeted sales.
A)True
B)False
Q2) The preferred cost allocation base for central corporate support costs is ________.
A)sales
B)cost of goods sold
C)total assets
D)usage
Q3) Ranger Company produces three products from a joint process.Products Simple and Complex are considered main products.Product Deluxe is a by-product.Joint-processing costs should be allocated to ________.
A)Simple and Complex
B)Simple and Deluxe
C)Complex and Deluxe
D)Simple,Complex and Deluxe
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Page 15
Chapter 13: Accounting for Overhead Costs
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Sample Questions
Q1) Differences between variable-costing and absorption-costing operating income can be explained by the change in units in beginning and ending inventory of finished goods.
A)True
B)False
Q2) The production volume variance appears when ________.
A)the actual production volume equals the expected production volume used in computing the fixed overhead rate
B)the actual production volume deviates from the expected production volume used in computing the fixed overhead rate
C)the actual production volume deviates from the expected production volume used in computing the variable overhead rate
D)the actual production volume equals the expected production volume used in computing the variable overhead rate
Q3) Under absorption-costing,fixed factory overhead costs appear only in cost of goods sold.
A)True B)False
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Chapter 14: Job-Order Costing and Process-Costing Systems
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Sample Questions
Q1) The first step in process costing is to calculate the cost of goods transferred during the accounting period.
A)True
B)False
Q2) In job-order costing,all the costs for a particular product or batch of products are recorded on the ________.
A)materials requisition form
B)labor time ticket
C)time card
D)job-cost record
Q3) Which of the following statements about backflush costing is FALSE?
A)Backflush costing only has one category of costs that is conversion costs.
B)Backflush costing does not have a Work-in-Process Inventory account.
C)Some backflush costing systems eliminate the Finished Goods Inventory account and transfer costs directly to Cost of Goods Sold.
D)Backflush costing applies costs to products only when the production process is complete.
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Page 17
Chapter 15: Basic Accounting: Concepts, techniques, and Conventions
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Sample Questions
Q1) One of the limitations of the balance sheet is that the dollar amounts for different assets reflect different levels of inflation.That is the result of the ________ assumption.
A)recognition
B)matching
C)stable monetary unit
D)conservatism
Q2) Each item in a financial statement is an account.
A)True
B)False
Q3) San Gabriel Company owns a fixed asset with an original cost of $100,000.The company estimates it will use the fixed asset for four years,at which time it will be sold for $10,000.The book value of the fixed asset after three years of use is ________.
A)$32,500
B)$45,000
C)$50,000
D)$100,000
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Chapter 16: Understanding Corporate Annual Reports:
Basic Financial Statements
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Sample Questions
Q1) The cash received from the sale of common stock is included in the ________ section of the statement of cash flows.
A)operating
B)financing
C)investing
D)noncash
Q2) The statement of cash flows classifies changes in cash as operating,investing and financing activities.
A)True
B)False
Q3) In periods of inflation,the ________ method of inventory valuation provides a more realistic net income.
A)LIFO
B)FIFO
C)average cost
D)weighted-average cost
Q4) The inventory method a company uses does not affect its income statement.
A)True
B)False
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Chapter 17: Understanding and Analyzing Consolidated Financial Statements
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Sample Questions
Q1) Rocky Company acquired 40% of the voting stock of Boulder Company for $40 million.At the end of Year 1,Boulder Company reports net income of $15 million and pays cash dividends of $5 million.At the end of Year 1,the market value of Rocky Company's investment in Boulder Company is $44 million.What accounts on Rocky Company's books would be affected by the net income of Boulder Company?
A)none
B)Investments increase $15 million and Stockholders' equity increases $15 million
C)Cash increases $15 million and Stockholders' equity increases $15 million
D)Investments increase $6 million and Stockholders' equity increases $6 million
Q2) When a company owns less than 20 percent of the common stock of another company,the market value method of accounting for investments in equity securities is used.
A)True
B)False
Q3) An efficient capital market is one in which an order to trade can be placed and executed in short period of time.
A)True
B)False
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