Cost Accounting Exam Solutions - 2568 Verified Questions

Cost Accounting Exam Solutions

Course Introduction

Cost Accounting provides an in-depth exploration of methods and techniques used to determine, analyze, and control costs within organizations. The course covers foundational concepts such as cost behavior, cost allocation, job and process costing, standard costing, budgeting, and variance analysis. Students learn how cost accounting supports strategic decision-making by providing relevant information for budgeting, pricing, and financial planning. Emphasis is placed on the use of cost data in performance evaluation and operational efficiency, preparing students to apply cost accounting principles in real-world business scenarios.

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Managerial Accounting 13th Edition by Carl Warren

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14 Chapters

2568 Verified Questions

2568 Flashcards

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Page 2

Chapter 1: Managerial Accounting Concepts and Principles

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201 Verified Questions

201 Flashcards

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Sample Questions

Q1) Work in process inventory increased by $20,000 during the current year.Cost of goods manufactured was $180,000.Total manufacturing costs incurred are

A)$198,000

B)$160,000

C)$189,000

D)$200,000

Answer: D

Q2) Prime costs are

A)direct materials and factory overhead

B)direct materials and direct labor

C)direct labor and factory overhead

D)period costs and factory overhead

Answer: B

Q3) Direct labor and direct materials are

A)product costs and expensed when the goods are sold

B)product costs and expensed when incurred

C)period costs and expensed when incurred

D)period costs and expensed when the goods are sold

Answer: A

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Chapter 2: Job Order Costing

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Sample Questions

Q1) If factory overhead applied exceeds the actual costs, the factory overhead account will have a credit balance.

A)True

B)False

Answer: True

Q2) Reynolds Manufacturers Inc.has estimated total factory overhead costs of $95,000 and expected direct labor hours of 9,500 for the current fiscal year.If job number 117 incurred 2,300 direct labor hours, Work in Process will be debited and Factory Overhead will be credited for

A)$21,850

B)$2,300

C)$95,000

D)$23,000

Answer: D

Q3) The controlling account for the cost ledger is

A)Finished Goods

B)Materials

C)Work in Process

D)Cost of Goods Sold

Answer: C

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Chapter 3: Process Cost Systems

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Sample Questions

Q1) The cost of production report summarizes 1 the units for which the department is accountable and the units to be assigned costs and 2 the costs charged to the department and the allocation of those costs.

A)True

B)False

Answer: True

Q2) Assuming that all direct materials are placed in process at the beginning of production, what is the total cost of the departmental work in process inventory at the end of the period?

A)$90,000

B)$283,140

C)$199,500

D)$16,438

Answer: D

Q3) The Bottling Department of Mountain Springs Water Company had 4,000 liters in beginning work in process inventory 40% complete.During the period, 66,000 liters were completed.The ending work in process inventory was 3,000 liters 70% complete.Using the FIFO method, what are the equivalent units for conversion costs?

Answer: 11ea855c_6e73_a7bc_9aec_7930c8409c65_TB6237_00

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Page 5

Chapter 4: Cost Behavior and Cost-Volume-Profit Analysis

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Sample Questions

Q1) The Atlantic Company sells a product with a break-even point of 3,000 sales units.The variable cost is $60 per unit, and fixed costs are $270,000.

Determine the a unit sales price, and b break-even points in sales units if the company desires a target profit of $36,000.

Q2) If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point was

A)$5,000,000

B)$3,000,000

C)$12,000,000

D)$1,000,000

Q3) Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in units?

A)40,000 units

B)12,000 units

C)35,000 units

D)28,000 units

Q4) A low operating leverage is normal for highly automated industries.

A)True

B)False

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Chapter 5: Variable Costing for Management Analysis

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Sample Questions

Q1) At EOM Inc., the beginning inventory is 20,000 units.All of the units manufactured during the period and 16,000 units of the beginning inventory were sold.The beginning inventory fixed costs are $50 per unit, and variable costs are $300 per unit.Determine a whether variable costing income from operations is less than or greater than absorption costing income from operations, and b the difference in variable costing and absorption income from operations.

Q2) For a period during which the quantity of inventory at the end was larger than that at the beginning, income from operations reported under variable costing will be larger than income from operations reported under absorption costing.

A)True

B)False

Q3) For a period during which the quantity of product manufactured was less than the quantity sold, income from operations reported under absorption costing will be larger than income from operations reported under variable costing.

A)True

B)False

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Chapter 6: Budgeting

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Sample Questions

Q1) Budgeted production for product XXX during the month is

A)498,000 units

B)502,000 units

C)534,000 units

D)566,000 units

Q2) To meet projected annual sales, Bluegill Manufacturers, Inc.needs to produce 75,000 machines for the year.The estimated January 1 inventory is 7,000 units, and the desired December 31 inventory is 12,000 units.What are projected sales units for the year?

Q3) a plan that shows the expected cash inflows and outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans

A)budget

B)capital expenditures budget

C)sales budget

D)production budget

E)cash budget

F)budgeted balance sheet

Q4) Describe a master budget and the sequence in which the individual budgets within the master budget are prepared.

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Chapter 7: Performance Evaluation Using Variances From

Standard Costs

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Sample Questions

Q1) If the price paid per unit differs from the standard price per unit for direct materials, the variance is a

A)variable variance

B)controllable variance

C)price variance

D)volume variance

Q2) The following are inputs and outputs to the help desk: operator training number of calls per day maintenance of computer equipment number of operators number of complaints

Identify whether each is an input or an output to the help desk.

Q3) Standard costs should always be revised when they differ from actual costs.

A)True

B)False

Q4) A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

A)True B)False

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Chapter 8: Performance Evaluation for Decentralized Operations

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Sample Questions

Q1) Three measures of investment center performance are income from operations, rate of return on investment, and residual income.

A)True

B)False

Q2) The profit center income statement should include only controllable revenues and expenses.

A)True

B)False

Q3) The net income for Train Corporation is

A)$83,180

B)$35,940

C)$48,390

D)$60,840

Q4) How much service department cost will be allocated to the Micro Division?

A)$200,000

B)$145,000

C)$60,000

D)$345,000

Page 10

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Chapter 9: Differential Analysis, Product Pricing, and

Activity-Based Costing

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Sample Questions

Q1) Differential analysis only considers the short-term one-year effects of discontinuing a product.

A)True

B)False

Q2) What is the activity rate for material handling?

A)$1.50 per part

B)$3.75 per part

C)$7.50 per part

D)$2.50 per part

Q3) What is the differential revenue of producing Product D?

A)$6.75 per pound

B)$22.25 per pound

C)$18.00 per pound

D)$6.25 per pound

Q4) If the total unit cost of manufacturing Product Y is currently $36 and the total unit cost after modifying the style is estimated to be $48, the differential cost for this situation is $12.

A)True

B)False

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Chapter 10: Capital Investment Analysis

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Sample Questions

Q1) The process by which management allocates funds among various capital investment proposals

A)Capital rationing

B)Annuity

C)Capital investment analysis

D)Internal rate of return method

E)Payback period

F)Accounting rate of return

Q2) Can be determined by initial cost divided by annual net cash inflow of an investment

A)Capital investment analysis

B)Time value of money concept

C)Net present value method

D)Average rate of return

E)Cash payback period

Q3) Methods that ignore present value in capital investment analysis include the net present value method.

A)True

B)False

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Page 12

Chapter 11: Cost Allocation and Activity-Based Costing

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Sample Questions

Q1) The Roget Factory has determined that its budgeted factory overhead budget for the year is $15,500,000.They plan to produce 2,000,000 units.Budgeted direct labor hours are 1,050,000 and budgeted machine hours are 750,000.Using the single plantwide factory overhead rate based on direct labor hours, calculate the factory overhead rate for the year.

A)$14.76

B)$20.67

C)$7.75

D)$77.50

Q2) When a plantwide factory overhead rate is used, overhead costs are applied to all products by a single rate.

A)True

B)False

Q3) In a service organization, the multiple department overhead rate method is the most effective in providing information about the cost of services.

A)True

B)False

Q4) Explain why it is imperative that proper factory overhead be allocated in factories that produce multiple products.

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Chapter 12: Lean Principles, Lean Accounting, and Activity Analysis

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Sample Questions

Q1) manufacturing philosophy emphasizes quality and zero defects.

A)Traditional

B)Lean

C)Zero-Based

D)Chinese

Q2) Lean manufacturing focuses on reducing time, cost, and poor quality in processes.

A)True

B)False

Q3) Which of the following results in long lead time?

A)long setup times

B)large batch sizes

C)large inventories

D)all of the above

Q4) By spending more in costs of controlling quality, the costs of failing to control quality will decrease.

A)True

B)False

Q5) From the above schedule, calculate the external failure costs.

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Q6) From the above schedule, compute the percentage of non-value-added activities.

Chapter 13: Statement of Cash Flows

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Sample Questions

Q1) Cash flow per share is

A)required to be reported on the balance sheet

B)required to be reported on the income statement

C)required to be reported on the statement of cash flows

D)not required to be reported on any statement

Q2) Cash paid for equipment would be reported on the statement of cash flows in

A)the cash flows from operating activities section

B)the cash flows from financing activities section

C)the cash flows from investing activities section

D)a separate schedule

Q3) Lamar Corporation purchased land for $150,000.Later in the year, the company sold land with a book value of $190,000 for $200,000.Show how the effects of these transactions are reported on the statement of cash flows using the indirect method.

Q4) Cash flows from investing activities, as part of the statement of cash flows, would include any receipts from the issuance of bonds payable.

A)True

B)False

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Chapter 14: Financial Statement Analysis

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Sample Questions

Q1) Horizontal analysis is a technique for evaluating financial statement data

A)for one period of time

B)over a period of time

C)on a certain date

D)as it may appear in the future

Q2) an analysis of a company's ability to pay its current liabilities

A)discontinued operations

B)extraordinary items

C)change from one generally accepted accounting principle to another

D)horizontal analysis

E)vertical analysis

F)common-sized financial statements

G)current position analysis

H)profitability analysis

Q3) Short-term creditors are typically most interested in analyzing a company's

A)marketability

B)profitability

C)operating results

D)solvency

Q4) The following data are available for Martin

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