Cost Accounting
Final Test Solutions
Course Introduction
Cost Accounting is a course designed to introduce students to the principles and methods used to determine, analyze, and control the costs associated with producing goods and services. The course covers a range of topics such as cost behavior, cost allocation, standard costing, activity-based costing, budgeting, and variance analysis.
Emphasis is placed on how cost accounting information aids managers in decision-making, planning, and performance evaluation. Through practical examples and problem-solving exercises, students gain a comprehensive understanding of how cost data supports operational efficiency and strategic management within organizations.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 11th Edition by Tracie L. Miller Nobles
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9 Chapters
1673 Verified Questions
1673 Flashcards
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Chapter 18: Introduction to Managerial Accounting
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210 Verified Questions
210 Flashcards
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Sample Questions
Q1) Define indirect materials and give two examples of indirect materials for a manufacturing company.
Answer: Indirect materials are used in making a product but either cannot be conveniently traced to specific,finished products or are not large enough to justify tracing to the specific product.Examples include glue used in making tables and manufacturing supplies.
Q2) Managerial accounting is used in manufacturing and merchandising companies,but not in service companies.
A)True
B)False
Answer: False
Q3) Define product cost.How does a merchandising company treat these costs?
Answer: Product cost is the cost of purchasing or making a product.The cost is recorded as an asset and then expensed when the product is sold.
Q4) Repair and maintenance costs for manufacturing equipment are product costs. A)True
B)False
Answer: True
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3
Chapter 19: Job Order Costing
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170 Verified Questions
170 Flashcards
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Sample Questions
Q1) Q-dot Manufacturing uses a predetermined overhead allocation rate based on direct labor hours.It has provided the following information for the year: \[\begin{array}
{ | l | r | }
\hline \text { Manufacturing overhead costs allocated to production } & \$ 185,000 \\
\hline \text { Actual direct materials cost } & \$ 540,000 \\
\hline \text { Actual direct labor cost } & \$ 2,470,000 \\
\hline \text { Actual direct labor hours } & 9,020 \text { direct labor hours } \\
\hline \text { Estimated machine hours } & 180,000 \text { machine hours } \\ \hline \end{array}\]
Based on the above information,calculate Q-dot's predetermined overhead allocation rate.(Round your answer to two decimal places.)
A) $1.03 per machine hour
B) 7.49% of direct labor cost
C) 34.26% of direct materials cost
D) $20.51 per direct labor hour
Answer: D
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Chapter 20: Process Costing
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167 Verified Questions
167 Flashcards
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Sample Questions
Q1) Direct labor costs are accumulated in the Manufacturing Overhead account.
A)True
B)False Answer: False
Q2) Cost amounts that are transferred out of one department become the transferred in cost for the next department.
A)True
B)False Answer: True
Q3) Conversion costs include the costs of purchasing and converting raw materials into finished products.
A)True
B)False Answer: False
Q4) A production cost report helps managers identify the costs that can be reduced in the production process.
A)True
B)False Answer: True
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Chapter 21: Cost-Volume-Profit Analysis
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238 Verified Questions
238 Flashcards
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Sample Questions
Q1) A company's proportion of fixed costs to variable costs is called its ________.
A) target profit
B) relevant range
C) mixed cost
D) cost structure
Q2) The margin of safety can be used to evaluate a company's plans for the future.
A)True
B)False
Q3) Keys Spas,Inc.reports the following information for August: \[\begin{array} { | l | r | }
\hline \text { Sales Revenue } & \$ 740,000 \\
\hline \text { Variable Costs } & 230,000 \\
\hline \text { Fixed Costs } & 100,000 \\
\hline
\end{array}\] Calculate the contribution margin for August.
A) $130,000
B) $510,000
C) $410,000
D) $640,000
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6
Chapter 22: Master Budgets
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) Purchases equals cost of goods sold plus beginning merchandise inventory minus ending merchandise inventory.
A)True
B)False
Q2) Which of the following statements is true of the capital expenditures budget?
A) It is a part of the financial budget.
B) It must be completed after the budgeted income statement is prepared.
C) It includes the sales budget.
D) It must be completed before the cash budget is prepared.
Q3) Farmerlands,Inc.has budgeted sales for the months of September and October at $304,000 and $272,000,respectively.Monthly sales are 80% credit and 20% cash.Of the credit sales,50% are collected in the month of sale,and 50% are collected in the following month.Calculate cash collections for the month of October.
A) $163,200
B) $291,200
C) $284,800
D) $182,400
Q4) Why is the forecast of sales revenue considered to be the cornerstone of the master budget?
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Chapter 23: Flexible Budgets and Standard Cost Systems
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204 Verified Questions
204 Flashcards
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Sample Questions
Q1) List the direct materials variances,and briefly describe each.
Q2) Because it is a cost variance,the fixed overhead volume variance explains why fixed overhead is underallocated or overallocated.
A)True
B)False
Q3) Zenith Fashions uses standard costs for their manufacturing division.From the following data,calculate the fixed overhead cost variance. \[\begin{array} { | l | r | }
\hline \text { Actual fixed overhead } & \$ 36,000 \\
\hline \text { Budgeted fixed overhead } & \$ 21,000 \\
\hline \text { Standard overhead allocation rate } & \$ 8 \\
\hline \text { Standard direct labor hours per unit } & 4 \text { DLHr } \\
\hline \text { Actual output } & 2,400 \text { units } \\
\hline \end{array}\]
A) $55,800 F
B) $55,800 U
C) $15,000 F
D) $15,000 U
Q4) List the direct labor variances and briefly describe each.
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Chapter 24: Cost Allocation and Responsibility Accounting
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189 Verified Questions
189 Flashcards
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Sample Questions
Q1) Investment center managers are responsible for generating profits and making use of the investment center's assets.
A)True
B)False
Q2) Fill in the blanks:
Direct materials cost and direct labor cost can be ________ ________ to products.Manufacturing overhead costs are ________ in cost pools and then ________ to products.
Q3) One part of the balanced scorecard helps management answer the question,"How do we look to investors and creditors?" Which of the four perspectives is being described with this statement?
A) financial
B) customer
C) internal business
D) learning and growth
Q4) The transfer price is the transaction amount of one unit of goods when the transaction occurs between the company and its external customers.
A)True
B)False
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Chapter 25: Short-Term Business Decisions
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181 Verified Questions
181 Flashcards
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Sample Questions
Q1) CM Company manufactures a component used in the production of one of its main products.The following cost information is available: \[\begin{array} { | l | r | }
\hline \text { Direct materials } & \$ 410 \\
\hline \text { Direct labor (variable) } & 100 \\
\hline \text { Variable manufacturing overhead } & 90 \\
\hline \text { Fixed manufacturing overhead } & 35 \\
\hline
\end{array}\] A supplier has offered to sell the component to CM for $630 per unit.If CM buys the component from the supplier,the released facilities can be used to manufacture a product that would generate a contribution margin of $10,000 annually.Assuming that CM needs 4,000 components annually and that the fixed manufacturing overhead is unavoidable,what would be the impact on operating income if CM outsources?
A) Operating income would decrease by $110,000.
B) Operating income would increase by $10,000.
C) Operating income would decrease by $10,000.
D) Operating income would increase by $120,000.
Q2) Define the terms Relevant Cost and Sunk Cost.
Q3) Explain the difference between price-takers and price-setters.
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Page 10
Chapter 26: Capital Investment Decisions
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) Two methods of analyzing potential capital investments-payback and accounting rate of return-ignore the time value of money.
A)True
B)False
Q2) Cash flows used in net present value and internal rate of return analyses ignore
A) future increased sales
B) future cost savings
C) depreciation expense
D) residual value
Q3) Capital budgeting is the ________.
A) process of planning for investments in long-term assets
B) preparation of the budget for operating expenses
C) process of evaluating the profitability of a business
D) process of making pricing decisions for products
Q4) Which of the following best describes the profitability index?
A) an index of projects based on their net income
B) the ratio of present value of net cash inflows to initial investment
C) the ratio of total cash inflows to initial investment
D) an array of possible investment outcomes at different discount rates
11
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