Cost Accounting
Final Test Solutions
Course Introduction
Cost Accounting introduces students to the principles, methods, and techniques used to record, analyze, and control costs within an organization. The course covers key topics such as cost behavior, cost allocation, job and process costing, standard costing, and variance analysis, with an emphasis on how cost information is used in planning, budgeting, performance evaluation, and decision-making. Students will learn to apply cost accounting concepts to real-world business scenarios, enabling them to provide accurate and relevant financial data to assist management in driving efficiency and profitability.
Recommended Textbook
Managerial Accounting 13th Edition by Carl Warren
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Page 2
Chapter 1: Managerial Accounting Concepts and Principles
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Sample Questions
Q1) Tires for the bicycles
A)Product
B)Period
Answer: A
Q2) A report analyzing how many products need to be sold to cover operating costs is not typically a managerial accounting report.
A)True
B)False
Answer: False
Q3) Which of the following is not a characteristic of useful managerial accounting reports?
A)accurate
B)GAAP-adhering
C)historical and estimated data
D)prepared as needed
Answer: B
Q4) Factory overhead cost is sometimes referred to as factory burden.
A)True
B)False
Answer: True
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Chapter 2: Job Order Costing
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Sample Questions
Q1) A separate account for each material is found in a
A)general ledger
B)materials ledger
C)receiving report
D)job cost sheet
Answer: B
Q2) At the end of July, the first month of the current fiscal year, the factory overhead account had a debit balance.Which of the following describes the nature of this balance and how it would be reported on the interim balance sheet?
A)Over applied, deferred credit
B)Under applied, deferred debit
C)Under applied, deferred credit
D)Over applied, deferred debit
Answer: B
Q3) The direct labor and overhead costs of providing services to clients are accumulated in a work in process account.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Process Cost Systems
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Sample Questions
Q1) The Mountain Springs Water Company has two departments, Purifying and Bottling.The Bottling Department had 3,000 liters in beginning work in process inventory 30% complete.During the period 71,000 liters were completed.The ending work in process was 5,000 liters 70% completed.What are the total equivalent units for direct materials using the FIFO method if materials were added at the beginning of the process?
Answer: 11ea855c_6e73_5999_9aec_2396d23d5ee7_TB6237_00
Q2) provides information for controlling and improving operations
A)cost of production report
B)equivalent units of production
C)manufacturing cells
D)yield
E)just-in-time processing
Answer: A
Q3) In a process costing system, each process will have a work in process inventory account.
A)True
B)False
Answer: True
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Chapter 4: Cost Behavior and Cost-Volume-Profit Analysis
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Sample Questions
Q1) The range of activity over which changes in cost are of interest to management is called the relevant range.
A)True
B)False
Q2) Unit variable cost does not change as the number of units of activity changes.
A)True
B)False
Q3) Variable costs are costs that remain constant on a per-unit basis as the level of activity changes.
A)True
B)False
Q4) Vary in proportion to changes in activity levels
A) Relevant range
B) Break-even point
C) Contribution margin
D) Fixed costs
E) Variable costs
Q5) The contribution margin ratio is the same as the profit-volume ratio. A)True
B)False
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Chapter 5: Variable Costing for Management Analysis
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Sample Questions
Q1) For a period during which the quantity of product manufactured equals the quantity sold, income from operations reported under absorption costing will equal the income from operations reported under variable costing.
A)True
B)False
Q2) In variable costing, the cost of products manufactured is composed of only those manufacturing costs that increase or decrease as the volume of production rises or falls.
A)True
B)False
Q3) In determining cost of goods sold, two alternate costing concepts can be used: direct costing and variable costing.
A)True
B)False
Q4) Direct labor cost is an example of a controllable cost for the supervisor of a manufacturing department.
A)True
B)False
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Chapter 6: Budgeting
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Sample Questions
Q1) Consider Derek's budget information: materials to be used totals $64,750; direct labor totals $198,400; factory overhead totals $394,800; work in process inventory
January 1, $189,100; and work in progress inventory on December 31, $197,600.What is the budgeted cost of goods manufactured for the year?
A)$649,450
B)$657,950
C)$197,600
D)$1,044,650
Q2) What is the budgeted unit of production for February?
A)186,000
B)181,000
C)222,000
D)174,000
Q3) A budget procedure that provides for the maintenance at all times of a twelve-month projection into the future is called master budgeting.
A)True
B)False
Q4) What is a cash budget? How does management use a cash budget?
Q5) Describe at least five benefits of budgeting.
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Chapter 7: Performance Evaluation Using Variances From
Standard Costs
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Sample Questions
Q1) It is correct to rely exclusively on past cost data when establishing standards. A)True
B)False
Q2) A company must choose either a standard system or nonfinancial performance measures to evaluate the performance of a company.
A)True
B)False
Q3) If the standard to produce a given amount of product is 2,000 units of direct materials at $12 and the actual was 1,600 units at $13, the direct materials quantity variance was $5,200 favorable.
A)True
B)False
Q4) What is the amount of the variable factory overhead controllable variance?
A)$12,000 unfavorable
B)$12,000 favorable
C)$14,000 unfavorable
D)$26,000 unfavorable
Q5) Standard cost variances are usually not reported in reports to stockholders.
A)True
B)False
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Chapter 8: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) What is Clydesdale Company's investment turnover?
A)1.80
B)2.25
C)1.25
D)1.4
Q2) The plant managers in a cost center can be held responsible for major differences between budgeted and actual costs in their plants.
A)True
B)False
Q3) It is beneficial for divisions in a company to negotiate a transfer price when the supplying division has unused capacity in its plant.
A)True
B)False
Q4) How much will Square Yard Products total income from operations increase?
A)$32,000
B)$112,000
C)$80,000
D)$150,000
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Chapter 9: Differential Analysis, Product Pricing, and
Activity-Based Costing
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Sample Questions
Q1) In using the variable cost concept of applying the cost-plus approach to product pricing, fixed manufacturing costs and fixed selling and administrative expenses must be covered by the markup.
A)True
B)False
Q2) A cost that will not be affected by later decisions is termed a sunk cost.
A)True
B)False
Q3) What is the total overhead allocated to Product A using activity-based costing?
A)$194,500
B)$162,500
C)$32,000
D)$224,000
Q4) Activity-based costing provides more accurate and useful cost data than traditional systems.
A)True
B)False
Q5) Make-or-buy decisions should be made only with related parties. 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 available investment funds among competing investment proposals is called
A)investment capital
B)investment rationing
C)cost-volume-profit analysis
D)capital rationing
Q2) The method of analyzing capital investment proposals in which the estimated average annual income is divided by the average investment is the average rate of return method.
A)True
B)False
Q3) If in evaluating a proposal by use of the net present value method there is an excess of the present value of future cash inflows over the amount to be invested, the rate of return on the proposal is less than the rate used in the analysis.
A)True
B)False
Q4) A series of equal cash flows at fixed intervals is termed an annuity.
A)True
B)False
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Chapter 11: Cost Allocation and Activity-Based Costing
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Sample Questions
Q1) Shanghai Company sells glasses, fine china, and everyday dinnerware.They use activity-based costing to determine the cost of the shipping and handling activity.The shipping and handling activity has an activity rate of $14 per pound.A box of glasses weighs 2 lbs., the box of china weighs 4 lbs., and a box of everyday dinnerware weighs 6 lbs.a Determine the shipping and handling activity for each product and b determine the total shipping and receiving costs for the china if 3,500 boxes are shipped.
Q2) Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to small lamp production if actual direct hours for the period is 285,000?
A)$275,000
B)$285,000
C)$440,000
D)$456,000
Q3) Activity cost pools are assigned to products, using factory overhead rates for each activity.
A)True
B)False
Q4) Calculate the cost of services for a highlight.
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Page 13
Chapter 12: Lean Principles, Lean Accounting, and Activity Analysis
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Sample Questions
Q1) Examples of transforming a traditional manufacturing environment to a lean environment is to do all of the following except
A)form partnerships with reliable suppliers.
B)reorganize operational processes to organized product lines.
C)train employees to perform various operations.
D)increase raw materials to produce more, thereby increasing finished goods inventory.
Q2) In a lean environment, raw materials are delivered more frequently than in a traditional environment.
A)True
B)False
Q3) Processing returned materials
A)Value-added
B)Non-value-added
Q4) From the above schedule of activity costs, determine the total activity cost.
A)$62,000
B)$179,000
C)$94,000
D)$241,000
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Q5) 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) In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is
A)added to net income
B)deducted from net income
C)ignored because it does not affect cash
D)reported supplementally as a noncash investing and financing activity
Q2) If a gain of $11,000 is realized in selling for cash office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is
A)$44,000
B)$11,000
C)$55,000
D)$66,000
Q3) On the statement of cash flows prepared by the indirect method, the cash flows from operating activities section would include
A)receipts from the sale of investments
B)amortization of premium on bonds payable
C)payments for cash dividends
D)receipts from the issuance of capital stock
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Page 15
Chapter 14: Financial Statement Analysis
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Q1) The independent auditor's report
A)describes which financial statements are covered by the audit
B)gives the auditor's opinion regarding the fairness of the financial statements
C)summarizes what the auditor did
D)states that the financial statements were presented on time
Q2) The particular analytical measures chosen to analyze a company may be influenced by all of the following except
A)industry type
B)capital structure
C)diversity of business operations
D)product quality or service effectiveness
Q3) The report on internal control required by the Sarbanes-Oxley Act of 2002 may be prepared by either management or the company's auditors.
A)True
B)False
Q4) The number of days' sales in receivables is one means of expressing the relationship between average daily sales and accounts receivable.
A)True
B)False
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