Cost Accounting
Midterm Exam
Course Introduction
Cost Accounting explores the principles and practices used to determine, record, and analyze the costs associated with producing goods and providing services. This course covers key topics such as cost behavior, cost-volume-profit analysis, job order and process costing, budgeting, standard costing, and variance analysis. Students will learn how to gather relevant cost data, utilize various costing methods, and apply cost information to make informed managerial decisions that enhance operational efficiency and profitability. The course emphasizes both the theoretical foundations and practical applications of cost accounting in real-world business scenarios.
Recommended Textbook
Cornerstones of Managerial Accounting 2nd Canadian Edition by Maryanne Mowen
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14 Chapters
2059 Verified Questions
2059 Flashcards
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) The controller is the Chief Executive Officer of a company.
A)True
B)False
Answer: False
Q2) What is the name of the newly formed professional accounting body?
A) CA Canada
B) CFA Canada
C) CPA Canada
D) CMA Canada
Answer: C
Q3) Virtually all management accounting practices were developed to assist managers in maximizing profits.
A)True
B)False Answer: True
Q4) Another name for management accounting could be internal accounting.
A)True
B)False Answer: True
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Chapter 2: Basic Managerial Accounting Concepts
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Sample Questions
Q1) Ballard Company supplied the following information for the month of December.
\[\begin{array} { l r }
\text { Operating income percentage } & 10.5 \% \\
\text { Gross margin percentage } & 30 \%
\end{array}\] Required: Solve for the following amounts assuming that Ballard Company's operating income in December was $44,100. A. \(\quad\)sales revenue
B. \(\quad\)cost of goods sold
C. \(\quad\)total selling and administrative expenses
Answer: A. \( \quad \) Sales revenue \( =\$ 44,100 / 105=420,000 \)
B. Cost of goods sold \( =420,000 \times .70=\$ 294,000 \)
\(\begin{array}{lr}
\text {C. Gross margin }(420,000 \times .30) & 126,000 \\
\text { Less: selling and administrative exp. } & 81,900 \\
\text { Operating income } & 44,100
\end{array}\)
Q2) The revenue per unit is called price.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Cost Behaviour
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Which of the following processes requires one to know how costs change as output changes?
A) Analyzing,reporting,and decision making
B) examining and interpreting
C) planning,controlling,and decision making
D) recalling and summarizing
Answer: C
Q2) What is the relationship between total variable costs and output?
A) Total variable costs stay the same as output changes.
B) Total variable costs increase as output decreases.
C) Total variable costs decrease as output increases.
D) Total variable costs equal variable rate × amount of output.
Answer: D
Q3) What is the relationship between per-unit fixed costs and output?
A) Per-unit fixed costs stay the same as output changes.
B) Per-unit fixed costs decrease as output increases.
C) Per-unit fixed costs decrease as output decreases.
D) Per-unit fixed costs increase as output increases.
Answer: B
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Page 5
Chapter 4: Costvolumeprofit Analysis: a Managerial Planning Tool
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160 Verified Questions
160 Flashcards
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Sample Questions
Q1) What is the equation to calculate contribution margin?
A) contribution margin = sales revenue × variable cost ratio
B) contribution margin ratio = contribution margin / variable costs
C) contribution margin = fixed costs
D) contribution margin ratio = 1 variable cost ratio
Q2) It is impossible to calculate the break-even point for individual products in a multiple product firm because many of the fixed costs are common to a number of products.
A)True
B)False
Q3) What is the break-even point?
A) the point at which total sales are greater than total cost
B) the point at which total sales equal total cost
C) the point at which fixed costs equal variable costs
D) the point at which total sales are less than total cost
Q4) Refer to the Figure.What is the break-even point in sales dollars?
A) $392,241
B) $420,000
C) $761,905
D) $948,275
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Chapter 5: Job-Order Costing
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176 Verified Questions
176 Flashcards
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Sample Questions
Q1) What account is debited when goods are sold?
A) cost of goods sold
B) finished goods
C) work in process
D) accounts payable
Q2) Refer to the Figure.What is the ending balance of finished goods?
A) $0
B) $15,000
C) $23,321
D) $64,321
Q3) The journal entry for $17 of underapplied overhead is: \(\begin{array}{|l|l|l|} \hline
\text { Cost of Goods Sold }&17 \\ \text { Overhead Control }&&17 \end{array}\)
A)True
B)False
Q4) Overhead costs are assigned to work in process using a predetermined rate. A)True B)False
Page 7
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Chapter 6: Process Costing
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Sample Questions
Q1) Refer to the Figure.What would be the equivalent units for materials when using the first-in,first-out method?
A) 85,000
B) 90,000
C) 105,000
D) 110,000
Q2) Which statement is a characteristic of process accounting?
A) It is used on unique products that are produced on a continuous basis.
B) It accumulates costs by individual job.
C) It works best with a small number of unique products.
D) It utilizes equivalent units computed by the weighted average method or the FIFO method.
Q3) What two categories of completed units are needed in the FIFO method so that each category can be costed correctly?
A) beginning work-in-process units and units started
B) units started and completed and ending work-in-process units
C) beginning work-in-process units and units started and completed
D) units started and completed and ending work in process
Q4) Describe the differences between sequential and parallel processing.
Q5) Describe the differences between process costing and job-order costing.
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Chapter 7: Activity-Based Costing and Management
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155 Flashcards
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Sample Questions
Q1) A production dictionary lists the activities in an organization along with some critical activity attributes.
A)True
B)False
Q2) Activity attributes are financial and nonfinancial information items that describe individual activities.
A)True
B)False
Q3) Financial and nonfinancial information items that describe individual activities
A)Activity drivers
B)Activity-based costing system
C)Consumption ratio
D)Unit-level activities
E)Activity attributes
F)Resource drivers
Q4) Which costing system first assigns costs to activities and then to products?
A) activity-based costing
B) production costing
C) volume-based costing
D) unit-level costing
Page 9
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Chapter 8: Absorption and Variable Costing,and Inventory Management
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Sample Questions
Q1) Which accounting method is used for external reporting?
A) absorption costing
B) variable costing
C) transfer price costing
D) responsibility costing
Q2) Refer to the Figure.What is the inventory cost per unit using absorption costing?
A) $32
B) $84
C) $104
D) $140
Q3) Absorption costing income statements and variable costing income statements may differ because of their treatment of fixed overhead costs.
A)True
B)False
Q4) A major advantage to the JIT inventory approach is that it decreases carrying costs.
A)True
B)False
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Chapter 9: Budgeting, production, cash, and Master Budget
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Sample Questions
Q1) A company provided the following information on its projected sales for the coming year: \(\begin{array}{lrrrr} & \text { 1st Quarter } & \text { 2nd Quarter } & \text { 3rd Quarter } & \text { 4th Quarter } \\
\text { Units } & 50,000 & 40,000 & 30,000 & 80,000 \\
\text { Average selling price } & \$ 5 & \$ 5 & \$ 5 & \$ 6 \end{array}\) Assume that the beginning inventory is 5,000 units,and that the company policy is to have 25% of the next quarter's sales in ending inventory.Which quarter will have the lowest production?
A) Quarter 1
B) Quarter 2
C) Quarter 3
D) Quarter 4
Q2) Refer to the Figure.What is the cost in dollars of purchases for July?
A) $7,970
B) $8,450
C) $19,925
D) $33,320
Q3) Does a not-for-profit agency need to budget? Why or why not?
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Page 11
Chapter 10: Standard Costing: a Managerial Control Tool
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174 Flashcards
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Sample Questions
Q1) Which of the following is NOT characteristic of engineering studies?
A) They can determine the most efficient way to operate.
B) They are often achievable by operating personnel.
C) They provide very rigorous guidelines.
D) They are ideal standards.
Q2) Kaizen costing provides fixed standards which reflect continuous improvement efforts.
A)True
B)False
Q3) Refer to the Figure.What are Fantastic's standard hours allowed for a volume of 100,000 blades?
A) 189,000 hours
B) 190,000 hours
C) 210,000 hours
D) 211,000 hours
Q4) Refer to the Figure.What is the materials usage variance?
A) $15,000 U
B) $20,000 U
C) $135,000 U
D) $170,000 U
Page 12
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Chapter 11: Flexible Budgets and Overhead Analysis
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Sample Questions
Q1) The variable overhead variance is affected by both input price changes and by how efficiently overhead is used.
A)True
B)False
Q2) How does one create a meaningful performance report?
A) compare actual costs with the expected costs found in the static budget
B) calculate actual costs as a percentage of sales
C) compare actual costs with the prior year's actual costs
D) compare actual costs with the expected costs at the same level of activity
Q3) A performance report compares actual costs with external benchmarks.
A)True
B)False
Q4) Price changes of variable overhead items are easily controlled by production supervisors.
A)True B)False
Q5) The volume variance is often interpreted as a measure of capacity utilization. A)True B)False
Page 13
Q6) Define static budget and flexible budget.What is each type used for?
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Chapter 12: Performance Evaluation and Decentralization
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Sample Questions
Q1) Refer to the Figure.What are the average operating assets for Division B?
A) $5,000
B) $25,000
C) $125,000
D) $208,333
Q2) Ding Company had operating income of $140,000,sales of $437,500,and turnover of 0.5.What is Ding's ROI?
A) 16%
B) 32%
C) 50%
D) 64%
Q3) What is the term for the practice of delegating decision-making authority to the lower levels of management in a company?
A) centralization
B) decentralization
C) hierarchy flattening
D) authorization
Q4) Decentralization is usually achieved by creating units called divisions.
A)True
B)False
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Chapter 13: Short-Run Decision Making: Relevant Costing
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Sample Questions
Q1) A major disadvantage of markup pricing is that standard markups are easy to apply. A)True
B)False
Q2) Bars Manufacturing Company produces Products A1,B2,C3,and D4 through a joint process.The joint costs amount to $200,000. \(\begin{array}{rrrrr}&&&\text { If Processed Further }\\
&\text { Units }&\text { Sales Value }&\text {Additional}&\text { Sales }\\ \text { Product }&\text { Produced }&\text { Sales split-Off }&\text { Costs }&\text { Value }\\
A 1 & 3,000 & \$ 10,000 & \$ 2,500 & \$ 15,000 \\
\mathrm{~B} 2 & 5,000 & 30,000 & 3,000 & 35,000 \\ \mathrm{C} 3 & 4,000 & 20,000 & 4,000 & 25,000 \\
\mathrm{D} 4 & 6,000 & 40,000 & 6,000 & 45,000
\end{array}\) Suppose Product B2 is processed further.What will be the effect on profits?
A) Profits will decrease by $3,000.
B) Profits will increase by $2,000.
C) Profits will increase by $30,000.
D) Profits will increase by $32,000.
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Chapter 14: Capital Investment Decisions
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Sample Questions
Q1) Which of the following is characteristic of the measurement and use of indirect and intangible benefits in capital investment decision making?
A) ABC has made identifying indirect benefits easier.
B) Intangible benefits cannot be measured.
C) Indirect and intangible benefits should not be considered; only direct costs and benefits are considered.
D) Actions by competitors are not considered.
Q2) What term refers to the interest rate that sets the present value of a project's cash inflows equal to the present value of the project's cost?
A) the present value
B) the discount rate
C) the internal rate of return
D) the payback period
Q3) Refer to the Figure.What is the accounting rate of return for the investment?
A) 2.5%
B) 10.0%
C) 12.5%
D) 20.0%
Q4) What is a postaudit? What are the advantages and disadvantages of the postaudit?
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