Cost Accounting
Midterm Exam
Course Introduction
Cost Accounting is an essential course that explores the methods and principles used to record, analyze, and manage costs within an organization. The course covers topics such as cost terminology, cost behavior, job order costing, process costing, activity-based costing, budgeting, and standard costing systems. Students will learn how cost information supports decision-making processes, planning, and control of business operations. Through practical examples and case studies, the course equips students with the skills to prepare internal reports that help managers in optimizing resources, setting prices, and improving overall financial performance.
Recommended Textbook
Cost Management Measuring Monitoring and Motivating Performance 2nd Canadian Edition by
Available Study Resources on Quizplus
18 Chapters
2553 Verified Questions
2553 Flashcards
Source URL: https://quizplus.com/study-set/3848 Page 2
Chapter 1: The Role of Ethical Accounting Information in Management Decision Making
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/76756
Sample Questions
Q1) Because accounting information is highly objective and quantitative in nature, it is not subject to uncertainties or management bias.
A)True
B)False
Answer: False
Q2) Conflicts of interest often compromise managers' ability to make ethical decisions. Which of the following situations most likely includes a conflict of interest?
A)Selling goods and services at discounted prices to some clients based on historical volumes
B)Offering sales on credit only to creditworthy clients
C)Paying dividends to shareholders rather than investing in an environmental project
D)Using LIFO to report the cost of ending inventory on the balance sheet
Answer: C
Q3) Ethical behavior is an individual obligation, but not an organizational obligation. A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Cost Concepts, Behaviour, and Estimation
Available Study Resources on Quizplus for this Chatper
170 Verified Questions
170 Flashcards
Source URL: https://quizplus.com/quiz/76755
Sample Questions
Q1) Which of the following are forms of regression analysis?
A)Quantitative and qualitative
B)Fixed and variable
C)Simple and multiple
D)Financial and managerial
Answer: C
Q2) Managers should be trained in engineering to calculate an engineered cost estimate.
A)True
B)False Answer: True
Q3) Regression analysis works best when the relationship between costs and cost drivers is:
A)Positive and linear
B)Linear and direct
C)Positive and indirect
D)Positive, linear, and indirect
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Cost-Volume-Profit Analysis
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/76754
Sample Questions
Q1) Blackmon Co. is deciding between two compensation plans. In Plan A, salaries are $100,000 and the commission is $2 per unit. In Plan B, salaries are $40,000 and the commission is $4 per unit. At what level of sales, in units, is Blackmon indifferent between the two compensation plans?
A)30,000
B)20,000
C)10,000
D)Cannot be determined
Answer: A
Q2) Log Homes on Spec (LHOS)in British Columbia makes log home kits. Currently, the company does not advertise and has a low selling price for its kits compared to competitors. Next year, the company plans to increase the selling price and begin a wide advertising campaign. Which of the following statements is true?
A)LHOS's breakeven point will be lower next year
B)LHOS's operating leverage will be higher next year if the same number of units is sold
C)LHOS's profits will be higher next year
D)LHOS's margin of safety will be lower next year
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Relevant Information for Decision Making
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/76753
Sample Questions
Q1) In a linear programming problem, slack resources are the same as:
A)Idle capacity
B)Constraints
C)Limits on production
D)Mixed costs
Q2) (CMA)Callow Company has considerable excess manufacturing capacity. A special job order's cost sheet includes the following allocated manufacturing overhead costs: Fixed costs $42,000
Variable costs 66,000
The fixed costs include a normal $7,400 allocation for in-house design costs, although no in-house design will be done. Instead, the job will require the use of external designers costing $15,500. What is the total amount to be included in the calculation to determine the minimum acceptable price for the job?
A)$73,000
B)$81,500
C)$108,000
D)$116,100
Q3) Describe the costs that are usually relevant to a make or buy decision.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Job Costing
Available Study Resources on Quizplus for this Chatper
166 Verified Questions
166 Flashcards
Source URL: https://quizplus.com/quiz/76752
Sample Questions
Q1) Both actual costing and normal costing systems use the actual quantity of the allocation base to assign overhead costs to jobs.
A)True
B)False
Q2) Direct Direct Direct Materials Labour Cost Labour Hours
Job 400 $200 $800 40
Job 401 250 200 10
Job 402 500 600 32
O'Hare Sisters Manufacturing uses job costing and applies overhead using a normal costing system using direct labour hours as the allocation base. This period's estimated overhead cost is $400,000, estimated direct labour cost is $500,000 and estimated direct labour hours are 25,000. This period's actual overhead cost was $420,000, actual direct labour cost was $390,000, and actual direct labour hours were 20,000. What is the total manufacturing cost of Job 400?
A)$1,200
B)$1,000
C)$1,320
D)$1,640
Q3) Explain, in general terms, the steps taken to implement a job costing system.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Process Costing
Available Study Resources on Quizplus for this Chatper
142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/76751
Sample
Questions
Q1) Macey Company uses a weighted-average process costing system. Beginning inventory consists of 6,000 units, 40% complete. Units started are 14,000, completed are 10,000, and ending inventories are 9,000 units, 70% complete. Normal spoilage is 5% of the units inspected. Direct material is added at the 75% point and spoilage inspection occurs at the 80% point. The cost per equivalent unit for materials was $1.00 and $3.00 for conversion costs. The cost of the units completed was:
A)$40,000
B)$42,200
C)$41,760
D)$41,870
Q2) Process costing information is useful for measuring and monitoring production processes.
A)True
B)False
Q3) The manager in a plant that mass-produces computer components would like information about the most current costs because the cost of direct materials frequently changes. Provide a recommendation for a process costing method and give one reason for your recommendation.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Activity-Based Costing and Management
Available Study Resources on Quizplus for this Chatper
180 Verified Questions
180 Flashcards
Source URL: https://quizplus.com/quiz/76750
Sample Questions
Q1) Which of the following is not a benefit of an ABC system?
A)Helping managers focus on measurement at the activity level
B)Increasing profits
C)Improving accuracy in cost measurement
D)Motivating employees to find ways to improve performance
Q2) In an ABC system, committed costs:
A)Vary with capacity levels
B)Vary with activity levels
C)Should not be included in ABC cost pools
D)Are related to capacity
Q3) Costs associated with developing an ABC system most likely include:
A)Reduced profits
B)Loss of market share
C)Employee time and consulting fees
D)Increased overhead costs
Q4) Batch-level costs include:
A)Raw materials
B)The cost of advertising a product
C)Amortization of the manufacturing plant
D)Tooling for a custom job
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Measuring and Assigning Support Department
Costs
Available Study Resources on Quizplus for this Chatper
138 Verified Questions
138 Flashcards
Source URL: https://quizplus.com/quiz/76749
Sample Questions
Q1) Support department costs are generally allocated to inventory when preparing financial statements under generally accepted accounting principles.
A)True
B)False
Q2) Departments are often used as cost pools when allocating support department costs because:
A)Many organizations already accumulate costs by department
B)Generally accepted accounting principles require it
C)All departments have easily identifiable allocation bases
D)Canadian income tax regulations require it
Q3) Sometimes costs that include single-rate support department allocations are used in short-term decision-making. List several limitations of these costs when used in decision-making.
Q4) Explain the difference between operating departments and support departments.
Q5) "Perceived fairness" is sometimes used as a criterion for allocating support department costs to operating departments.
A)True
B)False
Q6) List two factors that should be considered when choosing allocation bases.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Joint Product and By-Product Costing
Available Study Resources on Quizplus for this Chatper
140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/76748
Sample Questions
Q1) Which joint cost allocation method best reflects the idea that joint costs cannot be separated?
A)Net realizable value
B)Constant gross margin NRV
C)Physical output
D)Sales value at split-off
Q2) Managers should choose a joint cost allocation method to:
A)Justify dropping an unprofitable product
B)Minimize the total joint cost allocated to all products
C)Maximize the organization's overall profitability
D)Avoid giving the mistaken impression that one or more products are sold at a loss
Q3) Managers sometimes erroneously include joint cost allocations in the information they use for short term decision-making, such as product emphasis. Explain why this practice could lead to suboptimal decisions.
Q4) Joint costs are:
A)Easily traceable to individual product lines
B)Common costs that result in two or more unique products
C)Incurred by a particular product
D)Fixed costs incurred after the split-off point
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Static and Flexible Budgets
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/76747
Sample Questions
Q1) Kelita, Inc., projects sales for its first three months of operation as follows: October November December
Credit sales $100,000 $150,000 $200,000
Cash sales 40,000 60,000 50,000
Total Sales $140,000 $210,000 $250,000
Inventory on October 1 is $40,000. Subsequent beginning inventories should be 40% of that month's cost of goods sold. Goods are priced at 140% of their cost. 50% of purchases are paid for in the month of purchase; the balance is paid in the following month. It is expected that 50% of credit sales will be collected in the month following sale, 30% in the second month following the sale, and the balance the third month. A 5% discount is given if payment is received in the month following sale.
(Appendix 10A)What are the anticipated cash disbursements for October?
A)$120,000
B)$180,000
C)$140,000
D)$60,000
Q2) How are budgets related to organizational strategies?
Q3) How are the master budget and flexible budget related?
Q4) How can budgeting assist an organization to efficiently use its human resources?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Standard Costs and Variance Analysis
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/76746
Sample Questions
Q1) During the current period, Richeleau Company produced 1,000 units of product. The flexible budget for standard costs for the 1,000 units is:
Direct materials $43,000
Direct labour 67,000
Variable overhead 30,000
Fixed overhead 25,000
Richeleau purchases only the amount of material required for production each period; it does not maintain raw material inventories. Variances for the period are:
Direct materials price $400 U
Direct materials efficiency 500 U
Direct labour price 600 F
Direct labour efficiency 200 U
Variable overhead spending 300 F
Variable overhead efficiency 100 F
Fixed overhead spending 500 F
Fixed overhead production volume 1000 U
Prepare the journal entries necessary to record all variances and then to close them, assuming that they are all immaterial.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Strategic Investment Decisions
Available Study Resources on Quizplus for this Chatper
136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/76745
Sample Questions
Q1) Sensitivity analysis is usually performed after applying quantitative analysis techniques in a capital budgeting decision.
A)True
B)False
Q2) Capital budgeting is a process managers use when choosing investments with multi-year cash flows.
A)True B)False
Q3) The internal rate of return method assumes that future cash flows can be reinvested to earn the same return generated by a capital investment project.
A)True
B)False
Q4) Williams Company is evaluating a new project. The project will cost $300,000 and have a 10-year life. Annual revenues will be $200,000 and annual operating expenses, including amortization, will be $188,000. The terminal value is $20,000, and the company requires a 16% rate of return. Ignore income taxes. Compute the accrual accounting rate of return.
Q5) List one pro and one con for using the payback method.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Pricing Decisions
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/76744
Sample Questions
Q1) Which prices are recorded by departments under a dual-rate transfer pricing system? Selling Purchasing
Department Department
A)Variable cost Variable cost
B)Variable cost Market price
C)Market price Full cost
D)Market price Variable cost
Q2) Changes in variable costs and changes in the product's demand sensitivity to price are the two factors that affect the profit-maximizing price.
A)True
B)False
Q3) Charging different prices at different times to reduce capacity constraints is called
A)Penetration pricing
B)Transfer pricing
C)Peak load pricing
D)Price skimming
Q4) Describe cost-based pricing and give an example of a product for which this pricing method would be appropriate.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Strategic Management of Costs
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/76743
Sample Questions
Q1) Which of the following is not typically associated with successful implementation of just-in-time (JIT)systems?
A)Find high quality suppliers
B)Locate suppliers with short transit times
C)Use as many suppliers as possible to minimize the risk of non-delivery
D)Develop management commitment to the JIT process
Q2) A target cost is the minimum cost a company should strive for to obtain its desired profit margin.
A)True
B)False
Q3) Consumer surveys, focus groups, and market research are:
A)Value-added activities
B)Information sources for target costing projects
C)Always part of a company's value chain
D)Information sources for cost-based pricing
Q4) Kaizen costing and target costing are two names for the same thing.
A)True
B)False
Q5) Give a complete but concise explanation of the target costing cycle.
Q6) Compare and contrast target costing with kaizen costing.
Page 16
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: Measuring and Assigning Costs for Income Statements
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/76742
Sample Questions
Q1) Volume variances are calculated for which of the following reasons?
I. GAAP requires that actual costs be recorded in the income statement and balance sheet
II. Estimates are used for allocation rates so that costs can be allocated when actual costs are not yet known
III. Only CRA requires volume variances in the calculation of income taxes
A)I only
B)II only
C)I and II only
D)I, II, and III
Q2) Inventory cost under absorption costing includes:
A)Only direct materials costs
B)Only variable production costs
C)Variable and fixed production costs
D)All of the costs of the organization
Q3) Theoretical capacity reflects:
A)Actual capacity levels
B)The capacity level with no reduction for holidays or other down time
C)The estimate of average capacity over time
Page 17
D)The capacity level taking into account holidays and other down time
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Performance Evaluation and Compensation
Available Study Resources on Quizplus for this Chatper
76 Verified Questions
76 Flashcards
Source URL: https://quizplus.com/quiz/76741
Sample Questions
Q1) Bellingham Division has a required rate of return by corporate headquarters of 20%. The weighted average cost of capital is 12%. You are given the following information for Bellingham's operations for a two-year period: 2005 2004
Current assets $ 50,000 $ 60,000
Long-term assets 200,000 204,000
Accumulated amortization 60,000 44,000
Current liabilities 40,000 20,000
Long-term debt 100,000 140,000
Operating income for the year 19,000 21,000
Tax rate 40% 40%
The after-tax income for 2005 was:
A)$47,500
B)$11,400
C)$7,600
D)$31,667
Q2) Executive compensation is typically set by the shareholders at the annual meeting. A)True B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 18
Chapter 17: Strategic Performance Measurement
Available Study Resources on Quizplus for this Chatper
137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/76740
Sample Questions
Q1) The steps for implementing a balanced scorecard:
A)Are different in for-profit and not-for-profit organizations
B)Should be customized for individual organizations
C)Should not vary if the implementation is to be effective
D)Begin with developing measures in each perspective
Q2) Nonfinancial measures provide information about:
A)The economic impact of operations and decisions
B)Aspects of operations that cannot be measured in dollars
C)The dollar value of a particular cost containment strategy
D)The operating margin
Q3) Suppose an organization's strategic goals include the development of unusual, high-quality products. Which of the following would best support this strategy?
A)Offering products at a lower cost than competitors
B)Offering products that are similar to competitors
C)Advertising campaigns that make customers aware of how the company's products differ from competitors
D)Targets to achieve massive production cost reductions
Q4) Explain why focusing on the internal business process perspective could lead to improved financial performance.
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Sustainability Management
Available Study Resources on Quizplus for this Chatper
73 Verified Questions
73 Flashcards
Source URL: https://quizplus.com/quiz/76739
Sample Questions
Q1) Which of the following is a synonym for sustainability?
A)Double bottom line
B)Corporate Social Responsibility
C)Human capital
D)Economic impact
Q2) Material flow accounting assumes that total inputs must equal total outputs.
A)True
B)False
Q3) Firms that report GRI core indicators are more likely to:
I. Improve sustainability
II. Establish programs to reach targets for metrics reported
III. Conform with laws
A)I and II only
B)II and III only
C)I and III only
D)I, II, and III
Q4) Describe how management accountants contribute to the efforts to measure, monitor and motivate improved social and environmental performance.
Q5) How can companies reduce accusations of greenwashing?
Q6) Describe what is meant by "building a business case" for sustainable management.
Page 20
To view all questions and flashcards with answers, click on the resource link above.