Cost Accounting Practice Exam
Course Introduction
Cost Accounting is a course that introduces students to the principles and practices of tracking, analyzing, and managing costs within an organization. The course covers various cost concepts, cost behavior, and cost allocation methods used to support planning, control, and decision-making processes in business operations. Students will learn about different costing systems such as job order costing, process costing, and activity-based costing, as well as budgeting, standard costing, and variance analysis. By the end of the course, students will be equipped with the knowledge and skills to prepare, interpret, and utilize cost accounting information for effective business strategy and performance evaluation.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 10th Edition by Tracie L. Miller Nobles
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9 Chapters
1348 Verified Questions
1348 Flashcards
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Page 2
Chapter 1: Introduction to Managerial Accounting
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) What was the amount of manufacturing overhead costs?
A) $360,000
B) $313,000
C) $90,000
D) $336,000
Answer: A
Q2) What is the amount of direct labor incurred by Jasper in March?
A) $29,600
B) $39,870
C) $126,970
D) $23,030
Answer: D
Q3) Merchandising companies, like service companies, do not have a Cost of Goods Sold account.
A)True
B)False
Answer: False
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Chapter 2: Job Order Costing
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) On January 1, 2014 Feldstein Manufacturing had a beginning balance in Work-in-Process Inventory of $80,000 and a beginning balance in Finished Goods Inventory of $20,000. During the year, Feldstein incurred manufacturing costs of $350,000. Additionally, the following transactions occurred during the year:
Job A-12 was completed for a total cost of $120,000 and was sold for $125,000
Job A-13 was completed for a total cost of $200,000 and was sold for $210,000
Job A-15 was completed for a total cost $60,000 but was not sold as of year-end
The Manufacturing Overhead account had an unadjusted credit balance of $12,000, and was cleared to zero at year-end.
What was the final balance in the Cost of Goods Sold account?
A) $308,000 debit balance
B) $332,000 debit balance
C) $320,000 debit balance
D) $12,000 credit balance
Answer: A
Q2) Job order costing is well suited for the service industry.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Process Costing
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144 Verified Questions
144 Flashcards
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Sample Questions
Q1) Both job order costing and process costing track the product costs of direct materials, direct labor, and manufacturing overhead through three inventory accounts on the balance sheet.
A)True
B)False
Answer: True
Q2) Which of the following best describes the term equivalent units?
A) partially completed units expressed in terms of fully complete units of output
B) partially completed units of output that will be sold as is
C) substitute of units that are partially completed
D) different types of units that have same selling price
Answer: A
Q3) Which of the following statements is true of process costing?
A) It uses one Work in Process Inventory account.
B) It tracks and assigns both period costs and product costs to units produced.
C) It accumulates product costs by production departments.
D) It assigns manufacturing overhead costs to products only in the last production process.
Answer: C
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Page 5
Chapter 4: Cost-Volume-Profit Analysis
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) Gould Enterprises sells computer disks for $1.50 per disk. Unit variable expenses total $0.90. The breakeven point in units is 3,000 and expected sales in units are 4,300. What is the margin of safety in dollars?
A) $4,500
B) $1,950
C) $3,870
D) $6,450
Q2) McDaniel Company sells two products-J and B. McDaniel predicts that it will sell 7,200 units of J and 5,600 units of B in the next period. The unit contribution margins are $2.85 and $6.30, respectively. What is the weighted-average unit contribution margin?
A) $9.96 per product
B) $4.58 per product
C) $7.75 per product
D) $4.36 per product
Q3) When the selling price per unit decreases, the contribution margin per unit:
A) increases proportionately.
B) increases.
C) remains the same.
D) decreases.
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Page 6
Chapter 5: Master Budgets
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) Based on the new data, calculate the new projected cash balance at the end of July.
A) $8,500
B) $2,400
C) $7,000
D) $900
Q2) Which of the following is an example of the coordination and communication function of a budget?
A) A budget demands integrated input from different business units and functions.
B) Employees are motivated to achieve the goals set by the budget.
C) Budget figures are used to evaluate the performance of managers.
D) The budget outlines a specific course of action for the coming period.
Q3) All organizations use one standardized budgeting process.
A)True
B)False
Q4) Budgeting requires managers to decide upon the course of action and then to plan for the same.
A)True
B)False
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Chapter 6: Flexible Budgets and Standard Cost Systems
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174 Verified Questions
174 Flashcards
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Sample Questions
Q1) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows: Direct materials: 3 pounds per unit; $4 per pound
Direct labor: 4 hours per unit; $20 per hour
Emerald produced 5,000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the company used 25,000 direct labor hours and actual total direct labor costs were $375,000. Calculate the direct labor cost variance.
A) $125,000 Favorable
B) $300,000 Favorable
C) $300,000 Unfavorable
D) $125,000 Unfavorable
Q2) Which of the following best describes standard costs?
A) costs used as a budget for a single unit of product
B) costs incurred to produce a product
C) costs based on the average of current market values
D) costs used to compare with competitors' prices
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Page 8
Chapter 7: Cost Allocation and Responsibility Accounting
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) A market-based transfer price considers the ________ when determining the price.
A) variable costs
B) sales price of goods
C) cost of the goods
D) contribution margin
Q2) One of the advantages of decentralization is that it allows top management to concentrate on long-term strategic planning.
A)True
B)False
Q3) Activity-based costing uses a common allocation base for all activities.
A)True
B)False
Q4) Communicating the expectations of top management to segment managers improves goal congruence.
A)True
B)False
Q5) Performance report of a profit center includes both revenues and expenses. A)True
B)False
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Chapter 8: Short-Term Business Decisions
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161 Verified Questions
161 Flashcards
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Sample Questions
Q1) Rica Company is a price-taker and uses target pricing. Please refer to the following information: \[\begin{array} { | l | r | r|}
\hline \text { Production volume } & 600,000& \text { units per year } \\
\hline \text { Market price } & \$ 30& \text { per unit } \\
\hline \text { Desired operating income } & 15 \% &\text { of total assets } \\
\hline \text { Total assets } & \$ 13,900,000 \\
\hline \text { Variable cost per unit } & \$ 18 &\text { per unit } \\
\hline \text { Fixed cost per year } & \$ 5,600,000 &\text { per year } \\
\hline
\end{array}\] With the current cost structure, Rica cannot achieve its profit goals. It will have to reduce either the fixed costs or the variable costs. Assuming that fixed costs cannot be reduced, how much will be the target variable costs per year?
A) $10,315,000
B) $5,115,000
C) $5,600,000
D) $5,200,000
Q2) Price-setters emphasize a cost-plus pricing approach.
A)True
B)False
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Page 10
Chapter 9: Capital Investment Decisions
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) Calculate the payback period for Investment B.
A) 3 years
B) 2 years
C) 4 years
D) 5 years
Q2) Which project has the highest profitability index?
A) Project A
B) Project B
C) Project C
D) Project D
Q3) 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
Q4) Net present value is defined as the difference between the present value of the project's net cash inflows and the cost of investment.
A)True
B)False
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