Cost Accounting
Pre-Test Questions
Course Introduction
Cost Accounting is a foundational course that explores the principles, methods, and techniques used to determine, analyze, and control the costs associated with producing goods and services. Students will learn about various cost concepts, cost behaviors, and cost allocation methods, including job order costing, process costing, activity-based costing, and standard costing. The course also examines budgeting, variance analysis, and the use of cost information in managerial decision-making, planning, and performance evaluation. By the end of the course, students will have developed the analytical skills necessary to support effective cost management and contribute to the strategic financial goals of an organization.
Recommended Textbook
Managerial Accounting An Introduction to Concepts Methods and Uses 11th Edition by Michael W.
Available Study Resources on Quizplus
13 Chapters
1638 Verified Questions
1638 Flashcards
Source URL: https://quizplus.com/study-set/3918 Page 2
Chapter 1: Fundamental Concepts
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/78147
Sample Questions
Q1) List the six business functions in the value chain and describe how they contribute to the final product's service,quality,and cost.
Answer: 11ea906f_4cfb_793f_aec7_39fad535bf26_TB2144_00_TB2144_00
Q2) Who manages cost and managerial accounting in most organizations?
A)Controller
B)Treasurer
C)Board of directors
D)Chief executive officer
Answer: A
Q3) Discuss the concepts of cost,expense,and opportunity cost.
Answer: A cost is a sacrifice of resources.An expense is the historical cost of goods or services used.An opportunity cost is the sacrifice of forgoing the return from the best alternative use of an asset.
Q4) Who manages cash flows and raises cash for operations in most organizations?
A)Controller
B)Treasurer
C)Board of directors
D)Chief executive officer
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Measuring Product Costs
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/78142
Sample Questions
Q1) Which of the following is the appropriate procedure to apply overhead to production using normal costing?
A)Assign actual direct material and direct labor costs plus an amount representing "normal" manufacturing overhead to products.
B)Assign "normal" direct material and direct labor costs plus an amount representing "normal" manufacturing overhead to products.
C)Assign actual direct material and direct labor costs plus an amount representing actual manufacturing overhead to products.
D)All of the answers are correct.
Answer: A
Q2) Which of the following is an example of an organization that would use job-order accounting?
A)a custom construction company.
B)an oil refinery.
C)a cereal processor.
D)None of the answers is correct.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Activity-Based Management
Available Study Resources on Quizplus for this Chatper
139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/78141
Sample Questions
Q1) Describe the four steps accountants follow in activity-based costing.
Answer: Accountants must identify the activities that consume resources and assign costs to those activities.Then,they must identify the cost drivers associated with each activity.A cost rate per cost driver unit is computed.Finally,accountants assign costs to products by multiplying the cost driver rate times the volume of cost drivers consumed by the product.
Q2) Discuss what is meant by the expression,"products consume activities;activities consume resources."
Answer: If managers want their products to be competitive,they must know both (1)the activities that go into making the goods or providing the services,and (2)the cost of those activities.To reduce a product's costs,managers will likely have to change the activities the product consumes.
Q3) Operational uses of Activity Based Management allow for which of the following?
A)Competitive cost advantage by focusing attention on activities.
B)Competitive cost advantage by focusing attention on departments.
C)Competitive cost advantage by focusing attention on plants.
D)Competitive cost advantage by focusing attention on industry.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Strategic Management of Costs,quality,and
Time
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/78140
Sample Questions
Q1) Define Break-even time (BET)and describe how it works.Include any limitations from using this approach.
Break-even time (BET)is the length of time required to recover the investment made in new-product development.It is important to identify the relevant cash flows in break-even time analysis.The relevant cash flows are the differential future cash inflows and outflows that change as a result of introducing the new product.Overhead costs are irrelevant if adding a new product only changes the way overhead is allocated without changing the total cash outflow for overhead costs.Break-even time analysis should also include both positive and negative cash-flow effects that the new product may have on sales of existing products.
Q2) Which of the following are the two costs of controlling quality?
A)prevention costs and appraisal costs.
B)appraisal costs and internal failure.
C)internal failure and external failure costs.
D)prevention costs and external failure costs.
Q3) Compare the costs of quality control to the costs of failing to control quality.
Q4) Why is time important in a competitive environment?
Q5) How do traditional managerial accounting systems need to be modified to support total quality management?
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Cost Drivers and Cost Behavior
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/78139
Sample Questions
Q1) To simplify the analysis of cost behavior,decision makers usually assume that costs are either
A)short-run or long-run.
B)fixed or variable.
C)controllable or noncontrollable.
D)direct or indirect.
Q2) Which of the following cost functions describes costs vary with the volume of activity,but not in constant proportion?
A)semi-variable.
B)semi-fixed.
C)curvilinear variable.
D)curvilinear fixed.
Q3) If revenues are $20 per unit,variable costs are $10 per unit,and fixed costs are $150,what is the operating profit when 100 units are sold?
A)$ 850
B)$ 1,740
C)($16,000)
D)($ 140)
Q4) Identify capacity costs,committed costs,and discretionary costs.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Financial Modeling for Short-Term Decision Making
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/78138
Sample Questions
Q1) Explain how to use sales dollars as the measure of volume in performing cost-volume-profit (CVP)analysis.
Q2) The relative proportion of various products sold by a company is called the A)marketing mix.
B)product mix.
C)operating mix.
D)output mix.
Q3) The formula used in performing cost-volume-profit (CVP)analysis for the Target Profit in Units,where t is the tax rate,is
A)(Total Fixed Costs + Before-Tax Target Profit)/ Unit Contribution Margin.
B)(Total Fixed Costs + Before-Tax Target Profit)/ Contribution Margin Ratio.
C)(Total Fixed Costs ´ t)/ Unit Contribution Margin.
D)(Total Fixed Costs + (Target Profit ´ t))/ Unit Contribution Margin.
Q4) Explain the use of financial modeling in a multiple product setting.
Q5) Multiple products make using financial models more complex.To deal with this,managers can
A)treat each product line as a separate entity.
B)assume a weighted average contribution margin.
C)use sales dollars as a measure of volume.
D)All of the answers are correct.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Differential Cost Analysis for Operating Decisions
Available Study Resources on Quizplus for this Chatper
186 Verified Questions
186 Flashcards
Source URL: https://quizplus.com/quiz/78137
Sample Questions
Q1) What is the difference between short-run and long-run pricing decisions?
Q2) The optimal number of units to order or produce is the economic order quantity,which is the optimal trade-off between which of the following?
A)controllable and non-controllable costs.
B)fixed costs and variable costs.
C)setup (or order)costs and carrying costs.
D)sunk and opportunity costs.
Q3) Which of the following qualitative factors favors the buy choice in a make or buy decision?
A)Maintaining a long-run relationship with suppliers
B)The utilization of idle capacity
C)Quality control is critical.
D)All of the answers are correct.
Q4) The theory of constraints focuses on which of the following?
A)throughput contribution.
B)investments.
C)other operating costs.
D)All of the answers are correct.
Page 9
Q5) Explain how linear programming optimizes the use of scarce resources.
Q6) Identify the factors underlying make-or-buy decisions.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 8: Capital Expenditure Decisions
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/78136
Sample Questions
Q1) Justification of investments in advanced manufacturing systems by using discounted cash flow analysis results in rejection of the proposal because the present value of future cash flows are negative.What is/are possible reason(s)for adopting the proposal,anyway?
A)to inject new technology into the company's manufacturing operations
B)improved quality,greater flexibility,and lower inventories that lead to long-term cash flows.
C)intangible benefits in addition to quantifiable benefits should be considered. D)all of the above.
Q2) Which interest rate is used by analysts when computing the present value of future cash flows?
A)prime interest rate
B)Federal funds rate
C)discount rate
D)real rate
Q3) What behavioral issues are involved in capital budgeting?
Q4) Why does the capital investment process require audits?
Q5) Discuss the advantages of using spreadsheets including sensitivity analysis.
Q6) Describe the internal rate of return method of assessing investment alternatives.
Page 11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Profit Planning and Budgeting
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/78135
Sample Questions
Q1) Which of the following terms describes a method of yielding information for developing budgets that employees know but managers do not?
A)benchmarking.
B)participative budgeting.
C)bottom-up budgeting.
D)motivational budgeting.
Q2) Alma Mater College
The Admissions Department of Alma Mater College plans to hold several "open house" parties during the year.All the refreshment costs will be charged to the department.However,the party creates extra work for the Maintenance Department.The maintenance crew must work overtime and the maintenance supervisor is complaining about cost overruns in the Maintenance Department.
Refer to the Alma Mater College.How can the accounting system be changed so that the concept of responsibility accounting is achieved?
Q3) The Wholesome Company had an unfavorable sales price variance of $100.The budgeted selling price was $10 per unit,and the number of units sold was 50.What was the actual selling price?
Q4) Describe ethical dilemmas in budgeting.
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 10: Profit and Cost Center Performance Evaluation
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/78146
Sample Questions
Q1) Why do fixed manufacturing cost variances occur?
A)Managers do not correctly anticipate changes in wage rates.
B)Poor materials are used in production.
C)Supervisors encounter scheduling problems.
D)Actual fixed costs differ from budgeted fixed costs.
Q2) Which of the following does the cost variance model use to analyze differences between actual and budgeted profits?
A)Flexible production budget.
B)Fixed production budget.
C)Prior period's production budget.
D)Generally accepted accounting principles.
Q3) To help managers in their efforts to control overhead costs,managers and accountants analyze overhead variances using the variable cost variance model by separating variable overhead variances into
A)price and quality components.
B)economy and efficiency components.
C)price and efficiency components.
D)economy and effectiveness components.
Q4) What is the difference between price and efficiency variances?
Q5) How do you apply activity-based costing to variance analysis?
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Investment Center Performance Evaluation
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/78145
Sample Questions
Q1) In calculating return on investment (ROI),the use of book values of assets-particularly fixed assets-in the ROI denominator
A)is the preferable method.
B)may cause a manager of a division with fully depreciated assets to be reluctant to replace the assets with more costly assets.
C)is required by generally accepted accounting principles.
D)may cause a manager of a division with fully depreciated assets to replace the assets with newer,more efficient,but more costly assets.
Q2) Management uses the following as a measure for assessing efficiency in producing and selling goods and services because it indicates the portion of each dollar of revenue that is profit.
A)Profit margin percentage.
B)Return on investment
C)Investment turnover ratio.
D)Revenue realization ratio.
Q3) Identify the benefits and disadvantages of decentralization.
Q4) What issues must be addressed when using return on investment (ROI)as a divisional performance measure?
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 12: Incentive Issues
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/78144
Sample Questions
Q1) Effective incentive compensation plans must induce individual behavior compatible with increasing the firm's wealth,so for particular actions or extraordinary performance firms give
A)cash bonuses and profit sharing.
B)deferred compensation.
C)special awards.
D)reorganizations.
Q2) How does the balanced scorecard tie performance measures to organizational goals?
Q3) When implementing the balanced scorecard,why do some managers use a different term to describe it?
Q4) What is true of the Foreign Corrupt Practices Act?
A)It is illegal for any U.S.citizen or company to bribe foreign government officials in the course of business.
B)Questionable payments to foreign officials,record keeping,and internal accounting control are addressed.
C)"Grease payments" paid to low-level foreign government employees to expedite routine matters are permitted.
D)All of the answers are correct.
Page 15
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Allocating Costs to Responsibility Centers
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/78143
Sample Questions
Q1) Charley's Products allocates telephone expenses based on a variable rate of $1 per phone call.It allocates the fixed monthly charge equally over its budgeted usage.Able Division expected to make 300 telephone calls,but actually made 350.Baker Division expected to make 300 telephone calls,but actually made 250.Actual fixed costs for the month totaled $3,000.What are the amounts allocated to the two divisions using a dual rate of allocation?
A)Able Division = $2,259,Baker Division = $1,291
B)Able Division = $2,209,Baker Division = $1,391
C)Able Division = $1,850,Baker Division = $1,750
D)Able Division = $1,800,Baker Division = $1,800
Q2) Why do companies allocate common costs to departments and products?
A)pricing and bidding.
B)contract cost reimbursement.
C)motivation.
D)All of the answers are correct.
Q3) Why bother allocating joint-process costs?
A)It is a performance measurement.
B)It is used for determining and responding to regulatory rate changes.
C)It is used in estimating casualty losses.
D)All of the answers are correct.
To view all questions and flashcards with answers, click on the resource link above. Page 16