Cost Accounting
Pre-Test Questions
Course Introduction
Cost Accounting equips students with the principles and techniques for measuring, analyzing, and managing costs in business operations. The course covers essential topics such as cost behavior, cost allocation, job-order costing, process costing, activity-based costing, and budgeting. Students will learn how to use cost information for planning, decision-making, and control, as well as how to analyze variances and manage performance. By integrating practical exercises and real-world case studies, the course prepares students to effectively support strategic management and improve organizational efficiency through informed cost analysis.
Recommended Textbook
Managerial Accounting 12th Edition by
Carl S. Warren
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14 Chapters
2382 Verified Questions
2382 Flashcards
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Page 2
Chapter 2: Job Order Costing
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176 Flashcards
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Sample Questions
Q1) Materials are transferred from the storeroom to the factory in response to materials requisitions.
A)True
B)False
Answer: True
Q2) A widely used activity base for developing factory overhead rates in highly automated settings is:
A) direct labor hours
B) direct labor dollars
C) direct materials
D) machine hours
Answer: D
Q3) The amount of time spent by each employee and the labor cost incurred for each individual job or for factory overhead are recorded on:
A) pay stubs.
B) in-and-out cards.
C) time tickets.
D) employees' earnings records.
Answer: C
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Page 3
Chapter 3: Process Cost Systems
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178 Flashcards
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Sample Questions
Q1) Process manufacturing usually reflects a manufacturer that produces small quantities of unique items.
A)True
B)False
Answer: False
Q2) Department A had 1,000 units in Work in Process that were 60% completed at the beginning of the period at a cost of $7,000. 4,000 units of direct materials were added during the period at a cost of $8,200. 4,500 units were completed during the period, and 500 units were 40% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $28,700 and factory overhead was $4,510. The cost of the 500 units in process at the end of the period if the first-in, first-out method is used to cost inventories was:
A) $3,240
B) $5,175
C) $2,569
D) $2,645
Answer: D
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Chapter 4: Cost Behavior and Cost-Volume-Profit Analysis
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215 Flashcards
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Sample Questions
Q1) Douglas Company has a contribution margin ratio of 30%. If Douglas has $336,420 in fixed costs, what amount of sales will need to be generated in order for the company to break even?
Q2) Explain how variable costing net income will be different than absorption costing net income under the following situations:
(1) A company had no beginning or ending inventory. During the year they produced and sold 10,000 units.
(2) A company had no beginning inventory. During the year they produced 10,000 units and sold 8,000 units.
(3) A company had 2,000 units in beginning inventory. During the year they produced 10,000 units and sold 12,000 units.
Q3) As production increases, what would you expect to happen to fixed cost per unit?
A) Increase
B) Decrease
C) Remain the same
D) Either increase or decrease, depending on the variable costs
Q4) A mixed cost has characteristics of both a variable and a fixed cost.
A)True
B)False
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Chapter 5: Variable Costing for Management Analysis
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Sample Questions
Q1) Edna's Chocolates had planned to sell chocolate-covered strawberries for $3.00 each. Due to various factors, the actual price was $2.75. Edna's was able to sell 1,000 more strawberries than the anticipated 4,000. What is (1) the quantity factor and (2) the price factor for sales?
A) (1) $3,000, (2) $(1,250)
B) (1) $3,000, (2) $3,000
C) (1) $1,250, (2) $3,000
D) (1) $(4,000) (2) $(3,000)
Q2) 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
Q3) Costs that can be influenced by management at a specific level of management are called:
A) direct costs.
B) indirect costs.
C) noncontrollable costs.
D) controllable costs.
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Page 6
Chapter 6: Budgeting
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Sample Questions
Q1) The budgeted direct materials purchases is based on the sum of (1) the materials needed for production and (2) the desired ending materials inventory, less (3) the estimated beginning materials inventory.
A)True
B)False
Q2) For March, sales revenue is $1,000,000; sales commissions are 5% of sales; the sales manager's salary is $80,000; advertising expenses are $75,000; shipping expenses total 1% of sales; and miscellaneous selling expenses are $2,100 plus 1% of sales. Total selling expenses for the month of March are:
A) $227,100
B) $215,000
C) $217,100
D) $152,100
Q3) The cash budget presents the expected inflow and outflow of cash for a specified period of time.
A)True
B)False
Q4) Why is the sales budget usually prepared first?
Q5) What is a cash budget? How does management use a cash budget?
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Chapter 7: Performance Evaluation Using Variances From
Standard Costs
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158 Verified Questions
158 Flashcards
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Sample Questions
Q1) 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
Q2) A variable cost system is an accounting system where standards are set for each manufacturing cost element.
A)True
B)False
Q3) Though favorable volume variances are usually good news, if inventory levels are too high, additional production could be harmful.
A)True
B)False
Q4) Standards are set for only direct labor and direct materials.
A)True
B)False
Q5) Standard costs serve as a device for measuring efficiency. A)True B)False
Page 8
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Chapter 8: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) Which of the following is a disadvantage of decentralization?
A) Decisions made by one manager may negatively affect the profitability of the entire company.
B) Helps retain quality managers.
C) Decision making by managers closest to the operations.
D) Managers are able to acquire expertise in their areas of responsibility.
Q2) The sales, income from operations, and invested assets for each division of Marcus Company are as follows:
Q3) The ratio of sales to invested assets is termed the investment turnover component of the rate of return on investment.
A)True
B)False
Q4) The profit margin is the:
A) ratio of income from operations to sales
B) ratio of income from operations to invested assets
C) ratio of assets to liabilities
D) ratio of sales to invested assets
Q5) Developing and retaining quality managers is an advantage of decentralization.
A)True
B)False
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Chapter 9: Differential Analysis and Product Pricing
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Sample Questions
Q1) Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process, Tales take 7 hours, and Wales take 1 hour. Assume that Widgeon produced enough product with the highest contribution margin per unit to use 1,000 hours of machine time. Product demand does not warrant any more production of that product. What is the maximum additional contribution margin that can be realized by utilizing the remaining 1,000 hours on the product with the second highest contribution margin per hour?
A) $35,000
B) $7,000
C) $4,000
D) $28,000
Q2) When a bottleneck occurs between two products, the company must determine the contribution margin for each product and manufacture the product that has the highest contribution margin per bottleneck hour.
A)True
B)False
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Chapter 10: Capital Investment Analysis
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Sample Questions
Q1) All of the following qualitative considerations may impact upon capital investment analysis except:
A) time value of money
B) employee morale
C) the impact on product quality
D) manufacturing flexibility
Q2) A series of equal cash flows at fixed intervals is termed a(n):
A) present value index
B) price-level index
C) net cash flow
D) annuity
Q3) The amount of the estimated average income for a proposed investment of $90,000 in a fixed asset, giving effect to depreciation (straight-line method), with a useful life of four years, no residual value, and an expected total income yield of $21,600, is:
A) $10,800
B) $21,600
C) $ 5,400
D) $45,000
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11
Chapter 11: Cost Allocation and Activity-Based Costing
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Sample Questions
Q1) A plantwide factory overhead rate is computed by dividing total budgeted factory overhead costs by the plantwide allocation base.
A)True
B)False
Q2) Use of a plantwide factory overhead rate does not distort product costs when there are differences in the factory overhead rates across different production departments.
A)True B)False
Q3) Tibet 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 $7 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.
Q4) A single plantwide overhead rate method is very expensive to apply.
A)True
B)False
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Chapter 12: Cost Management for Just-In-Time
Environments
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Sample Questions
Q1) Just-in-Time (JIT) manufacturing is also called make-to-order manufacturing.
A)True
B)False
Q2) Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a just-in-time cell for each customer. The following information relates only to one customer's just-in-time cell for the coming year. Projected labor and overhead, $7,370,000; materials costs, $28 per unit. Planned production included 4,000 hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped amounted to 1,380 units. From the foregoing information, determine the manufacturing cost per unit.
A) $240.00
B) $268.00
C) $296.00
D) $1,870.50
Q3) It is easier to quantify costs of controlling quality than the costs of failing to control quality.
A)True
B)False
Page 13
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) An analysis of the general ledger accounts indicates that equipment, with an original cost of $134,000 and accumulated depreciation of $105,000 on the date of sale, was sold for $20,000 during the year. Using this information, indicate the items to be reported on the statement of cash flows using the indirect method.
Q2) The declaration and issuance of a stock dividend would be reported on the statement of cash flows.
A)True
B)False
Q3) A building with a cost of $153,000 and accumulated depreciation of $42,000 was sold for a $11,000 gain. When using the indirect method, the cash generated from this investing activity was $121,000.
A)True
B)False
Q4) On the statement of cash flows, the cash flows from operating activities section would include
A) receipts from the issuance of capital stock
B) receipts from the sale of investments
C) payments for the acquisition of investments
D) cash receipts from sales activities
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) In computing the rate earned on total assets, interest expense is subtracted from net income before dividing by average total assets.
A)True
B)False
Q2) The excess of current assets over current liabilities is referred to as working capital.
A)True
B)False
Q3) 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
Q4) Using measures to assess a business's ability to pay its current liabilities is called current position analysis.
A)True
B)False
Q5) Define solvency and profitability. How are they alike?
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Chapter 15: Managerial Accounting Concepts and Principles
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Sample Questions
Q1) A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $32,000 respectively, the cost of goods manufactured was:
A) $218,000
B) $226,000
C) $190,000
D) $222,000
Q2) Goods that are partway through the manufacturing process, but not yet complete, are referred to as materials inventory.
A)True
B)False
Q3) Manufacturers use labor, plant, and equipment to convert direct materials into finished products.
A)True
B)False
Q4) Product costs are also referred to as inventoriable costs.
A)True
B)False
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