Cost Accounting Question Bank
Course Introduction
Cost Accounting is an essential course that explores the methods and systems used to record, analyze, and manage costs within organizations. Students learn about various costing techniques, including job order, process, and activity-based costing, and how these approaches inform decision-making and planning. The course emphasizes cost behavior, cost allocation, budgeting, and performance evaluation, equipping learners with the skills needed to support strategic financial decisions and improve operational efficiency across diverse business environments.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 11th Edition by Tracie L. Miller Nobles
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9 Chapters
1673 Verified Questions
1673 Flashcards
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Page 2
Chapter 18: Introduction to Managerial Accounting
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210 Verified Questions
210 Flashcards
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Sample Questions
Q1) Which of the following is a product cost?
A) sales commissions
B) CEO's salary
C) delivery van depreciation
D) depreciation on production equipment
Answer: D
Q2) ________ is a philosophy of continuous improvement of products and processes.
A) Just-in-Time (JIT) Management
B) Enterprise Resource Planning (ERP)
C) Supply Chain Management (SCM)
D) Total Quality Management (TQM)
Answer: D
Q3) Product costs,such as factory overhead,should be treated as an asset until the product is sold.
A)True
B)False
Answer: True
Q4) Define direct cost.
Answer: A direct cost is a cost that can be easily and cost-effectively traced to a cost object.
Page 3
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Chapter 19: Job Order Costing
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170 Verified Questions
170 Flashcards
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Sample Questions
Q1) What is cost of goods manufactured? Describe the flow of this cost through the job order costing system.Your answer should include the accounts involved and whether the flow involves a debit or credit.
Answer: When a job is completed,the costs are transferred out of Work-in-Process with a credit and transferred into Finished Goods Inventory with a debit.This amount is called Cost of Goods Manufactured.
Q2) Work-in-Process Inventory is debited when indirect labor costs are incurred in a job order costing system.
A)True
B)False
Answer: False
Q3) If the debit side of the Manufacturing Overhead account totals more than the credit side of the account,the manufacturing overhead is overallocated.
A)True
B)False
Answer: False
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Chapter 20: Process Costing
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167 Verified Questions
167 Flashcards
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Sample Questions
Q1) The production cost report for Department 1 shows that $160,000 was assigned to the 38,000 units transferred to Department 2.This transfer cost assigned to units transferred to Department 2 is recorded with a debit to Work-in-Process-Department 1.
A)True
B)False
Answer: False
Q2) Which of the following formulas is used to calculate the cost per equivalent unit of production (EUP)for direct materials? The weighted-average method is used.
A) Cost per EUP for direct materials = Total conversion costs / Equivalent units of production for direct materials
B) Cost per EUP for direct materials = Total direct materials costs / Equivalent units of production for direct materials
C) Cost per EUP for direct materials = Total transferred in costs / Equivalent units for transferred in
D) Cost per EUP for direct materials = Total direct materials costs / Equivalent units of production for conversion costs
Answer: B
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Chapter 21: Cost-Volume-Profit Analysis
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238 Verified Questions
238 Flashcards
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Sample Questions
Q1) Fixed costs per unit decrease as production levels decrease.
A)True
B)False
Q2) A company's proportion of fixed costs to variable costs is called its ________.
A) target profit
B) relevant range
C) mixed cost
D) cost structure
Q3) Within the relevant range,the total fixed costs and the variable cost per unit remain the same.
A)True
B)False
Q4) Variable cost per unit,within the relevant range,will ________.
A) increase as production decreases
B) decrease as production decreases
C) remain the same as production levels change
D) decrease as production increases
Q5) The sales level at which operating income is zero is called the breakeven point. A)True
B)False
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Chapter 22: Master Budgets
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172 Verified Questions
172 Flashcards
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Sample Questions
Q1) The inventory costing method affects the process of preparing the cost of goods sold budget.
A)True
B)False
Q2) To calculate budgeted direct labor costs,multiply the number of units to be produced by the number of projected direct labor hours.Next,multiply that total by the average direct cost per hour.
A)True
B)False
Q3) The financial budget of a merchandising company is similar to that of a manufacturing company.
A)True
B)False
Q4) The ________ details how the business expects to go from the beginning cash balance to the desired ending cash balance.
A) capital expenditures budget
B) budgeted income statement
C) cash flow statement
D) cash budget
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Chapter 23: Flexible Budgets and Standard Cost Systems
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204 Flashcards
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Sample Questions
Q1) The static budget,at the beginning of the month,for Steak Frites Company follows:
Static budget:
Sales volume: 1,100 units; Sales price: $70.00 per unit
Variable costs: $32.00 per unit; Fixed costs: $38,500 per month
Operating income: $3,300
Actual results,at the end of the month,follows:
Actual results:
Sales volume: 995 units; Sales price: $74.00 per unit
Variable costs: $36.00 per unit; Fixed costs: $35,000 per month
Operating income: $2,810
Calculate the sales volume variance for revenue.
A) $3,500 U
B) $7,350 U
C) $3,990 U
D) $3,980 F
Q2) A standard cost system helps management set performance standards.
A)True
B)False
Q3) What does the fixed overhead cost variance measure?
Q4) What does the variable overhead cost variance measure?
Page 8
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Chapter 24: Cost Allocation and Responsibility Accounting
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189 Flashcards
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Sample Questions
Q1) Companies evaluate investment centers using the same measures as the profit centers.
A)True
B)False
Q2) Which of the following statements is true?
A) Indirect costs must be allocated based on a single plant wide rate.
B) Manufacturing overhead costs are individually assigned to products.
C) Managers cannot wait until the end of the accounting period for product cost information.
D) Managers can choose to wait until the end of the accounting period to allocate manufacturing overhead costs.
Q3) When a division is operating at capacity,the transfer price should be ________.
A) based on opportunity cost
B) a market-based transfer price
C) a cost-based transfer price
D) the total manufacturing cost
Q4) A profit center performance report includes both revenues and expenses.
A)True
B)False
Q5) Explain the difference between a controllable and a noncontrollable cost.
Page 9
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Chapter 25: Short-Term Business Decisions
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181 Flashcards
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Sample Questions
Q1) Which of the following is always irrelevant to short-term operating decisions?
A) relevant cost
B) differential cost
C) opportunity cost
D) sunk cost
Q2) Victory Tire Company makes a special kind of racing tire.Variable costs are $220 per unit,and fixed costs are $10,000 per month.Victory sells 600 units per month at a sales price of $300.If the quality of the tire is upgraded,the company believes it can increase the sales price to $350.If so,the variable cost will increase to $240 per unit,and the fixed costs will remain the same.If Victory decides to upgrade,how will it affect operating income?
A) Operating income will decrease by $18,000.
B) Operating income will decrease by $12,000.
C) Operating income will increase by $12,000.
D) Operating income will increase by $18,000.
Q3) If a business is considering buying a new vehicle,the cost of the insurance premium is relevant to the business decision.
A)True
B)False
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Page 10
Chapter 26: Capital Investment Decisions
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142 Verified Questions
142 Flashcards
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Sample Questions
Q1) The last step in the capital budgeting process is control,which compares the actual results with the projected results.These comparisons are known as ________.
A) net cash inflows
B) post-audits
C) rankings
D) variance analysis
Q2) The payback method is a screening device and is rarely used as the sole method for deciding whether to invest in an asset.
A)True
B)False
Q3) The payback method considers cash flows that occur both during and after the payback period.
A)True
B)False
Q4) The payback method is used only when the net cash inflows from a capital investment are the same for each period.
A)True
B)False
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