Cost Accounting Review Questions
Course Introduction
Cost Accounting is a specialized field of accounting that focuses on capturing, analyzing, and controlling costs associated with producing goods or providing services. This course introduces students to key concepts such as cost behavior, cost allocation, job and process costing, budgeting, and standard costing techniques. Through theoretical frameworks and practical case studies, students learn how to use cost information to support planning, decision-making, and performance evaluation within an organization. Emphasis is placed on understanding how cost accounting contributes to efficiency improvement, financial reporting, and strategic management in various business contexts.
Recommended Textbook
Managerial Accounting 3rd Canadian Edition by Karen
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12 Chapters
3096 Verified Questions
3096 Flashcards
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W. Braun
Page 2
Chapter 1: Introduction to Managerial Accounting
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) The person MOST likely to use ONLY financial accounting information would be the
A) bank loan officer.
B) plant manager.
C) vice president of plant operations.
D) product manager.
Answer: A
Q2) Management accountants only advise cross-functional teams because teams consist of employees from R&D, design, production, marketing, distribution, and customer service.
A)True
B)False
Answer: False
Q3) The cost of training production personnel on their job tasks is an example of a(n) A) internal failure cost.
B) external failure cost.
C) prevention cost.
D) appraisal cost.
Answer: C
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Chapter 2: Building Blocks of Managerial Accounting
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265 Verified Questions
265 Flashcards
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Sample Questions
Q1) What are the total manufacturing costs to account for at Active Apparel Company?
A) $620,000
B) $500,000
C) $685,000
D) $493,000
Answer: A
Q2) What is the total cost for the research and development category of the value chain at Sunnybrook Orange Groves?
A) $93,000
B) $102,000
C) $89,000
D) $191,000
Answer: C
Q3) Sanjay Company's total sales revenue will be
A) $160,000.
B) $120,000.
C) $112,000.
D) $8,000.
Answer: A
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Page 4
Chapter 3: Cost Behaviour
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374 Verified Questions
374 Flashcards
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Sample Questions
Q1) At Vanco Industries, what is closest to the total cost if the firm uses 5,000 machine hours?
A) $6,899.65
B) $2,413.21
C) $12,066,068.80
D) $4,486.43
Answer: A
Q2) Under absorption costing, fixed manufacturing costs are not expensed until the units are sold.
A)True
B)False
Answer: True
Q3) Absorption costing is required by
A) federal income tax reports.
B) external financial reports, but not income taxes.
C) both external financial reports and income tax reports.
D) neither external financial reports nor income tax reports.
Answer: C
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Chapter 4: Cost-Volume-Profit Analysis
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272 Flashcards
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Sample Questions
Q1) Fixed costs divided by weighted-average contribution margin per unit equals A) contribution margin ratio.
B) margin of safety ratio.
C) break-even sales in dollars.
D) break-even sales in units.
Q2) Which of the following statements is TRUE if total fixed costs decrease while the sale price per unit and variable costs per unit remain constant?
A) Contribution margin increases.
B) Contribution margin decreases.
C) Break-even point in units decreases.
D) Break-even point in units increases.
Q3) Coodson Company sells two products, Quartz models and Wind-up models. Coodson predicts that it will sell 7,200 Quartz models and 5,600 Wind-up models in the next period. The unit contribution margins for Quartz models and Wind-up models are $31 and $63, respectively. What is the weighted-average unit contribution margin?
A) $0.02
B) $45.00
C) $360.00
D) $23.14
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Page 6
Chapter 5: Job Costing
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353 Verified Questions
353 Flashcards
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Sample Questions
Q1) Job 241 has an ending balance of $26,000. It has been charged manufacturing overhead costs of $6,000. The rate is 75% of direct labour. What was the amount of direct materials charged to the job?
A) $12,000
B) $22,000
C) $24,500
D) $19,500
Q2) The primary factor causing a "cost" is called a
A) cost allocation.
B) cost driver.
C) materials requisition.
D) predetermined manufacturing overhead rate.
Q3) The cost of direct labour used in production is recorded as a A) credit to Manufacturing Overhead.
B) credit to Work in Process Inventory.
C) credit to Wages Payable.
D) credit to Wages Expense.
Q4) Finished goods inventory is credited when the product is sold.
A)True
B)False
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Chapter 6: Process Costing
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288 Flashcards
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Sample Questions
Q1) The number of equivalent units for vitamins and minerals at Hannish Orchards is
A) 8,800.
B) 10,000.
C) 8,000.
D) 2,000.
Q2) If all direct materials are added at the end of the production process, and the units have made it 50% of the way through the production process, then the percentage completion for direct materials is
A) 0%.
B) 100%.
C) 50%.
D) none of the above.
Q3) At Zander Corporation, what are the equivalent units for conversion costs?
A) 11,250
B) 6,300
C) 2,250
D) 9,000
Q4) When the units are sold, Cost of Goods Sold is debited.
A)True
B)False
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Chapter 7: Activity Based Costing
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Sample Questions
Q1) Two main benefits of ABC are: (1) more accurate product cost information, and (2) more detailed information on the costs of activities and the drivers of those costs.
A)True
B)False
Q2) The benefits of adopting ABC/ABM are higher for companies in more competitive markets.
A)True
B)False
Q3) The allocation base selected for each department should be the cost driver of the costs in the departmental overhead pool.
A)True
B)False
Q4) The four categories of activity costs in cost hierarchy are determined by the underlying factor that drives its costs.
A)True
B)False
Q5) What is activity-based management and how can it be used to improve the profitability of a company?
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Chapter 8: Short-Term Business Decisions
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Sample Questions
Q1) Assuming Accessibility Products Company drops model F and does not replace it, what affect will this have on operating income?
A) Decrease $1,000
B) Increase $1,000
C) Increase $15,000
D) Decrease $15,000
Q2) Target total cost is defined as
A) revenue at market price less desired profit.
B) cost of goods sold less desired profit.
C) revenue at market price less variable costs.
D) revenue at market price less fixed costs.
Q3) What is the contribution margin per machine hour for cat trees at Cozy Cat Furniture ?
A) $38
B) $244
C) $76
D) $30
Q4) Qualitative factors play an important part in make or buy decisions.
A)True
B)False
Page 10
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Chapter 9: The Master Budget and Responsibility Accounting
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Sample Questions
Q1) Investments centres are generally large divisions of corporations.
A)True
B)False
Q2) The budget committee
A) rarely has the final say on the budget.
B) usually is made up of the accounting staff.
C) usually is made up of the Board of Directors.
D) usually is made up of managers from all areas of the value chain.
Q3) The operating budgets project the collection and payment of cash, as well as forecast the company's budgeted balance sheet.
A)True
B)False
Q4) A plan that shows the units to be sold and the projected selling price and is also the starting point in the budgeting process, is called the
A) cash budget.
B) budgeted statement of cash flows.
C) sales budget.
D) budgeted income statement.
Page 11
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Chapter 10: Flexible Budgets and Standard Costs
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260 Flashcards
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Sample Questions
Q1) What is the actual cost of the direct materials used per kilogram at Grayson Industries?
A) $1.45
B) $2.00
C) $.95
D) $1.20
Q2) A debit balance in the direct materials price variance indicates the standard cost of materials was more than the actual cost of materials.
A)True
B)False
Q3) What is the flexible budget variance for variable manufacturing overhead?
A) $54,000 unfavourable
B) $19,600 unfavourable
C) $11,000 unfavourable
D) $161,500 unfavourable
Q4) What is the variable overhead spending variance?
A) $13,611 unfavourable
B) $13,611 favourable
C) $19,600 favourable
D) $19,600 unfavourable
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Chapter 11: Performance Evaluation and the Balanced Scorecard
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195 Flashcards
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Sample Questions
Q1) Financial measures are lead indicators for companies.
A)True
B)False
Q2) The convenience store owned by a national chain is likely to be classified as a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.
Q3) The purpose of the balanced scorecard is BEST described as helping an organization
A) develop customer relations.
B) mobilize employee skills for continuous improvements in processing capabilities, quality, and response times.
C) introduce innovative products and services desired by target customers.
D) translate an organization's mission and strategy into a set of performance measures that help to implement the strategy.
Q4) Cost centre performance reports typically focus on the static budget variance. A)True
B)False
Page 13
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Chapter 12: Capital Investment Decisions and the Time
Value of Money
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Sample Questions
Q1) Assuming an interest rate of 6%, if you invest a lump sum of $6,500 now, the balance of your investment in 7 years will be closest to
A) $45,500.
B) $11,642.
C) $36,283.
D) $9,776.
Q2) Which term below is best described as "the length of time required to recover the cost of an investment"?
A) Time value of money
B) Capital budgeting
C) Payback period
D) Annuity
Q3) When the present value of expected cash inflows from a project equals the present value of expected cash outflows of a project, the discount rate is the
A) hurdle rate.
B) internal rate of return.
C) required rate.
D) net present value rate.
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