Cost Accounting
Solved Exam Questions
Course Introduction
Cost Accounting is a specialized branch of accounting that focuses on capturing, analyzing, and reporting the costs associated with producing goods and services. This course explores various methods of cost determination, cost behavior, and cost allocation techniques such as job costing, process costing, and activity-based costing. Students will learn how to use cost information to support decision-making, budgeting, and performance evaluation within an organization. Through practical exercises and case studies, the course equips students with skills to control costs effectively and enhance profitability, aligning cost accounting practices with strategic business goals.
Recommended Textbook
Horngren's Accounting The Managerial Chapters 11th Edition by Tracie L. Miller Nobles
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1673 Verified Questions
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Chapter 18: Introduction to Managerial Accounting
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210 Flashcards
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Sample Questions
Q1) The following information has been provided by New Age,Inc.: \[\begin{array} { | l | r | }
\hline \text { Direct Labor } & \$ 25,800 \\
\hline \text { Direct Materials Used } & 10,500 \\
\hline \text { Raw Materials Purchased } & 16,820 \\
\hline \text { Cost of Goods Manufactured } & 48,400 \\
\hline \text { Ending Work-in-Process Inventory } & 11,100 \\
\hline \text { Corporate Headquarters' Property Taxes } & 2,000 \\
\hline \text { Manufacturing Overhead } & 19,200 \\
\hline
\end{array}\]
Calculate the beginning balance of the Work-in-Process Inventory account.
A) $92,800
B) $59,500
C) $4,000
D) $44,400
Answer: C
Q2) Define direct cost.
Answer: A direct cost is a cost that can be easily and cost-effectively traced to a cost object.
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Page 3
Chapter 19: Job Order Costing
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170 Flashcards
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Sample Questions
Q1) When raw materials are requisitioned for a job,the Raw Materials Inventory account is debited.
A)True
B)False
Answer: False
Q2) Iglesias,Inc.completed Job 12 on November 30.The details of Job 12 are given below:
\[\begin{array} { | l | r| }
\hline \text { Direct labor cost } & \$ 860 \\
\hline \text { Direct materials cost } & \$ 1,100 \\
\hline \text { Machine hours } & 9 \text { hours } \\
\hline \text { Direct labor hours } & 23 \text { hours } \\
\hline \text { Predetermined overhead allocation rate } & \$ 80 \text { per machine hour } \\
\hline
\end{array}\] What is the total cost of Job 12?
A) $2,680
B) $1,960
C) $1,580
D) $1,820
Answer: A
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Page 4
Chapter 20: Process Costing
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Sample Questions
Q1) In a production cost report,the number of units to account for must always be greater than the number of units accounted for.
A)True
B)False
Answer: False
Q2) The first-in,first-out (FIFO)method creates better month-to-month cost comparisons than the weighted-average method ________.
A) because it does not recognize transferred in units from other processes
B) when there are substantial quantities of units in process at the end of the period
C) because it merges costs from the prior period with the current period
D) because it is used by industries that do not experience significant cost changes
Answer: B
Q3) Under a process costing system,product costs are accumulated with respect to jobs completed.
A)True
B)False
Answer: False
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Chapter 21: Cost-Volume-Profit Analysis
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Sample Questions
Q1) The following data has been provided by Zimtex,Inc.for the year ended December 31,2017.
\[\begin{array} { | l |r | l|}
\hline \text { Units produced and sold } & 5,500& \text { units } \\
\hline \text { Sales price } & \$ 300& \text { per unit } \\
\hline \text { Direct materials } & \$ 90& \text { per unit } \\
\hline \text { Direct labor } & \$ 50& \text { per unit } \\
\hline \text { Variable manufacturing overhead } & \$ 40& \text { per unit } \\
\hline \text { Fixed manufacturing overhead } & \$ 110,000 &\text { per year } \\
\hline \text { Fixed selling and administrative costs } & \$ 150,000 &\text { per year } \\
\hline
\end{array}\] There are no beginning inventories.Prepare an income statement using the contribution margin format.
Q2) Absorption costing considers fixed selling and administrative costs as product costs. A)True
B)False
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Chapter 22: Master Budgets
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Sample Questions
Q1) Louise,Inc.has a cash balance of $24,000 on April 1.The company is now preparing the cash budget for the second quarter.Budgeted cash collections and payments are as follows: \[\begin{array} { | l | r | r | r | }
\hline & \text { Apr } & \text { May } & \text { Jun } \\
\hline \text { Cash collections } & \$ 20,000 & \$ 25,000 & \$ 24,000 \\
\hline \text { Cash payments: } & & & \\
\hline \text { Purchases of direct materials } & 4,000 & 4,000 & 6,200 \\
\hline \text { Operating expenses } & 6,000 & 4,600 & 4,600 \\
\hline
\end{array}\] There are no budgeted capital expenditures or financing transactions during the quarter.Based on the above data,calculate the projected cash balance at the end of May.
A) $25,000
B) $59,000
C) $55,000
D) $50,400
Q2) A strategic budget will be as detailed as an operational budget.
A)True
B)False
Q3) List the three sections of the cash budget.
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Chapter 23: Flexible Budgets and Standard Cost Systems
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Sample Questions
Q1) An efficiency variance measures how well a company keeps unit costs of material and labor inputs within standards.
A)True
B)False
Q2) City Golf Center reported actual operating income for the current year as $66,000.The flexible budget operating income for actual volume is $56,000,while the static budget operating income is $59,000.What is the flexible budget variance for operating income?
A) $10,000 favorable
B) $10,000 unfavorable
C) $3,000 unfavorable
D) $3,000 favorable
Q3) A favorable direct materials cost variance occurs when the actual direct materials cost incurred is less than the standard direct materials cost.
A)True
B)False
Q4) Define variance.What is the difference between a favorable and an unfavorable variance?
Q5) List the direct materials variances,and briefly describe each.
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Chapter 24: Cost Allocation and Responsibility Accounting
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Sample Questions
Q1) Which would be an appropriate cost driver for the shipping and receiving activity?
A) number of inspections
B) number of machine hours
C) number of batches
D) number of pounds of product shipped
Q2) Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue.
A)True
B)False
Q3) The transfer price is the transaction amount of one unit of goods when the transaction occurs between the company and its external customers.
A)True
B)False
Q4) The balanced scorecard is a performance evaluation system that requires management to consider financial measures of performance,but not nonfinancial measures.
A)True B)False
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Chapter 25: Short-Term Business Decisions
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Sample Questions
Q1) Seven Seas Sailboats Company manufactures 100 luxury yachts per month.A compact media center is included in each yacht.Seven Seas Sailboats manufactures the media center in-house.The company is considering the possibility of outsourcing the production of the media center in order to close down some of its facilities and reduce administrative costs.At present,the variable cost per unit is $325,and fixed costs are $37,000 per month.Assuming the company outsources the production of media center and the fixed costs could be eliminated entirely,at what contract cost would outsourcing pay off for Seven Seas? (Round to the nearest whole dollar.)
A) at any cost lower than $370 per unit
B) at any cost lower than $325 per unit
C) at any cost lower than $795 per unit
D) at any cost lower than $695 per unit
Q2) Define the terms Relevant Cost and Sunk Cost.
Q3) A customer of Mason Manufacturing has requested a one-time order at a reduced sales price.Before making the special pricing decision,what are three questions that management of Mason Manufacturing must consider?
Q4) Define joint cost.Should joint costs be considered in the decision to sell or further process the product? Explain your answer.
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Page 10
Chapter 26: Capital Investment Decisions
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Sample Questions
Q1) The payback method uses discounted cash flows to make investment decisions.
A)True
B)False
Q2) Cash flows used in net present value and internal rate of return analyses ignore ________.
A) future increased sales
B) future cost savings
C) depreciation expense
D) residual value
Q3) The Accounting Rate of Return method evaluates the lifetime return of an investment,whereas Return on Investment evaluates the annual return of an investment.
A)True
B)False
Q4) An annuity is a stream of equal cash payments made at equal time intervals.
A)True
B)False
Q5) Under what circumstances is the investment with the shortest payback the best choice? How should managers use the payback method?
Q6) What are the strengths of the net present value capital budgeting method?
Page 11
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