Cost Accounting Test Bank
Course Introduction
Cost Accounting is a comprehensive course that explores the principles, methods, and techniques used to determine, analyze, and control the costs associated with producing goods or providing services. Students will learn about various costing systems such as job order, process, and activity-based costing, and understand how cost information supports decision-making, budgeting, and strategic planning within organizations. The course emphasizes the application of cost accounting data in performance evaluation, cost control, pricing, and profitability analysis, equipping students with essential skills for managerial roles in a broad range of industries.
Recommended Textbook Cornerstones of Managerial Accounting 3rd Edition by Maryanne M. Mowen
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14 Chapters
2120 Verified Questions
2120 Flashcards
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Chapter 1: Introduction to Managerial Accounting
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64 Verified Questions
64 Flashcards
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Sample Questions
Q1) What is a primary objective of managerial accounting?
A) to provide the Canada Revenue Agency with information about taxable income
B) to provide management with information useful for planning and control of operations
C) to provide banks and other creditors with information useful in making credit decisions
D) to provide existing shareholders and potential investors with useful information for decision making Answer: B
Q2) Which employee would normally occupy a line position?
A) the treasurer
B) the controller
C) the purchasing manager
D) the vice-president of marketing Answer: D
Q3) In larger organizations, the controller is typically also the Chief Executive Officer of a company.
A)True
B)False Answer: False
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Chapter 2: Basic Managerial Accounting Concepts
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217 Verified Questions
217 Flashcards
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Sample Questions
Q1) Factory assembly line worker's wages
A)Product Cost, Direct Material
B)Product Cost, Direct Labour
C)Product Cost, Manufacturing Overhead
D)Product Cost, Selling Expense
E)Product Cost, Administrative Expense
F)Period Cost, Direct Material
G)Period Cost, Direct Labour
H)Period Cost, Manufacturing Overhead
I)Period Cost, Selling Expense
J)Period Cost, Administrative Expense
Answer: B
Q2) Costs may be directly or indirectly associated with cost objects.
A)True
B)False
Answer: True
Q3) Accounting firm
A)Tangible
B)Intangible Answer: B
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Chapter 3: Cost Behaviour
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211 Verified Questions
211 Flashcards
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Sample Questions
Q1) A variable cost decreases in total and per-unit when output decreases.
A)True
B)False
Answer: False
Q2) Refer to Kelowna Company. What is the set of high and low months? High Low
A) June July
B) June October
C) October June
D) October September
Answer: C
Q3) Refer to Nova Scotia Accounting Firm. What does "number of tax returns" represent?
A) the intercept
B) the variable rate
C) the dependent variable
D) the independent variable
Answer: D
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Page 5
Chapter 4: Cost-Volume-Profit Analysis: a Managerial Planning Tool
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154 Verified Questions
154 Flashcards
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Sample Questions
Q1) Wendall Company sells only one product at a regular sales price of $7.50 per unit. At that sales price, variable costs are 60% of sales, and fixed costs are $30,000. Management has decided to decrease the sales price to $6 in hopes of increasing its volume of sales. What is the contribution margin ratio when the sales price is reduced to $6 per unit?
A) 25%
B) 40%
C) 60%
D) 75%
Q2) Refer to Plastic Gym. The company expects tree house demand to increase from 4,000 to 8,000 units per year. What is the new contribution margin ratio?
A) 38%
B) 40%
C) 50%
D) 60%
Q3) Common fixed expenses are the fixed costs that are traceable to the segments and would remain even if one of the segments was eliminated.
A)True
B)False
Page 6
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Chapter 5: Job-Order Costing
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195 Verified Questions
195 Flashcards
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Sample Questions
Q1) Which statement most accurately describes a job-order costing?
A) Work-in-Process consists of all completed work.
B) Many different jobs are listed on a job-order cost sheet.
C) Direct labour is allocated to jobs along with manufacturing overhead.
D) Time tickets are used to assign the cost of direct labour to individual jobs.
Q2) Actual overhead costs are accumulated in the overhead control account.
A)True
B)False
Q3) The journal entry for $17,000 materials purchased on account is:
Raw Materials Inventory 17,000
Accounts Payable 17,000
A)True
B)False
Q4) Refer to Bob's Powerwasher Company. What is the balance in the Work-in-Process Inventory account on April 30?
A) $87,498
B) $88,340
C) $104,262
D) $106,570
Q5) Discuss overapplied and underapplied overhead.
Page 7
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Chapter 6: Process Costing
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156 Verified Questions
156 Flashcards
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Sample Questions
Q1) The Stewart Company had computed the flow of units for Department 123 for the month of July as follows:
Work-in-Process Inventory, July 1: 10,000 Started into production during July 39,000 Units to be accounted for 49,000 \(\begin{array}{lrr}&\text { Beginning }&\text { Added during the }\\&\text { Work-in-Process Inventory }&\text { current month }\\ \text { Materials } & \$ 20,800 & \$ 97,500 \\ \text { Labour } & 5,200 & 34,920 \\ \text { Manufacturing overhead } & 4,800 & 32,980\\\text { Total }&\$30,800&\$165,400 \end{array}\) Materials are added at the beginning of the process. There were 8,000 units of Work-in-Process Inventory at July 31. The Work-in-Process Inventory at July 1 was 70% complete as to direct labour and manufacturing overhead costs, and the Work-in-Process Inventory at July 31 was 60% complete as to direct labour and manufacturing overhead costs. What was the cost of the goods transferred out and in ending Work-in-Process Inventory using the FIFO costing method?
Q2) Describe the differences between sequential and parallel processing.
Q3) Describe the differences between process costing and job-order costing.
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Chapter 7: Activity-Based Costing and Management
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159 Verified Questions
159 Flashcards
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Sample Questions
Q1) What costing method can help a company to become more competitive by providing more accurate cost data?
A) production costing
B) unit-based costing
C) volume-based costing
D) activity-based costing
Q2) Activities necessary to remain in business
A)Cycle time
B)Non-value-added
C)Velocity
D)Quality
E)Value-added activities
F)Efficiency
Q3) Refer to CompInc. What is the inexpensive laptop's consumption ratio for setup hours?
A) 0.25
B) 0.45
C) 0.50
D) 0.75
Q4) What is the activity based costing hierarchy? Give an example for each.
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Chapter 8: Absorption and Variable Costing, and Inventory Management
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Birdd Company uses 450 units of a part each year. The cost of placing one order is $10; the cost of carrying one unit in inventory for a year is $2. Birdd currently orders 90 units at a time.
A. Calculate the annual ordering cost of Birdd's current policy.
B. Calculate the annual carrying cost of Birdd's current policy.
C. Calculate the total cost of Birdd's current policy.
D. Calculate the EOQ for Birdd.
E. Calculate the total inventory-related cost at the EOQ.
Q2) Which accounting method is used for external reporting?
A) variable costing
B) absorption costing
C) transfer price costing
D) responsibility costing
Q3) Which of the following is NOT a traditional reason for carrying inventory?
A) to satisfy customer demand
B) to hedge against future cost increases
C) to support a reliable production process
D) to avoid shutting down manufacturing facilities
Q4) List three problems that inventory is meant to solve. How does the JIT producer handle these problems?
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Chapter 9: Budgeting, Production, Cash, and Master Budget
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165 Verified Questions
165 Flashcards
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Sample Questions
Q1) Comparing actual results with budgeted results on a periodic basis provides planning in a budgetary system.
A)True
B)False
Q2) Refer to Miso Company. What cash is budgeted to be collected on account in August?
A) $45,000
B) $54,600
C) $132,600
D) $139,000
Q3) Ideally, managers are held accountable for controllable costs.
A)True
B)False
Q4) The controller usually serves as the budget director to review the budget, provide policy guidelines and budgetary goals, resolve differences that arise as the budget is prepared, approve the final budget, and monitor the actual performance of the organization as the year unfolds.
A)True
B)False
Q5) What are the advantages of budgeting?
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Chapter 10: Standard Costing: a Managerial Control Tool
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172 Flashcards
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Sample Questions
Q1) Bronze Brick Company uses the following rule to determine whether materials usage variances should be investigated:
A materials usage variance will be investigated when the variance is greater than either $5,000 or 12% of the standard cost.
During May, the company purchased and used 11,000 kg of concrete for $5 per kilogram. It was able to make 20,000 bricks. Its standard quantity of materials allowed is 0.50 kg of concrete per brick at a standard price of $6.50 per kilogram.
Required:
A. Determine Bronze's material usage variance and whether it is favourable or unfavourable.
B. Should the variance be investigated?
Q2) The unit standard quantity of inputs is an essential component in the computation of total amount of inputs allowed for the actual output and efficiency variances.
A)True
B)False
Q3) Explain the kaizen approach to costing.
Q4) How are standards developed?
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Chapter 11: Flexible Budgets and Overhead Analysis
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147 Verified Questions
147 Flashcards
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Sample Questions
Q1) Which of the following may cause an unfavourable variable overhead spending variance?
A) the use of excessive quantities of variable overhead items
B) the payment of lower prices for variable overhead items used
C) the payment of higher prices for variable overhead items used
D) the use of excessive quantities of the variable overhead allocation base
Q2) Most fixed overhead costs are affected by changes in production levels. A)True
B)False
Q3) Discuss why activity-based flexible budgeting provides a more accurate prediction of costs than a traditional flexible budget.
Q4) Refer to Kelsey, Inc. What can be concluded when comparing the static budget to the actual costs?
A) The salary of the plant supervisor is fixed.
B) Immediate action is needed to reduce costs.
C) The plant manager was clearly not efficient.
D) The manager spent more than should have been spent.
Q5) In an activity framework, controlling costs results from managing activities. A)True B)False
Page 13
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Chapter 12: Performance Evaluation and Decentralization
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145 Flashcards
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Sample Questions
Q1) A key feature of economic value added (EVA) is that it emphasizes after-tax operating income and the actual cost of capital.
A)True
B)False
Q2) A Balanced Scorecard viewpoint that describes the internal processes needed to provide value for customers and owners
A)Internal business process perspective
B)Learning and growth perspective
C)Customer perspective
D)Financial perspective
Q3) A responsibility centre in which a manager is responsible for sales, costs, and investments
A)Centralization
B)Revenue centre
C)Profit centre
D)Cost centre
E)Investment centre
F)Decentralization
Q4) Describe the four perspectives of the Balanced Scorecard.
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Chapter 13: Short-Run Decision Making: Relevant Costing
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84 Verified Questions
84 Flashcards
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Sample Questions
Q1) What kind of decision focuses on whether a one-off order should be accepted or rejected?
A) a relevant decision
B) a special-order decision
C) a make-or-buy decision
D) a sell-or-process-further decision
Q2) RJB Building routinely bids on construction jobs. The company first determines the budgeted product cost of the job and then applies a markup of 45%. If a bid of $20,000 is submitted for a new job, which of the following statements applies?
A) The budgeted product cost is $20,000.
B) All costs pertaining to the job total $20,000.
C) $6,207 includes selling and administrative expense and profit.
D) $6,207 includes fixed overhead, selling and administrative expense, and profit.
Q3) At split-off, the joint costs of production for joint products are NOT relevant to the sell-or-process-further decision.
A)True
B)False
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Chapter 14: Capital Investment Decisions
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151 Flashcards
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Sample Questions
Q1) If cash flows are uneven, the payback period assumes that the inflows during the last fraction of a year occur evenly.
A)True
B)False
Q2) A company is considering a project with an annual cash flow of $100,000. The project would have a 10-year life, and the company uses a discount rate of 8%. What is the maximum amount the company could invest in the project and have the project still be acceptable?
A) $406,420
B) $671,000
C) $727,208
D) $800,000
Q3) What is a follow-up analysis of a capital investment after it is implemented?
A) a postaudit
B) a peer review
C) a profitability analysis
D) a capital investment review
Q4) What are some reasons why companies use the payback period model in capital investment decision making?
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