Cost Accounting Test Bank
Course Introduction
Cost Accounting is a specialized branch of accounting that focuses on the identification, measurement, analysis, and management of costs associated with producing goods or providing services. This course introduces students to the fundamental concepts and methods used in cost determination, cost allocation, budgeting, and performance evaluation. Students will learn how cost information supports managerial decision-making, planning, and control, covering topics such as job costing, process costing, activity-based costing, and standard costing. Emphasis is placed on the practical application of cost accounting techniques in real-world business scenarios to help organizations achieve operational efficiency and strategic objectives.
Recommended Textbook Managerial Accounting 13th Edition by Carl Warren
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14 Chapters
2568 Verified Questions
2568 Flashcards
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Chapter 1: Managerial Accounting Concepts and Principles
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201 Verified Questions
201 Flashcards
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Sample Questions
Q1) Managerial accounting reports must be prepared according to generally accepted accounting principles.
A)True
B)False
Answer: False
Q2) What is the primary criterion for the preparation of managerial accounting reports?
A)relevance of the reports
B)manager needs
C)timing of the reports
D)cost of the reports
Answer: B
Q3) Jensen Company's product costs are
A)$995,000
B)$920,000
C)$825,000
D)$770,000
Answer: A
Q4) Differentiate between a line department and a staff department.
Answer: 11ea855c_6e65_c4b0_9aec_5192630972b9_TB6237_00
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Chapter 2: Job Order Costing
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195 Flashcards
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Sample Questions
Q1) typically used by companies whose products are indistinguishable from each other
A)job order cost system
B)process cost system
C)activity-based costing
D)under applied overhead
E)over applied overhead
F)finished goods ledger
G)materials ledger
Answer: B
Q2) Each account in the work in process subsidiary ledger in a job order costing system is called a job cost sheet.
A)True
B)False
Answer: True
Q3) The document authorizing the issuance of materials from the storeroom is a
A)materials requisition
B)purchase requisition
C)receiving report
D)purchase order
Answer: A
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Chapter 3: Process Cost Systems
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198 Flashcards
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Sample Questions
Q1) If the costs for direct materials, direct labor, and factory overhead were $277,300, $52,600, and $61,000, respectively, for 14,000 equivalent units of production, the total conversion cost was $390,900.
A)True
B)False Answer: False
Q2) Equivalent units of production are the number of units that could have been manufactured from start to finish during an accounting period.
A)True
B)False Answer: True
Q3) If 10,000 units that were 50% completed are in process at November 1, 90,000 units were completed during November, and 20,000 were 20% completed at November 30, the number of equivalent units of production for November was 90,000.Assume no loss of units in production and that inventories are costed by the first-in, first- out method.
A)True
B)False Answer: False
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Chapter 4: Cost Behavior and Cost-Volume-Profit Analysis
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225 Flashcards
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Sample Questions
Q1) Mia Enterprises sells a product for $90 per unit.The variable cost is $40 per unit, while fixed costs are $75,000.Determine the a break-even point in sales units, and b break-even point in sales units if the selling price increased to $100 per unit.
Q2) If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales units?
A)3,425 units
B)2,381 units
C)2,000 units
D)4,808 units
Q3) The dollars available from each unit of sales to cover fixed cost and profit is the unit variable cost.
A)True
B)False
Q4) The Waterfall Company sells a product for $150 per unit.The variable cost is $80 per unit, and fixed costs are $270,000.
Determine the a break-even point in sales units, and b break-even points in sales units if the company desires a target profit of $36,000.Round your answer to the nearest whole number.
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Page 6
Chapter 5: Variable Costing for Management Analysis
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160 Flashcards
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Sample Questions
Q1) Contribution margin reporting and analysis is appropriate only for manufacturing firms, not for service firms.
A)True
B)False
Q2) Treats fixed manufacturing cost as a period cost.
A)Absorption costing only
B)Variable costing only
C)Both absorption and variable costing
Q3) 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
Q4) Service firms can only have one activity base for analyzing changes in costs.
A)True
B)False
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Chapter 6: Budgeting
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197 Flashcards
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Sample Questions
Q1) The cash collections expected in September from accounts receivable are estimated to be
A)$223,600
B)$145,600
C)$182,000
D)$168,000
Q2) For April, sales revenue is $700,000; sales commissions are 5% of sales; the sales manager's salary is $98,000; advertising expenses are $90,000; shipping expenses total 2% of sales; and miscellaneous selling expenses are $2,100 plus 1/2 of 1% of sales.Total selling expenses for the month of April are
A)$159,100
B)$242,600
C)$186,000
D)$182,100
Q3) If Division Inc.expects to sell 200,000 units in the current year, desires ending inventory of 24,000 units, and has 22,000 units on hand as of the beginning of the year, the budgeted volume of production for the year is 198,000 units.
A)True
B)False
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Page 8
Chapter 7: Performance Evaluation Using Variances From Standard
Costs
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175 Verified Questions
175 Flashcards
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Sample Questions
Q1) The direct labor time variance measures the efficiency of the direct labor force. A)True
B)False
Q2) Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material at $4.50 and standard costs for 4,800 pounds of material at $5.10 per pound. What is the direct materials quantity variance?
A)$1,020 favorable
B)$1,020 unfavorable
C)$900 favorable
D)$900 unfavorable
Q3) If the price paid per unit differs from the standard price per unit for direct materials, the variance is a
A)variable variance
B)controllable variance
C)price variance
D)volume variance
Q4) Compute the direct materials price and quantity variances for Taylor Company.
Q5) Compute the direct labor rate and time variances for Taylor Company.
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Chapter 8: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) The underlying principle of allocating direct operating expenses to departments is to assign to each department an amount of expense proportional to the revenues of that department.
A)True
B)False
Q2) The rate of return on investment may be computed by multiplying investment turnover by the profit margin.
A)True
B)False
Q3) In a profit center, the manager has responsibility and authority for making decisions that affect
A)long-term liabilities
B)assets
C)investments
D)costs
Q4) A manager in a cost center also has responsibility and authority over the revenues.
A)True
B)False
Page 10
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Chapter 9: Differential Analysis, Product Pricing, and
Activity-Based Costing
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175 Verified Questions
175 Flashcards
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Sample Questions
Q1) Target selling price to be achieved in the long term
A)Engineering change order
B)Total cost concept
C)Variable cost concept
D)Normal selling price
E)Setup
Q2) The differential revenue of producing Product P is $82 per pound.
A)True
B)False
Q3) When using the total cost concept of applying the cost-plus approach to product pricing, what is included in the markup?
A)total selling and administrative expenses plus desired profit
B)total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit
C)total costs plus desired profit
D)desired profit
Q4) A cost that will not be affected by later decisions is termed a sunk cost.
A)True
B)False
11
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Chapter 10: Capital Investment Analysis
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190 Flashcards
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Sample Questions
Q1) A project has estimated annual net cash flows of $60,000.It is estimated to cost $240,000.Determine the cash payback period.
Q2) Also referred to as capital budgeting
A)Capital investment analysis
B)Time value of money concept
C)Net present value method
D)Average rate of return
E)Cash payback period
Q3) The methods of evaluating capital investment proposals can be grouped into two general categories that can be referred to as 1 methods that ignore present value and 2 present values methods.
A)True
B)False
Q4) A qualitative characteristic that may impact upon capital investment analysis is manufacturing productivity.
A)True
B)False
Q5) Identify four capital investment evaluation methods discussed in the chapter and discuss the strengths and weaknesses of each method.
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Chapter 11: Cost Allocation and Activity-Based Costing
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110 Flashcards
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Sample Questions
Q1) If selling and administrative expenses are allocated to different products, they should be reported as a
A)cost of goods manufactured
B)factory overhead cost
C)period cost
D)cost of goods sold
Q2) A plantwide factory overhead rate assumes that all overhead is directly related to one activity representing the entire plant.
A)True
B)False
Q3) Determine the activity rate for procurement per purchase order.
A)$43.53
B)$18.50
C)$15.42
D)$37.00
Q4) The selection of the factory overhead allocation method is important because the method selected determines the accuracy of the product cost.
A)True
B)False
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Chapter 12: Lean Principles, Lean Accounting, and Activity Analysis
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137 Flashcards
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Sample Questions
Q1) Set up time is disregarded as an improvement priority under the manufacturing concept.
A)traditional
B)lean
C)total quality management
D)product cost
Q2) Returned merchandise
A)Preventive costs
B)Appraisal costs
C)Internal failure costs
D)External failure costs
Q3) Which of the following is best suited to providing timely and focused performance information?
A)nonfinancial information
B)financial accounting information
C)cost accounting information
D)variance analysis
Q4) From the above schedule, compute the percentage of non-value-added activities.
Q6) From the above schedule, calculate the internal failure costs. Page 14
Q5) From the above schedule, calculate the external failure costs.
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Page 15
Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Free cash flow is flow cash from operations less cash used for
A)investments in PP&E needed to maintain current production
B)dividends and cash to redeem bonds payable
C)investments in PP&E needed to achieve desired future production
D)fixed assets needed to maintain productivity and cash to redeem bonds payable
Q2) Indicate the section operating activities, investing activities, financing activities, or none in which each of the following would be reported on the statement of cash flows prepared by the indirect method:
a gain on sale of fixed assets
b net income
c retirement of long-term debt
d sale of capital stock
e distribution of stock dividends
f payment of cash dividends
g purchase of fixed assets
h sale of fixed assets
i receipt of interest revenue
j Payment of interest expense
Q3) The cash flows from operating activities are reported by the direct method on the statement of cash
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Chapter 14: Financial Statement Analysis
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198 Flashcards
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Sample Questions
Q1) a percentage analysis of increases and decreases in related items on comparative financial statements
A)discontinued operations
B)extraordinary items
C)change from one generally accepted accounting principle to another
D)horizontal analysis
E)vertical analysis
F)common-sized financial statements
G)current position analysis
H)profitability analysis
Q2) What is the rate earned on common stockholders' equity for Diane Company?
A)6.75%
B)14.8%
C)7.4%
D)13.5%
Q3) Corporate annual reports typically do not contain
A)management discussion and analysis
B)an SEC statement expressing an opinion
C)accompanying notes
D)an auditor's report
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