Cost Accounting Test Preparation
Course Introduction
Cost Accounting provides students with an in-depth understanding of the methods and techniques used to determine, analyze, and control costs within organizations. The course covers foundational concepts such as cost classification, cost behavior, job and process costing, activity-based costing, and standard costing. Students will learn how to use cost information for planning, decision-making, budgeting, and performance evaluation, with a focus on practical applications in manufacturing and service environments. Emphasis is placed on the relevance of cost data to management strategies and how cost accounting supports organizational efficiency and competitiveness.
Recommended Textbook
Fundamental Managerial Accounting Concepts 8th Edition by Thomas P Edmonds
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14 Chapters
2016 Verified Questions
2016 Flashcards
Source URL: https://quizplus.com/study-set/3029
Page 2
Chapter 1: Management Accounting and Corporate Governance
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143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/60238
Sample Questions
Q1) Senior executives focus on financial data when comparing the performance of their companies to that of competitors.
A)True
B)False Answer: True
Q2) Under the terms of the Sarbanes-Oxley Act,a company and its external auditor are required to report on the effectiveness of the company's system of internal controls.
A)True
B)False Answer: True
Q3) Costs that are not classified as product costs are normally expensed in the period incurred.
A)True
B)False Answer: True
Q4) Product costs flow from the balance sheet to the income statement.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Cost Behavior, Operating Leverage, and Profitability Analysis
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141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/60237
Sample Questions
Q1) What are mixed or semivariable costs? Give an example of a mixed cost.
Answer: Answers will vary A mixed or semivariable cost has a fixed component and a variable component.Examples would be utilities or compensation of sales staff.For example,if sales personnel receive a salary and a commission,their compensation has a variable part (the commission,which varies with sales)and a fixed part (the salary).
Q2) The magnitude of operating leverage for Perkins Corporation is 4.5 when sales are $100,000.If sales increase to $110,000,profits would be expected to increase by what percent?
A) 4.5%
B) 14.5%
C) 45%
D) 10%
Answer: C
Q3) As activity increases,the fixed cost per unit increases while the variable cost per unit remains constant.
A)True
B)False
Answer: False
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Chapter 3: Analysis of Cost,Volume,and Pricing to Increase Profitability
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144 Verified Questions
144 Flashcards
Source URL: https://quizplus.com/quiz/60236
Sample Questions
Q1) Chesterfield Corporation has been operating well above its break-even point.What will happen to Chesterfield's margin of safety if the variable cost per unit increases?
A) The break-even point would decrease,and the margin of safety would decrease.
B) The break-even point would decrease,and the margin of safety would increase.
C) The break-even point would increase,and the margin of safety would decrease.
D) The break-even point would increase,and the margin of safety would increase.
Answer: C
Q2) Phan Company has not reported a profit in five years.This year the company would like to narrow its loss to $7,500.Assuming its selling price is $36.50 per unit and its variable costs per unit are $24,how many units must be sold to achieve its target given that total fixed costs are $60,000?
A) 2,188
B) 1,439
C) 4,200
D) 1,600
Answer: C
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Chapter 4: Cost Accumulation,Tracing,and Allocation
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156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/60235
Sample Questions
Q1) Herald Manufacturing Company uses a predetermined overhead rate to allocate fixed manufacturing overhead to production on a monthly basis.At the end of the accounting period it was determined that actual overhead cost was less than the estimated overhead cost and that the actual volume of production was higher than estimated.Based on this information alone:
A) The correct amount of cost was assigned to products during the accounting period.
B) Too much cost was assigned to products during the accounting period.
C) Too little cost was assigned to products during the accounting period.
D) The answer cannot be determined from the information provided.
Q2) The method of allocating service department costs that allocates the costs to both service departments and operating departments is the:
A) direct method.
B) indirect method.
C) weighted average method.
D) step method.
Q3) Indicate whether each of the following statements is
Q4) Why is a company's selection of cost allocation methods important to individual managers?
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Chapter 5: Cost Management in an Automated Business
Environment: ABC, ABM, and TQM
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153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/60234
Sample Questions
Q1) Farber Company produces its product in three departments,Prepping,Machining,and Finishing.A customer recently returned a defective product that had not been machined properly.The company's accountant would classify the repair cost as an internal failure cost.
A)True
B)False
Q2) Concerning the prevention of defects,which of the following statements is
A) Zero defects is a cost-effective strategy.
B) When the product falls to the right of the cost minimization point on the total quality cost curve,then incurring failure costs is wise.
C) It is always wiser to spend money on correcting failures than on preventing defects.
D) When the product falls to the right of the cost minimization point on the total quality cost curve,then incurring prevention costs is wise.
Q3) One of the advantages of activity-based costing systems over traditional systems is that ABC systems require less record-keeping.
A)True
B)False
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Page 7
Chapter 6: Relevant Information for Special Decisions
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139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/60233
Sample Questions
Q1) Engineering design costs are generally referred to as:
A) Batch-level costs.
B) Facility-level costs.
C) Unit-level costs.
D) Product-level costs.
Q2) Grady Corporation is evaluating two decision alternatives.Alternative One has costs of $2,000 and revenues of $3,000 while Alternative Two has costs of $3,200 and revenues of $4,000.The amount of differential revenue is $1,000.
A)True
B)False
Q3) Select the correct statement regarding relevant costs and revenues.
A) Relevant costs are also known as unavoidable costs.
B) Relevant costs are only those that are based on past experience.
C) Relevant revenues must differ between the alternatives.
D) All of the above.
Q4) Sunk costs are sometimes relevant for decision-making purposes.
A)True
B)False
Q5) How can a manager's time horizon affect his/her decision making?
Q6) How can managers manage (that is,reduce the impact of)constraints?
Page 8
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Chapter 7: Planning for Profit and Cost Control
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142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/60232
Sample Questions
Q1) Payne Company provided the following information relevant to its inventory sales and purchases for December Year 1 and the first quarter of Year 2: \(\begin{array}{|l|l|r|r|r|}
\hline& \text { Dec. Year } 1 &\text { Jan. Year } 2 &\text { Feb. Year } 2 & \text { Mar. Year } 2 \\
\hline & \text { (Actual)} & \text { (Budgeted) }& \text { (Budgeted) }& \text { (Budgeted) } \\
\hline \text {Cost of goods sold } &\$ 80,000 & \$ 140,000 & \$ 180,000 & \$ 120,000 \\ \hline
\end{array}\) Desired ending inventory levels are 25% of the following month's projected cost of goods sold.The company purchases all inventory on account.January Year 2 budgeted purchases are $150,000.The normal schedule for inventory payments is 60% payment in month of purchase and 40% payment in month following purchase. Budgeted cash payments for inventory in February Year 2 would be:
A) $132,600.
B) $152,600.
C) $99,000.
D) $159,000.
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Page 9
Chapter 8: Performance Evaluation
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150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/60231
Sample Questions
Q1) Hurst Company's standard variable materials cost per unit was $8.The actual materials cost per unit on production of 10,000 units was $8.22.Based on this information,Hurst Company incurred an unfavorable variable materials price variance of $2,200.
A)True
B)False
Q2) Indicate whether each of the following statements is
Q3) Which of the following statements is true?
A) An unfavorable materials price variance could have resulted from actions taken by the purchasing agent.
B) An unfavorable materials usage variance could have resulted from actions taken by the production supervisor.
C) An unfavorable labor usage variance could have resulted from actions taken by the personnel department.
D) All of these answers are correct.
Q4) Indicate whether each of the following statements is
Q5) Indicate whether each of the following statements is
Q6) How do differences between planned and actual volume impact companies that use a cost plus pricing strategy?
Page 10
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Chapter 9: Responsibility Accounting
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118 Verified Questions
118 Flashcards
Source URL: https://quizplus.com/quiz/60230
Sample Questions
Q1) Which of the following formats is typically used in year-to-date income statements prepared for internal use under a responsibility accounting system?
A) Sales - Cost of Goods Sold = Gross Margin;Gross Margin - Operating Expenses = Net Income
B) Sales - Manufacturing Costs = Manufacturing Margin;Manufacturing Margin - Selling and Administrative Costs = Net Income
C) Sales - Variable Costs = Contribution Margin;Contribution Margin - Fixed Costs = Net Income
D) None of these.
Q2) Frank and Brooke manage separate departments at Vantage Corporation.Frank's department is in charge of production of products,while Brooke's is responsible for sales of products.One of the company's objectives is to minimize its investment in inventory.Whose set of responsibility reports should include the cost of storing goods awaiting sale?
Q3) Mitchell Company has two divisions,Division A and Division B.Division A makes a product that Division B could use in making one of its products.Why do the managers of both divisions care about the amount of the transfer price?
Q4) Indicate whether each of the following statements is
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Page 11
Chapter 10: Planning for Capital Investments
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155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/60229
Sample Questions
Q1) Matt needs to compute the present value of $5,000 to be received four years from now.He should multiply $5,000 by the appropriate present value interest factor obtained from the present value of $1 table.
A)True
B)False
Q2) Langdon Company is considering purchasing a capital investment that is expected to provide annual cash inflows of $10,000 per year for 3 years.Assuming that Langdon's required rate of return is 8%,what is the present value of these cash inflows? (Do not round your intermediate calculations.Round your final answer to the nearest dollar. )
A) $24,018
B) $24,869
C) $33,121
D) $25,771
Q3) Indicate whether each of the following statements is
Q4) Cash inflows from a capital investment may include the terminal value of capital assets and increases in revenues.
A)True
B)False
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Chapter 11: Product Costing in Service and Manufacturing
Entities
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139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/60228
Sample Questions
Q1) Hughes Company paid production workers $25,550 cash.These wages will be classified as:
A) manufacturing overhead.
B) work in process.
C) cost of goods sold.
D) salary expense.
Q2) Johnson Company estimates that its production workers will work 88,000 direct labor hours to produce 8,800 units during the upcoming period and that overhead costs will amount to $880,000.During the year,its manufacturing employees actually worked 100,000 direct labor hours to produce 10,000 units and incurred $1,100,000 of overhead costs.Because the goods made by Johnson are homogeneous (that is,they are identical),the company has decided it makes sense to use number of units as the allocation base for overhead.Based on this information the predetermined overhead rate is:
A) $110.00 per unit.
B) $10.00 per direct labor hour.
C) $100.00 per unit.
D) $11.00 per direct labor hour.
Q3) What characteristic or feature of a service company distinguishes such a business from a manufacturing company?
Page 13
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Chapter 12: Job-Order, Process, and Hybrid Costing Systems
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144 Verified Questions
144 Flashcards
Source URL: https://quizplus.com/quiz/60227
Sample Questions
Q1) Job-order and process cost systems are two different costing systems that a company chooses between based on the preference of management.
A)True
B)False
Q2) Two methods of computing equivalent whole units are the LIFO and the weighted average methods.
A)True
B)False
Q3) Which event results in the transfer of product costs from the balance sheet to the income statement?
A) Purchase of materials
B) Sale of goods
C) Production of goods
D) Application of estimated manufacturing overhead to job
Q4) Which of the following items is provided on a work ticket?
A) Job-number
B) Employee identification
C) Work description
D) All of these.
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Chapter 13: Financial Statement Analysis
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152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/60226
Sample Questions
Q1) Indicate whether each of the following statements about financial statement analysis is
Q2) All of the following are considered to be measures of a company's short-term debt-paying ability except:
A) Current ratio.
B) Earnings per share.
C) Inventory turnover.
D) Average collection period.
Q3) Darden Company has cash of $40,000,accounts receivable of $60,000,inventory of $32,000,and equipment of $100,000.Assuming current liabilities of $48,000,this company's working capital is:
A) $12,000.
B) $52,000.
C) $144,000.
D) $84,000.
Q4) Vertical analysis always involves comparing financial statement elements over a span of time.
A)True
B)False
Q5) Discuss the limitations that affect financial statement analysis.
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Chapter 14: Statement of Cash Flows
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140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/60225
Sample Questions
Q1) Both the indirect and direct method of preparing a statement of cash flows begin with net income.
A)True
B)False
Q2) Under the indirect method,which of the following is not an item that is added back to net income in determining net cash flow from operating activities?
A) Decrease in accounts receivableAccounts Receivable
B) Decrease in inventory
C) Depreciation expense
D) Gain on sale of store fixtures
Q3) Which of the following would be reported as an investing activity on the statement of cash flows?
A) Cash receipts from issuing common stock
B) Cash payments to purchase treasury stock
C) Cash payments to purchase investment securities
D) Cash payments for inventory purchases
Q4) How is the direct method of preparing the statement of cash flows different from the indirect method?
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