Cost Management Study Guide Questions
Course Introduction
Cost Management is a critical discipline that focuses on planning, controlling, and monitoring the costs associated with business operations and projects. This course explores cost concepts, classification, behavior, and allocation, while introducing students to various cost accounting methods and tools such as activity-based costing, standard costing, and variance analysis. Emphasis is placed on using cost information to support strategic decision-making, budgeting, pricing, and performance evaluation. Students will learn how effective cost management contributes to organizational efficiency, competitiveness, and profitability within a dynamic business environment.
Recommended Textbook
Cost Accounting Foundations and Evolutions 9th Edition by Kinney
Available Study Resources on Quizplus
19 Chapters
2844 Verified Questions
2844 Flashcards
Source URL: https://quizplus.com/study-set/2912
Page 2
Chapter 1: Introduction to Cost Accounting
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/57987
Sample Questions
Q1) The internal business perspective of the balanced scorecard focuses on using an organization's intellectual capital to adapt to or influence customer needs and expectations.
A)True
B)False
Answer: False
Q2) The Foreign Corrupt Practices Act is directed at
A)U.S.corporations operating overseas.
B)foreign businesses operating in the U.S.
C)all businesses dealing with U.S.consumers.
D)all U.S.businesses with operations in foreign countries.
Answer: A
Q3) An organization's strategy is the guiding force for its mission.
A)True
B)False
Answer: False
Q4) The branch of accounting that is most concerned with addressing the needs of specific departments of the firm is ________ accounting
Answer: managerial
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Cost Terminology and Cost Behaviors
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/57988
Sample Questions
Q1) Costs that are incurred to improve quality by precluding defects and improper processing are referred to as ____________________ costs.
Answer: prevention
Q2) A(n)____ cost increases or decreases in intervals as activity changes.
A)historical cost
B)fixed cost
C)step cost
D)budgeted cost
Answer: C
Q3) An example of a fixed cost is
A)total indirect material cost.
B)total hourly wages.
C)cost of electricity.
D)straight-line depreciation.
Answer: D
Q4) A specific product cannot be a cost object.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Predetermined Overhead Rates, Flexible
Budgets, and Absorptionvariable Costing
Available Study Resources on Quizplus for this Chatper
201 Verified Questions
201 Flashcards
Source URL: https://quizplus.com/quiz/57989
Sample Questions
Q1) Weaknesses of the high-low method include all of the following except
A)only two observations are used to develop the cost function.
B)the high and low activity levels may not be representative.
C)the method does not detect if the cost behavior is nonlinear.
D)the mathematical calculations are relatively complex.
Answer: D
Q2) The difference between the reported income under absorption and variable costing is attributable to the difference in the A)income statement formats.
B)treatment of fixed manufacturing overhead.
C)treatment of variable manufacturing overhead.
D)treatment of variable selling,general,and administrative expenses.
Answer: B
Q3) Phantom profits result when absorption costing is used and production exceeds sales.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4:
Activity-Based Management and Activity-Based Costing
Available Study Resources on Quizplus for this Chatper
178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/57990
Sample Questions
Q1) Direct materials are normally considered unit-level costs.
A)True
B)False
Q2) ______________________________ refers to the number of different processes through which a product flows.
Q3) Activity-based costing and activity-based management are effective in helping managers do all of the following except
A)trace technology costs to products.
B)promote excellence standards.
C)identify only value-added activities.
D)analyze performance problems.
Q4) Unit level costs occur once for each unit produced.
A)True
B)False
Q5) It is necessary for an organization to define its processes before attempting to establish relationships among company activities.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Q6) Describe the two-step process by which costs are allocated in an ABC system.
Chapter 5: Job Order Costing
Available Study Resources on Quizplus for this Chatper
180 Verified Questions
180 Flashcards
Source URL: https://quizplus.com/quiz/57991
Sample Questions
Q1) The net cost of normal spoilage in a job-order costing system in which spoilage is common to all jobs should be
A)assigned directly to the jobs that caused the spoilage.
B)charged to manufacturing overhead during the period of the spoilage.
C)charged to a loss account during the period of the spoilage.
D)allocated only to jobs that are completed during the perioD.
Q2) When indirect labor is recorded for a job in process,the work in process account is debited.
A)True
B)False
Q3) Levine Company
Levine Company has a job-order costing system and an overhead application rate of 125 percent of direct labor cost.Job #123 is charged with direct material of $18,000 and overhead of $9,000.Job #124 has direct material of $4,500 and direct labor of $12,000.
Refer to Levine Company.What is the total cost of Job #124?
A)$15,000
B)$16,500
C)$31,500
D)$43,500
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Process Costing
Available Study Resources on Quizplus for this Chatper
214 Verified Questions
214 Flashcards
Source URL: https://quizplus.com/quiz/57992
Sample Questions
Q1) Normal continuous losses are absorbed by all units in ending inventory and transferred out on a EUP basis.
A)True
B)False
Q2) Which of the following accounts is credited when abnormal spoilage is written off in an actual cost system?
A)Miscellaneous Revenue
B)Loss from Spoilage
C)Finished Goods
D)Work in Process
Q3) What are two alternative calculations that can be used to either verify the number of equivalent units or to obtain the number initially?
Q4) A hybrid costing system combines characteristics of
A)job order and standard costing systems.
B)job order and process costing systems.
C)process and standard costing systems.
D)job order and normal costing systems.
Q5) Two methods of accounting for cost flows in process costing are ________ and
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Standard Costing and Variance Analysis
Available Study Resources on Quizplus for this Chatper
226 Verified Questions
226 Flashcards
Source URL: https://quizplus.com/quiz/57993
Sample Questions
Q1) When multiple labor categories are used,the financial effect of using a different mix of workers in a production process is referred to as a labor mix variance.
A)True
B)False
Q2) Managers have no ability to control the budget variance.
A)True
B)False
Q3) A favorable fixed overhead volume variance occurs if
A)there is a favorable labor efficiency variance.
B)there is a favorable labor rate variance.
C)production is less than planned.
D)production is greater than planneD.
Q4) Which of the following factors should not be considered when deciding whether to investigate a variance?
A)magnitude of the variance
B)trend of the variances over time
C)likelihood that an investigation will reduce or eliminate future occurrences of the variance
D)whether the variance is favorable or unfavorable
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: The Master Budget
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/57994
Sample Questions
Q1) The financial budget is prepared after the operating budget.
A)True
B)False
Q2) A budget manual should include pro-forma financial statements for the upcoming period.
A)True
B)False
Q3) Key variables that are identified in strategic planning are
A)normally controllable if they are internal.
B)seldom if ever controllable.
C)normally controllable if they occur in a domestic market.
D)normally uncontrollable if they are internal.
Q4) Top management should be directly involved in strategic planning for an organization.
A)True
B)False
Q5) What role does the budgeting activity play in managerial compensation and performance evaluation?
Q6) In a manufacturing organization,the budget that is prepared after the sales budget is the ______________________________.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Break-Even Point and Cost-Volume-Profit Analysis
Available Study Resources on Quizplus for this Chatper
122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/57995
Sample Questions
Q1) The contribution margin ratio always increases when the
A)variable costs as a percentage of net sales increase.
B)variable costs as a percentage of net sales decrease.
C)break-even point increases.
D)break-even point decreases.
Q2) The ____________ is computed by dividing the contribution margin by profit before tax.
Q3) Which of the following factors is involved in studying cost-volume-profit relationships?
A)product mix
B)variable costs
C)fixed costs
D)all of the above
Q4) Total fixed costs vary inversely with levels of production.
A)True
B)False
Q5) After the break-even point is reached,each dollar of contribution margin is a dollar of after-tax profit.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Relevant Information for Decision Making
Available Study Resources on Quizplus for this Chatper
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/57996
Sample Questions
Q1) Relevant costs are
A)all fixed and variable costs.
B)all costs that would be incurred within the relevant range of production.
C)past costs that are expected to be different in the future.
D)anticipated future costs that will differ among various alternatives.
Q2) Collins Company uses 12,000 units of a part in its production process.The costs to make a part are: direct material,$15;direct labor,$27;variable overhead,$15;and applied fixed overhead,$32.Eichholtz has received a quote of $60 from a potential supplier for this part.If Collins buys the part,75 percent of the applied fixed overhead would continue.Collins Company would be better off by
A)$30,000 to manufacture the part.
B)$348,000 to buy the part.
C)$60,000 to buy the part.
D)$216,000 to manufacture the part.
Q3) In a make or buy decision,the opportunity cost of capacity could
A)be considered to decrease the price of units purchased from suppliers.
B)be considered to decrease the cost of units manufactured by the company.
C)be considered to increase the price of units purchased from suppliers.
D)not be considered since opportunity costs are not part of the accounting records.
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Allocation of Joint Costs and Accounting for
By-Products
Available Study Resources on Quizplus for this Chatper
136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/57997
Sample Questions
Q1) Monetary allocation measures recognize the revenue generating ability of each product in a joint process.
A)True
B)False
Q2) Joplin Corporation produces three products from a common manufacturing process.The total joint cost of producing 2,000 pounds of Product A;1,000 pounds of Product B;and 1,000 pounds of Product C is $7,500.Selling price per pound of the three products are $15 for Product A;$10 for Product B;and $5 for Product C.Joint cost is allocated using the sales value method.
Required:
a.Compute the unit cost of Prochuct A if all three products are main products
b. Compute the unit cost of Prochict A if Products A and B are main products and Product C is a by-prochuct for which the cost reduction method is used
Q3) Briefly discuss the net realizable value at split-off point method of allocating joint costs.
Q4) Discuss briefly the three monetary measurement techniques of joint cost allocation.
Q5) Sales revenue at split-off less disposal costs equals ______.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Introduction to Cost Management Systems
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/57998
Sample Questions
Q1) Increasing automation generally results in cost management becoming more long-term in nature.
A)True
B)False
Q2) A long-run challenge for a business is maintaining a competitive position.
A)True
B)False
Q3) Profit sharing is a method of employee compensation that
A)allocates an equal amount of profit reward to each manager in the organization.
B)allows organizational profits to be divided among employees in a non-taxable status.
C)is contingent based on the level of subunit profit generated.
D)is used in many foreign companies but is virtually nonexistent in most U.S.organizations.
Q4) An effective reporting system is increasingly important in a decentralized organization.
A)True
B)False
Q5) Define a cost management system and indicate how it should help managers.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Responsibility Accounting,support Department
Allocations,and Transfer Pricing
Available Study Resources on Quizplus for this Chatper
175 Verified Questions
175 Flashcards
Source URL: https://quizplus.com/quiz/57999
Sample Questions
Q1) As the internal transfer price is increased,
A)overall corporate profits increase.
B)profits in the buying division increase.
C)profits in the selling division increase.
D)profits in the selling division and the overall corporation increase.
Q2) Decentralization is a transfer of authority from the bottom to the top of an organization.
A)True
B)False
Q3) A ____ is a document that reflects the revenues and/or costs that are under the control of a particular manager.
A)quality audit report
B)responsibility report
C)performance evaluation report
D)project report
Q4) In a decentralized organization,the cost objective is referred to as a
Q5) An organizational unit whose manager is solely responsible for generating revenues is referred to as a ______________________________.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Performance Measurement, balanced
Scorecards, and Performance Rewards
Available Study Resources on Quizplus for this Chatper
191 Verified Questions
191 Flashcards
Source URL: https://quizplus.com/quiz/58000
Sample Questions
Q1) Variance analysis would be appropriate to measure performance in A)profit centers.
B)investment centers.
C)cost centers.
D)all of the above.
Q2) Which of the following pay plans encourages the improvement of the overall company's well-being?
A)monthly salary
B)cafeteria plan
C)profit sharing
D)pensions
Q3) Identify the steps to follow in establishing the performance reward system for a company.
Q4) A pay plan that does not encourage the overall company good is A)profit sharing.
B)an employee stock option plan.
C)contingent pay.
D)monthly salary.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Q5) Statistical data about the steps that will create the results desired as referred to as
Chapter 15: Capital Budgeting
Available Study Resources on Quizplus for this Chatper
182 Verified Questions
182 Flashcards
Source URL: https://quizplus.com/quiz/58001
Sample Questions
Q1) A project has an initial cost of $125,000 and generates a present value of net cash inflows of $150,000.What is the project's profitability index?
A).20
B)1.20
C).83
D)5.00
Q2) A firm's discount rate is typically based on
A)the interest rates related to the firm's bonds.
B)a project's internal rate of return.
C)its cost of capital.
D)the corporate Aa bond yielD.
Q3) Why is it important for managers to be able to rank projects?
Q4) The after-tax net present value of a project is affected by A)tax-deductible cash flows.
B)non-tax-deductible cash flows.
C)accounting accruals.
D)all of the above.
Q5) A decision in which projects are ranked according to their impact on the achievement of company objectives is referred to as a(n)___________________________________.
Page 17
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Managing Costs and Uncertainty
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/58002
Sample Questions
Q1) A cost that must be reviewed periodically to determine if it is still appropriate and necessary is referred to as a
Q2) As the economy becomes more and more depressed,a company's management decides to slash spending on research and development.What is the likely effect of this action on net income? Net income will be
A)higher this period and lower in future periods.
B)higher this period and higher in future periods.
C)lower this period and higher in future periods.
D)lower this period and lower in future periods.
Q3) When the organizational output is difficult to define,management may rely on ____ for cost control.
A)qualitative measures
B)program budgeting
C)surrogate measures of output
D)all of the above
Q4) When can a discretionary fixed cost be subjected to control methods that are used for engineered costs?
Q5) Explain the meaning of the coefficient of determination in cost estimation.
Q6) How does strategic staffing fit in with departmental staffing?
Page 18
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: Implementing Quality Concepts
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/58003
Sample Questions
Q1) The balanced scorecard can be used to provide information on quality in an organization.
A)True
B)False
Q2) Reverse engineering is used in
A)statistical process control.
B)process benchmarking.
C)results benchmarking.
D)price fixing.
Q3) Discuss increased competition and improved problem solving skills as they relate to benchmarking.
Q4) What is continuous improvement? How does it relate to total quality management?
Q5) Compare and contrast results benchmarking and process benchmarking.
Q6) Productivity is measured by the quantity of good output generated from a specific amount of input during a time period.
A)True
B)False
Q7) Reworking a product is an appraisal cost.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Inventory and Production Management
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/58004
Sample Questions
Q1) The role of safety stock in an organization is to
A)reduce the lead time for an order to be received.
B)reduce the probability of a stockout.
C)reduce the order point.
D)decrease the economic order quantity.
Q2) What does the term "pull" mean in the context of production control?
Q3) Fixed factory overhead is typically the production cost least likely to be minimized in the short run.
A)True
B)False
Q4) What are the three primary goals of the just-in-time (JIT)philosophy?
Q5) Just-in-time (JIT)inventory systems
A)result in a greater number of suppliers for each production process.
B)focus on a "push" type of production system.
C)can only be used with automated production processes.
D)result in inventories being either greatly reduced or eliminateD.
Q6) A costing method that involves ongoing efforts for continuous improvement to reduce product costs,increase product quality and improve the production process after manufacturing activities have begun is referred to as
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Emerging Management Practices
Available Study Resources on Quizplus for this Chatper
69 Verified Questions
69 Flashcards
Source URL: https://quizplus.com/quiz/58005
Sample Questions
Q1) What is open-book management?
Q2) To make game playing successful,the employees must be able to A)mine datA.
B)form strategic alliances.
C)win.
D)use ERP.
Q3) EMS stands for
A)environmental manufacturing system.
B)employee management system.
C)emergency medical services.
D)environmental management system.
Q4) Business process reengineering (BPR)is not associated with A)employee layoffs.
B)outsourcing initiatives.
C)technology acquisition.
D)plant expansion.
Q5) Firms that are downsizing should engage in other innovative practices to improve efficiency.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 21