Advanced Cost Accounting Practice Questions
Course Introduction
Advanced Cost Accounting delves into the techniques and methodologies used to analyze, control, and manage costs within organizations. The course builds upon foundational cost accounting principles and explores advanced topics such as activity-based costing, standard costing, variance analysis, job and process costing, budgeting, and cost allocation methods. Students will learn to interpret cost data for strategic decision-making, support performance measurement, and optimize resource allocation. Practical case studies and real-world scenarios are utilized to prepare students for complex cost management challenges in various industries, emphasizing ethical considerations and the integration of cost information with broader managerial functions.
Recommended Textbook
Cost Accounting A Managerial Emphasis 14th Edition by Charles T. Horngren
Available Study Resources on Quizplus 23 Chapters
3902 Verified Questions
3902 Flashcards
Source URL: https://quizplus.com/study-set/3521
Page 2
Chapter 1: The Accountants Role in the Organization
Available Study Resources on Quizplus for this Chatper
195 Verified Questions
195 Flashcards
Source URL: https://quizplus.com/quiz/69902
Sample Questions
Q1) Treasury includes banking and short- and long-term financing, investments, and cash management.
A)True
B)False
Answer: True
Q2) It is generally easy to quantify expected benefits and costs when applying the cost-benefit approach.
A)True
B)False
Answer: False
Q3) Increased global competition is placing pressure on companies to reduce costs.
A)True
B)False
Answer: True
Q4) In order, list the five steps in the decision-making process.
Answer: 1. Identify the problem and uncertainties
2. Obtain information
3. Make predictions about the future
4. Make decisions by choosing among alternatives
5. Implement the decision, evaluate performance, and learn
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: An Introduction to Cost Terms and Purposes
Available Study Resources on Quizplus for this Chatper
224 Verified Questions
224 Flashcards
Source URL: https://quizplus.com/quiz/69903
Sample Questions
Q1) A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of direct costs for the golf equipment line are:
A)beverages provided daily in the plant break room
B)monthly lease payments for a specialized piece of equipment needed to manufacture the golf driver
C)salaries of the clerical staff that work in the company administrative offices
D)utilities paid for the manufacturing plant
Answer: B
Q2) When should the overtime premium of direct manufacturing labor be considered an indirect manufacturing cost? A direct manufacturing cost?
Answer: The overtime premium of direct manufacturing labor should be considered an indirect manufacturing cost when it is attributable to the overall volume of work, and a direct manufacturing cost when a "rush job" is the sole source of the overtime.
Q3) A cost object is always either a product or a service.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Cost-Volume-Profit Analysis
Available Study Resources on Quizplus for this Chatper
207 Verified Questions
207 Flashcards
Source URL: https://quizplus.com/quiz/69904
Sample Questions
Q1) Pounds of yeast used by a bake shop is a potential measure of output for the bakery industry.
A)True
B)False
Answer: False
Q2) (CPA adapted, November 1992)The strategy most likely to reduce the breakeven point would be to:
A)increase both the fixed costs and the contribution margin
B)decrease both the fixed costs and the contribution margin
C)decrease the fixed costs and increase the contribution margin
D)increase the fixed costs and decrease the contribution margin
Answer: C
Q3) The selling price per unit less the variable cost per unit is the:
A)fixed cost per unit
B)gross margin
C)margin of safety
D)contribution margin per unit
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Job Costing
Available Study Resources on Quizplus for this Chatper
199 Verified Questions
199 Flashcards
Source URL: https://quizplus.com/quiz/69905
Sample Questions
Q1) To smooth fluctuating levels of output, separate indirect-cost rates should be calculated for each month.
A)True
B)False
Q2) The cost driver of an indirect cost is often used as the cost-allocation base.
A)True
B)False
Q3) The budgeted direct-labor cost rate includes ________ in the calculation.
A)budgeted total costs in indirect cost pool
B)budgeted total direct-labor costs in the denominator
C)budgeted total direct-labor costs in the numerator
D)budgeted total direct-labor hours in the numerator
Q4) When the allocated amount of indirect costs are less than the actual amount, indirect costs have been:
A)overabsorbed
B)underapplied
C)underallocated
D)Both underapplied and underallocated are correct.
Q5) What is the difference between an actual cost system and a normal cost system?
Page 6
Q6) Explain how a budgeted indirect-cost rate is determined.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Activity-Based Costing and Activity-Based Management
Available Study Resources on Quizplus for this Chatper
175 Verified Questions
175 Flashcards
Source URL: https://quizplus.com/quiz/69906
Sample Questions
Q1) ABC assumes all costs are ________ because over the long run management can adjust the amount of resources employed.
A)fixed
B)variable
C)committed
D)nondiscretionary
Q2) How much of correspondence costs will be assigned to Department B?
A)$800
B)$6,250
C)$25,000
D)$10,000
Q3) Using the three cost pools to allocate overhead costs, what is the total manufacturing overhead cost estimate for Money Managers during 2010?
A)$13,700
B)$6,500
C)$6,860
D)$10,192
Q4) What are the four parts of the cost hierarchy. Briefly explain each part, and contrast this cost hierarchy to the fixed-variable dichotomy?
7
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Master Budget and Responsibility Accounting
Available Study Resources on Quizplus for this Chatper
229 Verified Questions
229 Flashcards
Source URL: https://quizplus.com/quiz/69907
Sample Questions
Q1) It is best to compare this year's performance with last year's actual performance rather than this year's budget.
A)True
B)False
Q2) Research shows that challenging budgets improve employee performance because employees view falling short of budgeted numbers as a failure.
A)True
B)False
Q3) Which statement about controllability is NOT true:
A)few costs are clearly under the sole influence of one manager
B)holds managers responsible for uncontrollable costs
C)with a long enough time span, all costs will come under somebody's control
D)describes the degree of influence that managers have over a particular item
Q4) Budgeting helps management anticipate and adjust for trouble spots in advance.
A)True B)False
Q5) The Japanese use kaizen to mean financing alternatives. A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Flexible Budgets, Direct-Cost Variances, and Management Control
Available Study Resources on Quizplus for this Chatper
180 Verified Questions
180 Flashcards
Source URL: https://quizplus.com/quiz/69908
Sample Questions
Q1) July's direct material efficiency variance is:
A)$1,400 unfavorable
B)$1,100 favorable
C)$2,500 unfavorable
D)None of these answers are correct.
Q2) A single variance:
A)signals the cause of a problem
B)should be evaluated in isolation from other variances
C)may be the result of many different problems
D)should be used for performance evaluation
Q3) The relative amount of inputs used to achieve a given output level is known as A)efficiency.
B)effectiveness.
C)continuous improvement.
D)All of these answers are correct.
Q4) July's direct material price variance is:
A)$1,400 favorable
B)$1,100 favorable
C)$2,500 unfavorable
D)None of these answers are correct.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Flexible Budgets, Overhead Cost Variances, and Management Control
Available Study Resources on Quizplus for this Chatper
171 Verified Questions
171 Flashcards
Source URL: https://quizplus.com/quiz/69909
Sample Questions
Q1) When machine-hours are used as a cost-allocation base, the item most likely to contribute to an unfavorable production-volume variance is:
A)a new competitor gaining market share
B)a new manufacturing machine costing considerably more than expected
C)an increase in the cost of energy
D)strengthened demand for the product
Q2) The variable overhead flexible-budget variance measures the difference between:
A)actual variable overhead costs and the static budget for variable overhead costs
B)actual variable overhead costs and the flexible budget for variable overhead costs
C)the static budget for variable overhead costs and the flexible budget for variable overhead costs
D)None of these answers is correct.
Q3) An unfavorable variable overhead spending variance indicates that:
A)variable overhead items were not used efficiently
B)the price of variable overhead items was more than budgeted
C)the variable overhead cost-allocation base was not used efficiently
D)the denominator level was not accurately determined
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Inventory Costing and Capacity Analysis
Available Study Resources on Quizplus for this Chatper
208 Verified Questions
208 Flashcards
Source URL: https://quizplus.com/quiz/69910
Sample Questions
Q1) The contribution-margin format of the income statement:
A)is used with absorption costing
B)calculates gross margin
C)distinguishes between manufacturing and nonmanufacturing costs
D)is used with variable costing
Q2) Data from normal costing and standard costing are used in pricing and product-mix decisions.
A)True
B)False
Q3) ________ is (are)based on the demand for the output of the plant.
A)Practical capacity
B)Master-budget capacity utilization
C)Normal capacity utilization
D)Both B and C are correct.
Q4) For benchmarking purposes it is best to use master-budget capacity because all competitors use about the same about of capacity for production.
A)True
B)False
Q5) Discuss the three methods to dispose of production volume variance.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Determining How Costs Behave
Available Study Resources on Quizplus for this Chatper
182 Verified Questions
182 Flashcards
Source URL: https://quizplus.com/quiz/69911
Sample Questions
Q1) In a graphical display of a cost function, the steepness of the slope represents the total amount of fixed costs.
A)True B)False
Q2) In estimating a cost function using quantitative analysis, the dependent variable is the factor used to predict the independent variable.
A)True B)False
Q3) Each time Mayberry Nursery hires a new employee, it must wait for some period of time before the employee can meet production standards. Management is unsure of the learning curve in its operations but it knows the first job by a new employee averages 30 hours and the second job averages 24 hours. Assume all jobs to be equal in size. Required:
a. What is the learning-curve percentage, assuming the cumulative average-time method?
b. What is the time for a new employee to build 16 units with this learning curve using the cumulative average-time method? You may use an index of -0.1520.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Decision Making and Relevant Information
Available Study Resources on Quizplus for this Chatper
220 Verified Questions
220 Flashcards
Source URL: https://quizplus.com/quiz/69912
Sample Questions
Q1) What is the contribution margin per machine-hour for a large chair?
A)$2.50
B)$6.00
C)$5.40
D)$3.60
Q2) A relevant revenue is a revenue that is a(n):
A)past revenue
B)future revenue
C)in-hand revenue
D)earned revenue
Q3) The formal process of choosing between alternatives is known as a(n):
A)relevant model
B)decision model
C)alternative model
D)prediction model
Q4) How can conflicts arise between the decision model and the performance evaluation model used to evaluate managers? Provide an example of this type of conflict.
Q5) All variable costs are relevant and all fixed costs are irrelevant.
A)True
B)False
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Pricing Decisions and Cost Management
Available Study Resources on Quizplus for this Chatper
210 Verified Questions
210 Flashcards
Source URL: https://quizplus.com/quiz/69913
Sample Questions
Q1) Companies that operate in non competitive environments offering products or services that differ from each other use a market-based approach when making their long-run pricing decisions.
A)True
B)False
Q2) When target costing and target pricing are used together:
A)the target cost is established first, then the target price
B)the target cost is the estimated long-run cost that enables a product or service to achieve a desired profit
C)the focus of target pricing is to undercut the competition
D)target costs are generally higher than current costs
Q3) What is the target cost?
A)$1,800,000
B)$1,920,000
C)$2,520,000
D)$2,016,000
Q4) Peak-load pricing is a form of price discrimination and is illegal.
A)True
B)False
Q5) What is the primary reason a firm would adopt target costing?
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Strategy, Balanced Scorecard, and Strategic
Profitability Analysis
Available Study Resources on Quizplus for this Chatper
171 Verified Questions
171 Flashcards
Source URL: https://quizplus.com/quiz/69914
Sample Questions
Q1) Discretionary costs:
A)result from a cause-and-effect relationship between the output and the input
B)include advertising and executive training costs
C)can be variable or fixed in the short run
D)pertain to processes that are detailed
Q2) Identify the best description of the balanced scorecard's financial perspective. To achieve our firm's vision and strategy:
A)how can we obtain greater profits for the current year?
B)how can we increase shareholder value?
C)how will we obtain continuous improvements?
D)how can we secure greater customer satisfaction?
Q3) Reengineering benefits are most significant when they focus on one business function rather than crossing functional lines of the business process.
A)True
B)False
Q4) What are the four key perspectives in the balanced scorecard?
Q5) Explain the product differentiation and the cost leadership strategies.
Page 15
Q6) Define engineered and discretionary costs and give two examples of each.
Q7) What is the primary purpose of the balanced scorecard?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis
Available Study Resources on Quizplus for this Chatper
170 Verified Questions
170 Flashcards
Source URL: https://quizplus.com/quiz/69915
Sample Questions
Q1) What is the total static-budget variance in terms of the contribution margin?
A)$900,000 favorable
B)$700,000 favorable
C)$200,000 unfavorable
D)$360,000 unfavorable
Q2) An unfavorable sales-mix variance would most likely be caused by:
A)a new competitor providing better service in the high-margin product sector
B)a competitor having distribution problems with high-margin products
C)the company offering low-margin products at a higher price
D)the company experiencing quality-control problems that get negative media coverage of low-margin products
Q3) The flexible-budget variance is the difference between an actual result and the flexible-budget amount based on the level of output actually achieved in the budget period.
A)True
B)False
Q4) To more accurately assess customer profitability, corporate-sustaining costs should be allocated.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Allocation of Support-Department Costs,
Common Costs, and Revenues
Available Study Resources on Quizplus for this Chatper
144 Verified Questions
144 Flashcards
Source URL: https://quizplus.com/quiz/69916
Sample Questions
Q1) Benefits of the single-rate method include:
A)it is easier to calculate
B)fixed costs that are transformed into variable costs for user decision making
C)signals regarding how variable and fixed costs behave differently
D)information that leads to outsourcing decisions that benefit the organization as a whole
Q2) If a dual-rate cost-allocation method is used, what amount of materials laboratory costs will be budgeted for the Small Plane Department?
A)$10,575,000
B)$7,637,500
C)$7,050,000
D)$8,225,000
Q3) The direct allocation method allows for no recognition of services rendered by support departments to other support departments.
A)True
B)False
Q4) The dual-rate method makes no distinction between fixed and variable costs. A)True B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Cost Allocation: Joint Products and Byproducts
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/69917
Sample Questions
Q1) Which of the following is NOT a reason to use the sales value at splitoff method:
A)simplicity
B)no anticipation of subsequent management decisions
C)measurement of the value of the joint products at the splitoff point
D)All of the above are reasons to use the sales value at splitoff method.
Q2) Joint costs are incurred beyond the splitoff point and are assignable to individual products.
A)True
B)False
Q3) When a single manufacturing process yields two products, one of which has a relatively high sales value compared to the other, the two products are respectively known as:
A)joint products and byproducts
B)joint products and scrap
C)main products and byproducts
D)main products and joint products
Q4) The only allowable method of joint cost allocation is specified by FASB.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Process Costing
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/69918
Sample Questions
Q1) In companies that produce masses of identical or similar units of output and consequently use process-costing systems, it is relatively easy to set standards and use a standard cost as the cost per equivalent unit.
A)True
B)False
Q2) How many of the units that were started during October were completed during October?
A)30,000
B)38,000
C)32,000
D)60,000
Q3) Job-order costing would be most likely used by a firm that produces homogeneous products.
A)True
B)False
Q4) Under standard costing the cost per equivalent-unit calculation is more difficult than in either weighted average or FIFO.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Spoilage, Rework, and Scrap
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/69919
Sample Questions
Q1) Spoilage is typically assumed to occur at the stage of completion where inspection takes place.
A)True
B)False
Q2) The accounting for scrap under process costing is similar to the accounting under:
A)job costing when scrap is different for each job
B)job costing when scrap is common to all jobs
C)process costing when scrap is different for each job
D)process costing when scrap is a common to all jobs
Q3) Spoilage and rework costs are thoroughly captured in the accounting system.
A)True
B)False
Q4) Costs are assigned to scrap only if it is normal scrap.
A)True
B)False
Q5) Recognizing the value of scrap in the accounting records is always done at the time the scrap is produced.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Balanced Scorecard: Quality, Time, and the
Theory of Constraints
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/69920
Sample Questions
Q1) Any factor where a change in the factor causes a change in the speed with which an activity is undertaken is referred to as:
A)a time driver
B)a bottleneck
C)manufacturing lead time
D)customer-response time
Q2) Preventive equipment maintenance is an example of:
A)prevention costs
B)appraisal costs
C)internal failure costs
D)external failure costs
Q3) The theory of constraints describes methods to maximize operating income when faced with some bottleneck and some nonbottleneck operations.
A)True
B)False
Q4) Prevention costs include inspection and product testing.
A)True
B)False
Page 21
Q5) Discuss the methods used to identify quality problems.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 20: Inventory Management, Just-In-Time, and Simplified Costing Methods
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/69921
Sample Questions
Q1) An inventory item of XYZ Manufacturing has an average daily demand of 10 units with a maximum daily demand of 12 units. The economic order quantity is 200 units. Without safety stocks, the reorder point is 50 units. Safety stocks are set at 94 units.
Required:
a. Determine the reorder point with safety stocks.
b. Determine the maximum inventory level.
c. Determine the average lead time.
d. Determine the maximum lead time.
Q2) The management accountant aids in MRP by:
A)doing journal entries as requested
B)preparing plant appropriation requests
C)maintaining accurate records of inventory and its costs
D)contacting vendors to make sure they can deliver the materials in time
Q3) All inventory costs are available in financial accounting systems.
A)True
B)False
Q4) Backflush costing does not strictly adhere to generally accepted accounting principles. Explain why. Also, describe the types of businesses that might use backflush costing.
Page 22
To view all questions and flashcards with answers, click on the resource link above.
Chapter 21: Capital Budgeting and Cost Analysis
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/69922
Sample Questions
Q1) The four typical categories of cash flow for an investment project are: (1)net initial investment, (2)net income, (3)after tax cash flow from operations, and (4)after tax cash flow from terminal disposal of an asset.
A)True
B)False
Q2) A capital budgeting tool that management can use to summarize the difference in the future net cash inflows from an intangible asset at two different points in time is referred to as:
A)the accrual accounting rate-of-return method
B)the net present value method
C)sensitivity analysis
D)the payback method
Q3) The relevant terminal disposal price of a machine equals the:
A)difference between the salvage value of the old machine and the ultimate salvage value of the new machine
B)total of the salvage values of the old machine and the new machine
C)salvage value of the old machine
D)salvage value of the new machine
Q4) How is inflation related to capital budgeting? Discuss.
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Management Control Systems, Transfer
Pricing, and Multinational
Considerations
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/69923
Sample Questions
Q1) Motivation is the desire to attain a selected goal combined with the resulting drive or pursuit toward that goal.
A)True
B)False
Q2) A major advantage of using actual costs for transfer prices is that often inefficiencies are NOT passed along to the receiving division.
A)True
B)False
Q3) A company has a plant in a high tax jurisdiction that produces products for a facility in a low tax jurisdiction. Suggest a strategy, including transfer prices, which will result in the lowest tax for the overall corporation.
Q4) ________ means minimum constraints and maximum freedom for managers at the lowest levels of an organization to make decisions and to take actions.
A)Total centralization
B)Use of market-based transfer pricing
C)Total decentralization
D)Use of negotiated transfer pricing
Q5) Briefly explain each of the three methods used to determine a transfer price.
Page 24
To view all questions and flashcards with answers, click on the resource link above.
Chapter 23: Performance Measurement, Compensation, and Multinational Considerations
Available Study Resources on Quizplus for this Chatper
139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/69924
Sample Questions
Q1) Residual income is a better evaluation method than return on investment because it has a lower required rate of return for the company projects than return on investment does.
A)True B)False
Q2) What are Wheels's and Assembly's return on investment based on book values, respectively?
A)0.21; 0.25
B)0.25; 0.21
C)0.14; 0.25
D)0.25; 0.14
Q3) Using residual income as a measure of performance rather than return on investment promotes goal congruence because residual income:
A)places importance on the reduction of underperforming assets
B)calculates a percentage return rather than an absolute return
C)concentrates on maximizing an absolute amount of dollars
D)concentrates on maximizing the return on sales
Q4) Investment turnover is calculated as revenue divided by investment.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 25