Cost Accounting Test Preparation
Course Introduction
Cost Accounting introduces students to the methods and techniques used to determine, record, and control costs within an organization. Emphasizing both the theoretical and practical aspects, the course covers topics such as cost behavior, cost allocation, activity-based costing, budgeting, standard costing, variance analysis, and decision-making processes related to cost control. Students will learn how cost information supports managerial planning, performance evaluation, and strategic decision-making, equipping them with the skills necessary to analyze costs and enhance organizational efficiency.
Recommended Textbook
Horngrens Cost Accounting A Managerial Emphasis 3rd Australian Edition by Charles Horngren
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21 Chapters
3782 Verified Questions
3782 Flashcards
Source URL: https://quizplus.com/study-set/3568 Page 2
Chapter 1: Management Accounting in Context
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200 Verified Questions
200 Flashcards
Source URL: https://quizplus.com/quiz/70842
Sample Questions
Q1) The value chain refers to the sequence of business functions in which customer usefulness is added to products or services.
A)True
B)False
Answer: True
Q2) Management accountants have important ethical responsibilities that are related to competence,confidentiality,integrity,and credibility.
A)True
B)False
Answer: True
Q3) Increased global competition is placing pressure on companies to reduce costs.
A)True
B)False Answer: True
Q4) The first step in the five-step decision-making process is 'gather relevant information'.
A)True
B)False Answer: False
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Chapter 2: Different Costs for Different Purposes
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324 Verified Questions
324 Flashcards
Source URL: https://quizplus.com/quiz/70843
Sample Questions
Q1) The Cycle Centre currently produces 1000 bicycles per month.The following per unit data apply for sales to regular customers: \(\begin{array}{lr}
\text { Direct materials } & \$ 50 \\
\text { Direct manufacturing labour } & 5 \\
\text { Variable manufacturing overhead } & 14 \\
\text { Fixed manufacturing overhead } & \underline{10} \\
{\text { Total manufacturing costs }} & \$ 79 \end{array}\)
The plant has capacity for 3000 bicycles and is considering expanding production to 2000 bicycles.What is the per unit cost of producing 2000 bicycles?
A)$134 per unit
B)$158 per unit
C)$74 per unit
D)$79 per unit
Answer: C
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4
Chapter 3: Determining How Costs Behave
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182 Verified Questions
182 Flashcards
Source URL: https://quizplus.com/quiz/70844
Sample Questions
Q1) The ideal database contains:
A)cost driver observations spanning a wide range.
B)numerous cost driver observations.
C)reliably measured observations.
D)All of these answers are correct.
Answer: D
Q2) Inflation is a fact,and therefore its influence should not be removed from the data.
A)True
B)False
Answer: False
Q3) The 'independent variable':
A)is also referred to as the 'cost driver'.
B)should have an economically plausible relationship with the dependent variable.
C)may also be called the 'cost-allocation base' if referring to an indirect cost.
D)All of these answers are correct.
Answer: D
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Chapter 4: Costvolumeprofit Analysis
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211 Verified Questions
211 Flashcards
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Sample Questions
Q1) Whether the purchase cost of a machine is treated as fixed or variable depends heavily on the time horizon being considered.
A)True
B)False
Q2) The break-even point is the activity level where:
A)revenues equal fixed costs.
B)contribution margin equals variable costs.
C)revenues equal the sum of variable and fixed costs.
D)revenues equal variable costs.
Q3) In multiproduct situations when sales mix shifts toward the product with the highest contribution margin,operating profit will be higher.
A)True
B)False
Q4) All of the following are assumed in the above analysis EXCEPT:
A)a constant product mix.
B)cost and revenue relationships are reflected accurately.
C)per unit variable costs increase when activity increases.
D)all costs can be classified as either fixed or variable.
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6
Chapter 5: Estimating the Cost of Producing Services
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Degree of variation captures the extent to which the service provider customises its services and interacts with its customers.
A)True
B)False
Q2) A(n)_______________ is a standardised method or technique performed repetitively,often on different materials,resulting in different finished goods.
A)process
B)job
C)operation
D)hybrid
Q3) Managers use a job-costing system when the output comprises many homogenous (identical or almost identical)units.
A)True
B)False
Q4) Over-costed outputs lead to overpricing,causing these outputs to lose market share to competitors producing similar outputs.
A)True
B)False
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Chapter 6: Estimating the Costs of Products and Inventory
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356 Verified Questions
356 Flashcards
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Sample Questions
Q1) Why are some costs,such as an automotive repair garage service manager's salary,not traced to a particular motor vehicle repair job?
Q2) The production-volume variance only exists under absorption costing and not under variable costing.
A)True
B)False
Q3) Using actual costing,the amount of manufacturing overhead costs allocated to jobs during 20X5 is:
A)$190 000.
B)$150 000.
C)$180 000.
D)$135 000.
Q4) Direct costs are allocated to the cost object using a cost-allocation method.
A)True
B)False
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Chapter 7: Target Costing, Managing Activities and Managing Capacity
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154 Verified Questions
154 Flashcards
Source URL: https://quizplus.com/quiz/70848
Sample Questions
Q1) Theoretical capacity allows time for regular machine maintenance.
A)True
B)False
Q2) If a company chooses practical capacity for planning purposes,it must also use practical capacity for performance evaluation.
A)True
B)False
Q3) ________ capacity represents an ideal goal,which some managers may wish to set as an aspirational goal.
A)Practical
B)Master budget
C)Theoretical
D)Normal
Q4) 'Unused capacity' is considered wasted resources and the result of poor planning.
A)True
B)False
Q5) Capacity costs arise in non-production parts of the value chain.
A)True
B)False
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Chapter 8: Activity-Based Management and Activity-Based Costing
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230 Verified Questions
230 Flashcards
Source URL: https://quizplus.com/quiz/70849
Sample Questions
Q1) Traditional systems are capable of producing reasonably accurate costs where a single activity accounts for a sizeable proportion of a department's indirect costs.
A)True
B)False
Q2) A well-designed ABC system allows managers to identify unused ________ in each major activity and to estimate its cost.
A)steps
B)procedures
C)processes
D)capacity
Q3) If managers were interested in long-run decisions,they would focus on the variable costs only.
A)True
B)False
Q4) The MOST likely example of an output unit-level cost is:
A)engineering costs.
B)general administrative costs.
C)machine depreciation.
D)paying suppliers for orders received.
Page 10
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Chapter 9: Pricing and Customer Profitability
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171 Verified Questions
171 Flashcards
Source URL: https://quizplus.com/quiz/70850
Sample Questions
Q1) ________ categorises costs related to customers into different cost pools on the basis of either different classes of cost drivers or different degrees of difficulty in determining the cause-and-effect (or benefits-received)relationships.
A)Customer revenues
B)Price discounting
C)Customer-cost hierarchy
D)Customer-profitability analysis
Q2) The higher the likely growth of a customer's sales,the more valuable the customer.
A)True
B)False
Q3) Which of the following statements is FALSE regarding cost-plus pricing?
A)The selling price computed is only a prospective price.
B)A company uses a mark-up percentage that estimates a product price that covers full product costs and earns the required return on investment.
C)A company selects a cost base that it regards as reliable.
D)The cost-plus price chosen has already been studied for customer reaction to the price.
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Chapter 10: Decision Making and Relevant Information
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211 Verified Questions
211 Flashcards
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Sample Questions
Q1) Which of the following minimise the risks of outsourcing?
A)Building close relationships with the supplier
B)The responsibility for on-time delivery is now the responsibility of the supplier
C)The use of short-term contracts that specify price
D)All of these answers are correct.
Q2) How does a manager go about choosing which of three products to produce and sell when each product uses a single machine with a limited capacity?
Q3) Relevant-cost analysis generally emphasises ________ factors that can be expressed in financial terms.
A)qualitative
B)strategic
C)operational
D)quantitative
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Page 12
Chapter 11: Budgeting, Management Control and Responsibility Accounting
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215 Verified Questions
215 Flashcards
Source URL: https://quizplus.com/quiz/70852
Sample Questions
Q1) Kaizen budgeting allows for budgeting of small incremental increases in costs each budgeting period to adjust for the effects of normal inflation.
A)True
B)False
Q2) How much cash will be paid to suppliers in March?
A)$29 000
B)$38 000
C)$44 000
D)None of these answers are correct.
Q3) A financial budget focuses on how operations and planned capital outlays affect ________.
A)cash.
B)inventory.
C)receivables.
D)payables.
Q4) Activity-based budgeting would separately estimate:
A)the cost of a setup activity.
B)the cost of overhead for a department.
C)a plant-wide cost-driver rate.
D)All of these answers are correct.
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Chapter 12: Flexible Budgets, Direct Cost Variances and Management Control
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246 Verified Questions
246 Flashcards
Source URL: https://quizplus.com/quiz/70853
Sample Questions
Q1) What is the total sales-quantity variance in terms of the contribution margin?
A)$200 000 unfavourable
B)$360 000 unfavourable
C)$900 000 favourable
D)$1 260 000 favourable
Q2) Performance variance analysis can be used in activity-based costing systems.
A)True
B)False
Q3) The degree to which a predetermined objective or target is met is called:
A)economy.
B)benchmarking.
C)effectiveness.
D)efficiency.
Q4) The relative amount of inputs used to achieve a given output level is called:
A)economy.
B)effectiveness.
C)benchmarking.
D)efficiency.
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Chapter 13: Flexible Budgets, Overhead Cost Variances and Management Control
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170 Verified Questions
170 Flashcards
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Sample Questions
Q1) What is the flexible-budget amount?
A)$49 000
B)$50 000
C)$51 450
D)None of these answers are correct.
Q2) The fixed overhead flexible-budget variance is the difference between actual fixed overhead costs and fixed overhead costs in the flexible budget.
A)True
B)False
Q3) Generally Accepted Accounting Principles require that unitised fixed manufacturing costs be used for:
A)pricing decisions.
B)external reporting.
C)costing decisions.
D)All of these answers are correct.
Q4) A favourable variable set-up overhead efficiency variance could be due to actual set-up-hours exceeding the set-up-hours planned for the units produced.
A)True
B)False
Page 15
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Chapter 14: Allocation of Support-Department Costs,
Common Costs and Revenues
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) Explain the two methods of allocating revenues of a bundled package to the individual products in that package.Describe any special problems associated with each method.
Q2) South Australian Fig Company has substantial fluctuations in its production costs because of the seasonal nature of fig production. Would you recommend an actual or budgeted allocation base? Why? Would you recommend calculating monthly,seasonal,or annual allocation rates? Why?
Q3) The goal is to allocate common costs to each user in a reasonable way.
A)True B)False
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Chapter 15: Strategy Formation, Strategic Control and the Balanced Scorecard
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157 Verified Questions
157 Flashcards
Source URL: https://quizplus.com/quiz/70856
Sample Questions
Q1) Managers at Chipset need to make strategic decisions.What are the five steps that the managers use to make the decision?
Q2) Discretionary costs:
A)are physically observable activities.
B)possess a high level of certainty.
C)are usually large total amounts.
D)have detailed processes.
Q3) The balanced scorecard uses only financial performance measures to evaluate short-run and long-run performance.
A)True
B)False
Q4) The primary purpose of the balanced scorecard is to obtain increased operating profits for the current year.
A)True
B)False
Page 17
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Chapter 16: Quality, Time and the Balanced Scorecard
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) Management should always look for opportunities to generate higher revenues,not only cost reductions,from quality improvements.
A)True
B)False
Q2) Costs of quality (COQ)reports usually do not consider opportunity costs.
A)True
B)False
Q3) When demand uncertainty is ________ ,some unused capacity is desirable.
A)low
B)non-existent
C)average
D)high
Q4) Managers must improve internal business processes because they affect many of the quality-related factors that influence customer satisfaction and improve financial performance.
A)True
B)False
Q5) A cause-and-effect diagram is used to help identify potential causes of defects. A)True
B)False
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Chapter 17: Inventory Management, Just-In-Time and Simplified Costing Methods
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126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/70858
Sample Questions
Q1) In a just-in-time inventory system,there is less emphasis on the need to eliminate scrap and rework problems.
A)True
B)False
Q2) In managing inventory,what are the costs of goods acquired from suppliers including incoming freight or transportation costs known as? Variant question
A)Carrying costs
B)Ordering costs
C)Stockout costs
D)Purchasing costs
Q3) The purchase-order lead time is the:
A)difference between the products ordered and the products received.
B)difference between the times an order is placed and its delivery.
C)discrepancies in purchase orders.
D)time required to correct errors in the products received.
Q4) Retailers generally have a high percentage of net profit to revenues.
A)True
B)False
19
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Chapter 18: Capital Budgeting and Cost Analysis
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) Gold Coast Glass Company provides glassware machines for major department store retailers.The company has been investigating a new piece of machinery for its production department.The old equipment has a remaining life of five years and the new equipment has a value of $115 500 with a five-year life.The expected additional cash inflows are $35 000 per year.What is the payback period on this investment?
A)2.5 years
B)3 years
C)3.3 years
D)5 years
Q2) Depreciation is usually not considered an operating cash flow in capital budgeting because:
A)depreciation usually does not result in an increase in working capital
B)depreciation is usually a constant amount each year over the life of the capital investment
C)deducting depreciation from operating cash flows would be counting the lump-sum amount twice
D)depreciation usually has no effect on the disposal price of the machine
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Chapter 19: Management Control Systems, Transfer Pricing and
Multinational Considerations
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140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/70860
Sample Questions
Q1) One of the problems in using one set of accounting records for tax reporting and another set of records for internal management reporting is that:
A)tax authorities may suspect manipulation of records.
B)it is almost impossible to keep the records straight and hard to reconcile the books.
C)it is illegal.
D)Both A and B are correct.
Q2) 'Effort',in terms of management control systems,is defined in terms of physical exertion such as a worker producing at a faster rate.
A)True
B)False
Q3) Which of the following transfer-pricing methods motivates management effort?
A)a market-based transfer price
B)a negotiated transfer price
C)a cost-based transfer price based on budgeted costs
D)All of the above.
Q4) Management control systems reflect only financial data.
A)True
B)False
21
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Chapter 20: Performance Measurement, Compensation
and Multinational Considerations
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140 Verified Questions
140 Flashcards
Source URL: https://quizplus.com/quiz/70861
Sample Questions
Q1) The Coffee Division of New Zealand Products is planning the 2019 operating budget.Average operating assets of $1 500 000 will be used during the year and unit selling prices are expected to average $100 each.Variable costs of the division are budgeted at $400 000,while fixed costs are set at $250 000.The company's required rate of return is 18%.
Required:
a.Compute the sales volume necessary to achieve a 20% ROI.
b.The division manager receives a bonus of 50% of residual income.What is his anticipated bonus for 2019,assuming he achieves the 20% ROI from part (a)?
Q2) The first step in designing accounting based performance measures is to choose performance measures that align with top management's financial goals. A)True
B)False
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Chapter 21: Measuring and Reporting Sustainability
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50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/70862
Sample Questions
Q1) A possible method of reducing a company's carbon footprint is:
A)planting trees.
B)injecting carbon dioxide into porous rock and thereby 'burying' it.
C)piping carbon dioxide kilometres below the ocean.
D)All of the above.
Q2) With crisis comes opportunity.
A)True
B)False
Q3) Why might a business undertake a sustainable approach within its organisation?
A)Increase its market share
B)Behave ethically
C)Improve relationships with suppliers
D)All of the above.
Q4) Sustainability does not include:
A)climate change.
B)recycling.
C)the impact of globalisation on living standards in developing countries.
D)None of the above are excluded.
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