Cost Analysis and Control Final Exam
Course Introduction
Cost Analysis and Control focuses on the principles, methods, and tools used to assess, allocate, and manage costs within organizations. This course covers cost behavior, cost allocation techniques, budgeting processes, variance analysis, and performance measurement systems. Students will learn how to analyze cost data to support decision-making, plan and control operations efficiently, and evaluate financial performance. Emphasis is placed on both traditional cost accounting methods and modern approaches, equipping students with the skills to improve organizational efficiency and financial effectiveness.
Recommended Textbook
Horngrens Cost Accounting A Managerial Emphasis 3rd Australian Edition by Charles Horngren
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Page 2
Chapter 1: Management Accounting in Context
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Sample Questions
Q1) Companies gain (in terms of cost,quality and the speed with which new products are developed)if two or more of the individual business functions of the value chain work concurrently as a team.
A)True
B)False
Answer: True
Q2) What are R&D,production,and customer service as business functions included as part of?
A)Marketing
B)Benchmarking
C)The supply chain
D)The value chain
Answer: D
Q3) The production component of the value chain refers to acquiring,coordinating,and assembling resources to produce a product or deliver a service.
A)True
B)False
Answer: True
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Chapter 2: Different Costs for Different Purposes
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Sample Questions
Q1) Some costs have both fixed and variable elements and are called mixed or ________ costs.
A)allocated
B)estimated
C)accumulated
D)semi-variable
Answer: D
Q2) Costs that are fixed in the short run have no cost driver in the short run but may have a cost driver in the _______ run.
A)short
B)long
C)indefinite
D)cost driver
Answer: B
Q3) What is the amount of gross margin?
A)$2 507 500
B)$1 500 000
C)$1 475 000
D)$1 032 500
Answer: D
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Chapter 3: Determining How Costs Behave
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Sample Questions
Q1) What is the constant for the estimating cost equation?
A)$4000
B)$13 600
C)$16 000
D)$20 000
Answer: A
Q2) The y-intercept of a linear cost function is an accurate cost assessment of using zero machine-hours,even if zero machine-hours is outside of the relevant range.
A)True
B)False
Answer: False
Q3) A learning curve is a function that measures how labour-hours per unit decrease,as units of production increase.
A)True
B)False
Answer: True
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Chapter 4: Costvolumeprofit Analysis
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Sample Questions
Q1) Operating profit calculations DO NOT use:
A)operating costs.
B)income tax expense.
C)cost of goods sold.
D)revenue.
Q2) Barbies Beer Emporium sells beer and ale in the proportions 3:5.This means if it sells 1200 items in total for the day it will sell 450 glasses of beer.
A)True
B)False
Q3) When a company has at least some fixed costs,the degree of operating leverage is different at different levels of sales.
A)True
B)False
Q4) What is the budgeted operating profit for the month assuming that Dr Hunter plans to perform the procedure 200 times?
A)$40 000
B)$200 000
C)$80 000
D)$100 000
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Chapter 5: Estimating the Cost of Producing Services
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Sample Questions
Q1) 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
Q2) In a(n)_______________ system,individual jobs differ in the extent to which they use quantities of production resources,so it would be incorrect to use average production costs for different jobs.
A)job-costing
B)process costing
C)hybrid
D)accounting
Q3) Schmenner classifies services according to two dimensions: degree of variation and relative throughput time.
A)True
B)False
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Chapter 6: Estimating the Costs of Products and Inventory
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Sample Questions
Q1) Which of the following cost(s)are inventoried when using absorption costing?
A)Fixed manufacturing costs
B)Variable marketing costs
C)Direct manufacturing costs
D)Both A and C are correct.
Q2) When there are multiple support departments within an organisation,it is common to use journal entries to transfer-in costs from one department to another.What are some of the points to remember about these costs?
Q3) When identical or similar units of products or services are mass produced,job-costing is used to calculate an average production cost for all units produced.
A)True
B)False
Q4) Direct costs are traced the same way for actual costing and normal costing.
A)True
B)False
Page 8
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Chapter 7: Target Costing, Managing Activities and Managing Capacity
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Sample Questions
Q1) Target pricing:
A)estimates are based on customers' perceived value of the product.
B)is used for short-term pricing decisions.
C)is one form of cost-based pricing.
D)refers to the fact that relevant costs are all variable costs.
Q2) Market-based pricing starts with an assessment of market conditions,including customers' perceived value of an entity's output and how competitors are likely to price competing outputs.
A)True
B)False
Q3) When actual production is below practical capacity,there is unused capacity in the distribution function as well as in the production function.
A)True
B)False
Q4) 'Budgeted capacity utilisation' is the level of capacity that managers expect to be used for the current budget period,which is typically one year.
A)True
B)False
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Chapter 8: Activity-Based Management and Activity-Based Costing
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Sample Questions
Q1) Using an ABC system,next year's estimates show manufacturing overhead costs will total $228 300 for 52 000 T-shirts.If all other T-shirt costs and sales prices remain the same,the profitability that can be expected is:
A)($0.81)per T-shirt
B)$4.39 per T-shirt
C)$1.11 per T-shirt
D)$5.41 per T-shirt
Q2) What are the indirect manufacturing costs per remote control assuming an Activity-based costing method is used and a batch of 100 remote controls is produced? The batch requires 500 parts,10 direct manufacturing labour hours and 5 minutes of inspection time.
A)$18.23 per remote control
B)$24.30 per remote control
C)$1823 per remote control
D)$48.60 per remote control
Q3) Today,companies are simplifying their cost systems and moving toward less-detailed and less-complex cost-allocation bases.
A)True
B)False
Page 10
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Chapter 9: Pricing and Customer Profitability
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Sample Questions
Q1) What is the target rate of return on investment for Cairns Company?
A)15.0%
B)11.1%
C)17.6%
D)10.0%
Q2) The allocation of organisation-sustaining costs is useful for:
A)motivating distribution-channel management.
B)focusing on the cause-and-effect relationships with the cost-allocation bases.
C)evaluating the performance of salespersons with individual customer accounts.
D)None of these answers are correct.
Q3) If one of four distribution channels is discontinued,organisation-sustaining costs such as general administration costs will most likely be reduced by 25%.
A)True
B)False
Q4) An advantage of using a bar chart to visualise customer profitability is that:
A)trends in the volume of purchases become apparent.
B)loss customers stand out.
C)differences in commissions paid to sales persons stand out.
D)All of these answers are correct.
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Chapter 10: Decision Making and Relevant Information
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Sample Questions
Q1) Increasing numbers of businesses are including ethical considerations in relation to the community as well as the environment when making decisions.
A)True
B)False
Q2) Should Stephans make or buy the subassemblies? What is the difference between the two alternatives?
A)Buy;savings = $50 000
B)Make;savings = $60 000
C)Buy;savings = $20 000
D)Make;savings = $5000
Q3) Phil Company has offered to sell 10 000 units of the same part to Nullabor Corporation for $18 per unit.Assuming there is no other use for the facilities,Nullabor should:
A)buy the part,as this would save $3 per unit.
B)buy the part,as this would save the company $30 000.
C)make the part,as this would save $3 per unit.
D)make the part,as this would save $1 per unit.
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Chapter 11: Budgeting, Management Control and Responsibility Accounting
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Sample Questions
Q1) What is the ending cash balance for March?
A)$3000
B)$3200
C)($25 000)
D)$18 800
Q2) To gain the benefits of budgeting,________ must understand and support the budget.
A)customers
B)management at all levels
C)suppliers
D)All of these answers are correct.
Q3) Operating decisions deal with how to best use the limited resources of an organisation.
A)True
B)False
Q4) Distinguish between controllable and uncontrollable aspects of revenue and costs.Can a manager totally control all revenue and costs? Why or why not?
Q5) Activity-based budgeting and kaizen budgeting are really equivalent in meaning. A)True
B)False
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Chapter 12: Flexible Budgets, Direct Cost Variances and Management Control
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Sample Questions
Q1) Variance analysis should be a tool to 'play the blame game.'
A)True
B)False
Q2) In order to predict costs,it is important to have standard prices for each:
A)input.
B)variance.
C)output.
D)target.
Q3) Which of the following is TRUE about a flexible budget?
Variant question
A)It is developed at the end of the period
B)It is based on the budgeted level of output
C)It provides favourable operating results
D)It is another name for management by exception
Q4) The sales-volume variance is:
A)$2400 favourable.
B)$2000 favourable.
C)$17 000 unfavourable.
D)$14 000 unfavourable.
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Chapter 13: Flexible Budgets, Overhead Cost Variances and Management Control
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Sample Questions
Q1) The flexible-budget amount for a fixed-cost item is also the amount included in the static budget prepared at the start of the period.
A)True
B)False
Q2) What are the arguments for prorating a production-volume variance that has been deemed to be material among work-in-process,finished goods,cost and cost of goods sold as opposed to writing it all off to cost of goods sold?
Q3) What is the amount of fixed overhead allocated to production?
A)$150 000
B)$153 000
C)$120 000
D)$122 000
Q4) Detailed 4-variance analyses are most common in large,complex businesses.
A)True
B)False
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Chapter 14: Allocation of Support-Department Costs,
Common Costs and Revenues
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Sample Questions
Q1) Using the direct method,what amount of Personnel Department costs will be allocated to Department B?
A)$24 000
B)$10 000
C)$16 000
D)$30 000
Q2) The single-rate cost-allocation method provides better information for decision making than the dual-rate method.
A)True
B)False
Q3) Using the direct method,what amount of Personnel Department costs will be allocated to Department A?
A)$10 000
B)$30 000
C)$24 000
D)$16 000
Q4) Contract disputes often arise with respect to cost allocation. A)True
B)False
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Chapter 15: Strategy Formation, Strategic Control and the Balanced Scorecard
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Sample Questions
Q1) Bledisloe Corporation plans to grow by offering an audio-visual training programme,the Rugger2018 that is superior and unique from the competition.Bledisloe believes that putting additional resources into R&D and staying ahead of the competition with technological innovations are critical to implementing its strategy.
Required:
a.Is Bledisloe's strategy one of product differentiation or cost leadership? Explain briefly.
b.Identify at least one key element that you would expect to see included in the balanced scorecard:
- for the financial perspective.
- for the customer perspective.
- for the internal business process perspective.
- for the learning and growth perspective.
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Chapter 16: Quality, Time and the Balanced Scorecard
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Sample Questions
Q1) The costs relating to new materials testing are classified as appraisal costs.
A)True
B)False
Q2) What is the net effect on appraisal costs for 2018,assuming the new receiving method is implemented and that 800 000 material units are received?
A)$20 000 increase
B)$240 000 increase
C)$220 000 decrease
D)$20 000 decrease
Q3) A tool which identifies potential causes of failures or defects is a:
A)control chart.
B)cause-and-effect diagram.
C)Pareto diagram
D)None of these answers are correct.
Q4) What is the change in the daily contribution margin if the change is made?
A)$800
B)$2800
C)$1700
D)$250
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Chapter 17: Inventory Management, Just-In-Time and Simplified Costing Methods
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Sample Questions
Q1) The freight and transportation costs on goods acquired from suppliers are generally included in purchasing costs.
Variant question
A)True
B)False
Q2) How many deliveries will be required at the economic order quantity (EOQ)?
A)5.1 deliveries
B)8.2 deliveries
C)1.0 delivery
D)18.5 deliveries
Q3) If Ballart Collectibles Inc.has a safety stock of 70 units and the average weekly demand is 21 units,how many days can be covered if the shipment from the supplier is delayed?
A)21 days
B)23.3 days
C)35 days
D)3.3 days
Q4) All inventory costs are recorded in the financial accounting system.
A)True B)False
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Chapter 18: Capital Budgeting and Cost Analysis
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Sample Questions
Q1) A capital budgeting project is accepted if the required rate-of-return equals or exceeds the internal rate-of-return.
A)True
B)False
Q2) What are the two factors capital budgeting emphasises?
A)Qualitative and non-financial
B)Quantitative and non-financial
C)Qualitative and financial
D)Quantitative and financial
Q3) Relevant cash flows are expected future cash flows that differ among the alternative uses of investment funds.
A)True
B)False
Q4) For capital budgeting decisions,the use of the accrual accounting rate of return for evaluating performance is often a stumbling block to the implementation of the:
A)most effective tax strategy.
B)discounted cash flow method for capital budgeting.
C)most effective goal-congruence choice.
D)net cash flow.
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Chapter 19: Management Control Systems, Transfer Pricing and
Multinational Considerations
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Sample Questions
Q1) What is the operating profit of both divisions together if the Assembly Division sells 50 000 blades at a price of $120 a pair to customers?
A)$2 600 000
B)$3 400 000
C)$3 000 000
D)$4 400 000
Q2) What is the term used to describe the situation when a manager's decision,which benefits one subunit,is more than offset by the costs to the organisation as a whole?
A)Suboptimal decision making
B)Dysfunctional decision making
C)Congruent decision making
D)Both A and B are correct.
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.
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Chapter 20: Performance Measurement, Compensation
and Multinational Considerations
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Sample Questions
Q1) Return on investment is the most popular performance measure when measuring performance in an investment centre.
A)True
B)False
Q2) What were the sales for the Beta Division?
A)$4 333 333
B)$5 952 380
C)$6 500 000
D)$7 151 800
Q3) The after-tax average cost of all the long-term funds used by a corporation equals:
A)economic value added.
B)return on investment.
C)weighted-average cost of capital.
D)return on equity.
Q4) Customer-satisfaction measures are an example of the:
A)financial report scorecard approach.
B)balanced scorecard approach.
C)goal-congruence approach.
D)investment success approach.
22
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Chapter 21: Measuring and Reporting Sustainability
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Sample Questions
Q1) The International Standards for Environmental Management Systems are ISO 14001 and ISO 14004.
A)True
B)False
Q2) A 'cap and trade' approach to greenhouse gas control is a 'stick' rather than a 'carrot' approach.
A)True
B)False
Q3) A scheme that is designed to reduce greenhouse gases by providing economic incentives to achieve a reduction in these gas emissions is known as:
A)systems thinking.
B)a balanced scorecard.
C)an emissions trading scheme.
D)the ecological footprint scheme.
Q4) Currently,very few organisations are truly sustainable.
A)True
B)False
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