Question 1

A cost system determines the cost of a cost object by ________.

Accepted Answer

A)  accumulating and then assigning costs 
B)  accumulating costs 
C)  assigning and then accumulating costs 
D)  assigning costs 
A)  accumulating and then assigning costs 
B)  accumulating costs 
C)  assigning and then accumulating costs 
D)  assigning costs

Question 2

Cost assignment ________.

Accepted Answer

A)  includes future and arbitrary costs 
B)  associates accumulated costs with certain cost objects 
C)  is the same as cost accumulation 
D)  is the difference between budgeted and actual costs 
A)  includes future and arbitrary costs 
B)  associates accumulated costs with certain cost objects 
C)  is the same as cost accumulation 
D)  is the difference between budgeted and actual costs

Question 3

A unit cost is computed by ________.

Accepted Answer

A)  multiplying total cost by the number of units produced 
B)  dividing total cost by the number of units produced 
C)  dividing variable cost by the number of units produced 
D)  dividing fixed cost by the number of units produced 
A)  multiplying total cost by the number of units produced 
B)  dividing total cost by the number of units produced 
C)  dividing variable cost by the number of units produced 
D)  dividing fixed cost by the number of units produced

Question 4

Period costs ________.

Accepted Answer

A)  include only fixed costs 
B)  seldom influence financial success or failure 
C)  include the cost of selling, delivering, and after-sales support for customers 
D)  should be treated as an indirect cost rather than as a direct manufacturing cost 
A)  include only fixed costs 
B)  seldom influence financial success or failure 
C)  include the cost of selling, delivering, and after-sales support for customers 
D)  should be treated as an indirect cost rather than as a direct manufacturing cost

Question 5

For a manufacturing company, indirect manufacturing costs would be included in ________.

Accepted Answer

A)  direct materials inventory only 
B)  merchandise inventory only 
C)  both work-in-process inventory and finished goods inventory 
D)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts 
A)  direct materials inventory only 
B)  merchandise inventory only 
C)  both work-in-process inventory and finished goods inventory 
D)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts

Question 6

What is the cost of goods manufactured for 2018?

Accepted Answer

A)  $404,000 
B)  $399,000 
C)  $301,000 
D)  $311,000 
A)  $404,000 
B)  $399,000 
C)  $301,000 
D)  $311,000

Question 7

A cost driver is a variable, such as the level of activity or volume that causally affects costs over a given time span.

Accepted Answer

A) True 
 B)False

Question 8

Costs expensed on the income statement in the accounting period incurred are called ________.

Accepted Answer

A)  direct costs 
B)  indirect costs 
C)  period costs 
D)  inventoriable costs 
A)  direct costs 
B)  indirect costs 
C)  period costs 
D)  inventoriable costs

Question 9

Using the following information find the unknown amounts. Assume each set of information is an independent case.

Accepted Answer

a.Ending balance of merchandise inventor

Question 10

Management accountants help managers identify what information is relevant and what information is
irrelevant that help in decision making.

Accepted Answer

A) True 
 B)False

Question 11

The most likely cost driver of direct labor costs is the ________.

Accepted Answer

A)  number of machine setups for the product 
B)  number of miles driven 
C)  number of production hours 
D)  number of machine hours 
A)  number of machine setups for the product 
B)  number of miles driven 
C)  number of production hours 
D)  number of machine hours

Question 12

The cost system of Charlton Frabricators indicates that a product cost $30 to make in house. Of that $30 cost, $7 consists of plant costs that have already been paid for. A supplier proposes to make the same product for $26 but Charlton's plant will have idle time and because of budgetary constraints, will not be retooled to take advantage of that idle time. Should the product be outsourced to the supplier?

Accepted Answer

A)  No because the relevant cost for making the product is only $23 . 
B)  Yes because the Supplier can produce the product for $4.00 less per unit than Charlton can. 
C)  Yes because the Supplier can produce the product for $11.00 less per unit than Charlton can. 
D)  No because the plant can be utilized for other purposes and either save the company even more money or produce additional revenue. 
A)  No because the relevant cost for making the product is only $23 . 
B)  Yes because the Supplier can produce the product for $4.00 less per unit than Charlton can. 
C)  Yes because the Supplier can produce the product for $11.00 less per unit than Charlton can. 
D)  No because the plant can be utilized for other purposes and either save the company even more money or produce additional revenue.

Question 13

Variable costs per unit vary with the level of production or sales volume.

Accepted Answer

A) True 
 B)False

Question 14

Idle time wages consists of the wages paid to all workers (for both direct labor and indirect labor) in excess of their straight-time wage rates.

Accepted Answer

A) True 
 B)False

Question 15

Pederson Company reported the following:
 
What is the average manufacturing cost per unit?

Accepted Answer

A)  $11.20 
B)  $11.00 
C)  $22.00 
D)  $22.40 
A)  $11.20 
B)  $11.00 
C)  $22.00 
D)  $22.40

Question 16

What are the factors that affect the classification of a cost as direct or indirect?

Accepted Answer

Several factors affect whether a cost is

Question 17

Ridez Manufacturing currently produces 4,000 bicycles per month. The following per unit data apply for sales to regular customers:
 
The plant has capacity for 6,000 bicycles and is considering expanding production to 5,000 bicycles. What is the per unit cost of producing 5,000 bicycles?

Accepted Answer

A)  $91.80 per unit 
B)  $111.25 per unit 
C)  $69.80 per unit 
D)  $86.20 per unit 
A)  $91.80 per unit 
B)  $111.25 per unit 
C)  $69.80 per unit 
D)  $86.20 per unit

Question 18

Which of the following might explain why one manager might assign certain costs to a cost object while a different manager might assign some different costs to that same cost object?

Accepted Answer

A)  one manager might classify one cost as direct while another might classify that same cost as indirect 
B)  For financial statement purposes, one manager might include all the costs of the value chain while the other might only only include GAAP cost 
C)  one manager might value an inventory item for the balance sheet as the sum of all the value chain costs while another manager might choose to only recognize variable costs as inventoribale costs for GAAP purposes. 
D)  one manager might be pricing a cost object while the other manager might be seeking the inventoriable cost 
A)  one manager might classify one cost as direct while another might classify that same cost as indirect 
B)  For financial statement purposes, one manager might include all the costs of the value chain while the other might only only include GAAP cost 
C)  one manager might value an inventory item for the balance sheet as the sum of all the value chain costs while another manager might choose to only recognize variable costs as inventoribale costs for GAAP purposes. 
D)  one manager might be pricing a cost object while the other manager might be seeking the inventoriable cost

Question 19

Cost drivers casually affect total costs of a cost object over a given time span.

Accepted Answer

A) True 
 B)False

Question 20

Period costs are included in the cost of goods sold.

Accepted Answer

A) True 
 B)False

Exam 2: An Introduction to Cost Terms and Purposes

A cost system determines the cost of a cost object by ________.

Cost assignment ________.

A unit cost is computed by ________.

Period costs ________.

For a manufacturing company, indirect manufacturing costs would be included in ________.

What is the cost of goods manufactured for 2018?

A cost driver is a variable, such as the level of activity or volume that causally affects costs over a given time span.

Costs expensed on the income statement in the accounting period incurred are called ________.

Using the following information find the unknown amounts. Assume each set of information is an independent case.

Management accountants help managers identify what information is relevant and what information is irrelevant that help in decision making.

The most likely cost driver of direct labor costs is the ________.

Variable costs per unit vary with the level of production or sales volume.

Idle time wages consists of the wages paid to all workers (for both direct labor and indirect labor) in excess of their straight-time wage rates.

Pederson Company reported the following: What is the average manufacturing cost per unit?

What are the factors that affect the classification of a cost as direct or indirect?

Ridez Manufacturing currently produces 4,000 bicycles per month. The following per unit data apply for sales to regular customers: The plant has capacity for 6,000 bicycles and is considering expanding production to 5,000 bicycles. What is the per unit cost of producing 5,000 bicycles?

Which of the following might explain why one manager might assign certain costs to a cost object while a different manager might assign some different costs to that same cost object?

Cost drivers casually affect total costs of a cost object over a given time span.

Period costs are included in the cost of goods sold.

The Manager and Management Accounting

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

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