Question 1

Product costs used for pricing and product-mix decisions generally include

Accepted Answer

A)  manufacturing costs only. 
B)  design costs plus manufacturing costs. 
C)  all costs incurred along the value chain. 
D)  distribution costs only. 
E)  prime costs but not conversion costs. 
A)  manufacturing costs only. 
B)  design costs plus manufacturing costs. 
C)  all costs incurred along the value chain. 
D)  distribution costs only. 
E)  prime costs but not conversion costs.

Question 2

The determination of a cost as being either direct or indirect depends upon

Accepted Answer

A)  the accounting system. 
B)  the allocation system. 
C)  the cost tracing system. 
D)  only the cost object chosen to determine its individual costs. 
E)  the choice of the cost object, and the materiality of the cost in question. 
A)  the accounting system. 
B)  the allocation system. 
C)  the cost tracing system. 
D)  only the cost object chosen to determine its individual costs. 
E)  the choice of the cost object, and the materiality of the cost in question.

Question 3

A fixed cost is a cost that changes per unit as a cost driver changes.

Accepted Answer

A) True 
 B)False

Question 4

Butler Hospital wants to estimate the cost for each patient stay. It is a general health care facility offering only basic services and not specialized services such as organ transplants.
Required:
a. Classify each of the following costs as either direct or indirect with respect to each patient.
b. Classify each of the following costs as either fixed or variable with respect to hospital costs per day.

Accepted Answer

The answer of Butler Hospital wants to estimate the cost...

Question 5

Competition places an increased emphasis on cost reductions. For an organization to reduce costs it must focus on

Accepted Answer

A)  maximizing the cost allocation system. 
B)  reporting non-value added costs separately from value-added costs. 
C)  efficiently managing the use of the cost drivers in those value-added activities. 
D)  the cost allocation process. 
E)  reducing the number of cost drivers. 
A)  maximizing the cost allocation system. 
B)  reporting non-value added costs separately from value-added costs. 
C)  efficiently managing the use of the cost drivers in those value-added activities. 
D)  the cost allocation process. 
E)  reducing the number of cost drivers.

Question 6

Use the information below to answer the following question(s).
The following information pertains to Payton's Shoe Manufacturing:
   99,500 pairs of shoes are sold during the year for $18.
-What is the amount of Payton's ending finished goods inventory?

Accepted Answer

A)  $99,500 
B)  $8,000 
C)  $5,000 
D)  $500 
E)  $0 
A)  $99,500 
B)  $8,000 
C)  $5,000 
D)  $500 
E)  $0

Question 7

Use the information below to answer the following question(s).
Consider the following data of the Vancouver Company for the year 20X4:
  
-What is the unit cost for the direct materials for 20X4 assuming direct materials are for the production of 507,000 units?

Accepted Answer

A)  $0.80 
B)  $0.95 
C)  $2.00 
D)  $1.08 
E)  $1.10 
A)  $0.80 
B)  $0.95 
C)  $2.00 
D)  $1.08 
E)  $1.10

Question 8

Use the information below to answer the following question(s).
Frazer Inc. had the following activities in the year:
  
-Finished goods inventory would normally include

Accepted Answer

A)  direct materials in stock and awaiting use in the manufacturing process. 
B)  goods partially worked on but not yet fully completed. 
C)  goods fully completed but not yet sold. 
D)  products in their original form intended to be sold without changing their basic form. 
E)  goods completed and sold. 
A)  direct materials in stock and awaiting use in the manufacturing process. 
B)  goods partially worked on but not yet fully completed. 
C)  goods fully completed but not yet sold. 
D)  products in their original form intended to be sold without changing their basic form. 
E)  goods completed and sold.

Question 9

Nearly all accounting systems accumulate forecasted costs.

Accepted Answer

A) True 
 B)False

Question 10

When 50,000 units are produced the fixed costs are $10 per unit. Therefore when 100,000 units are produced fixed costs will remain at $10 per unit.

Accepted Answer

A) True 
 B)False

Question 11

Direct materials inventory is products held for resale.

Accepted Answer

A) True 
 B)False

Question 12

Answer the following question(s) using the information below.
The West Company manufactures several different products. Unit costs associated with Product ORD203 are as follows:
  
-What are the period costs per unit associated with Product ORD203?

Accepted Answer

A)  $15 
B)  $6 
C)  $9 
D)  $27 
E)  $48 
A)  $15 
B)  $6 
C)  $9 
D)  $27 
E)  $48

Question 13

Describe a variable cost. Describe a fixed cost. Explain why the distinction between variable and fixed costs is important in cost accounting.

Accepted Answer

Total variable costs increase with incre

Question 14

A new employee in the accounting department is having difficulty understanding two sets of accounting terms-variable and fixed costs as opposed to period and product costs. He understands that variable costs change during an accounting period while fixed costs do not. However, he explains that a period cost implies that it is for a period of time and is, therefore, also fixed. Does his assumption imply that all product costs are then variable?
Required:
As part of your responsibility to train new staff, explain the difference between these terms.

Accepted Answer

First, you should explain that all costs

Question 15

Which of the following statements about cost management is true?

Accepted Answer

A)  It requires that managers actively strive to increase revenues. 
B)  It only focuses on inventoriable costs. 
C)  It is not affected by the organization's customers. 
D)  It only applies to period costs. 
E)  It requires efficient management of the use of the cost drivers in the value-added activities. 
A)  It requires that managers actively strive to increase revenues. 
B)  It only focuses on inventoriable costs. 
C)  It is not affected by the organization's customers. 
D)  It only applies to period costs. 
E)  It requires efficient management of the use of the cost drivers in the value-added activities.

Question 16

A manufacturing company contracts with the labour union to guarantee full employment for all employees with at least 10 years seniority. The Company expects to be working at capacity for the next 2 years (the life of the contract), so this was seen as a bargaining concession without any cost to the company. On average, an employee earns $30 per hour, including benefits. The work force consists of 800 employees, with seniority ranging from 1 year to 18 years.
Required:
Analyze the direct labour cost in term of variable costs, fixed costs, and the relevant range.

Accepted Answer

Usually, we think of direct labour as a

Question 17

Combs, Inc., reports the following information for September sales:
   Required:
If sales double in October, what is the projected operating income?

Accepted Answer

($15,000 ×

Question 18

Use the information below to answer the following question(s).
Montreal Industries Inc. had the following activities during the year::
  
-For a manufacturing company, direct material costs may 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. 
E)  period costs. 
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. 
E)  period costs.

Question 19

The vice president of production has just completed the January meeting with all production department heads. Everyone is upset that the production variances for the month were unfavourable. They do not understand why everything was unfavourable. January is typically the company's lowest production month of the year.
The company uses annual average unit costs for production evaluation purposes. The average costs are based on the prior year's actual performance with adjustments for any predicted changes in the coming year. Both production and economic items are considered in setting the averages for each new year.
Required:
Explain the problems with using average costs in evaluating production.

Accepted Answer

One of the problems with average unit co

Question 20

Use the information below to answer the following question(s).
The following information pertains to Payton's Shoe Manufacturing:
   99,500 pairs of shoes are sold during the year for $18.
-The following information pertains to the Stratford Company:   What is the cost of goods sold?

Accepted Answer

A)  $436,000 
B)  $384,000 
C)  $376,000 
D)  $316,000 
E)  $444,000 
A)  $436,000 
B)  $384,000 
C)  $376,000 
D)  $316,000 
E)  $444,000

Product costs used for pricing and product-mix decisions generally include

The determination of a cost as being either direct or indirect depends upon

A fixed cost is a cost that changes per unit as a cost driver changes.

Competition places an increased emphasis on cost reductions. For an organization to reduce costs it must focus on

Use the information below to answer the following question(s). The following information pertains to Payton's Shoe Manufacturing: 99,500 pairs of shoes are sold during the year for $18. -What is the amount of Payton's ending finished goods inventory?

Use the information below to answer the following question(s). Consider the following data of the Vancouver Company for the year 20X4: -What is the unit cost for the direct materials for 20X4 assuming direct materials are for the production of 507,000 units?

Use the information below to answer the following question(s). Frazer Inc. had the following activities in the year: -Finished goods inventory would normally include

Nearly all accounting systems accumulate forecasted costs.

When 50,000 units are produced the fixed costs are $10 per unit. Therefore when 100,000 units are produced fixed costs will remain at $10 per unit.

Direct materials inventory is products held for resale.

Answer the following question(s) using the information below. The West Company manufactures several different products. Unit costs associated with Product ORD203 are as follows: -What are the period costs per unit associated with Product ORD203?

Describe a variable cost. Describe a fixed cost. Explain why the distinction between variable and fixed costs is important in cost accounting.

Which of the following statements about cost management is true?

Combs, Inc., reports the following information for September sales: Required: If sales double in October, what is the projected operating income?

Use the information below to answer the following question(s). Montreal Industries Inc. had the following activities during the year:: -For a manufacturing company, direct material costs may be included in

Use the information below to answer the following question(s). The following information pertains to Payton's Shoe Manufacturing: 99,500 pairs of shoes are sold during the year for $18. -The following information pertains to the Stratford Company: What is the cost of goods sold?

The Accountants Vital Role in Decision Making

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 2: An Introduction to Cost Terms and Purposes

Product costs used for pricing and product-mix decisions generally include

The determination of a cost as being either direct or indirect depends upon

A fixed cost is a cost that changes per unit as a cost driver changes.

Competition places an increased emphasis on cost reductions. For an organization to reduce costs it must focus on

Use the information below to answer the following question(s). The following information pertains to Payton's Shoe Manufacturing: 99,500 pairs of shoes are sold during the year for $18. -What is the amount of Payton's ending finished goods inventory?

Use the information below to answer the following question(s). Consider the following data of the Vancouver Company for the year 20X4: -What is the unit cost for the direct materials for 20X4 assuming direct materials are for the production of 507,000 units?

Use the information below to answer the following question(s). Frazer Inc. had the following activities in the year: -Finished goods inventory would normally include

Nearly all accounting systems accumulate forecasted costs.

When 50,000 units are produced the fixed costs are $10 per unit. Therefore when 100,000 units are produced fixed costs will remain at $10 per unit.

Direct materials inventory is products held for resale.

Answer the following question(s) using the information below. The West Company manufactures several different products. Unit costs associated with Product ORD203 are as follows: -What are the period costs per unit associated with Product ORD203?

Describe a variable cost. Describe a fixed cost. Explain why the distinction between variable and fixed costs is important in cost accounting.

Which of the following statements about cost management is true?

Combs, Inc., reports the following information for September sales: Required: If sales double in October, what is the projected operating income?

Use the information below to answer the following question(s). Montreal Industries Inc. had the following activities during the year:: -For a manufacturing company, direct material costs may be included in

Use the information below to answer the following question(s). The following information pertains to Payton's Shoe Manufacturing: 99,500 pairs of shoes are sold during the year for $18. -The following information pertains to the Stratford Company: What is the cost of goods sold?

The Accountants Vital Role in Decision Making

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters