Cost Accounting

Mission statements typically remain unchanged throughout the life of an organization.

Select one:

a. False

b. True

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The correct answer is: False.

Question 2

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Cost and management accounting

Select one:

a. are required for business recordkeeping as are financial and tax accounting.

b. provide product/service cost information as well as information for internal decision making.

c. require an entirely separate group of accounts than financial accounting uses.

d. focus solely on determining how much it costs to manufacture a product or provide a service.

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The correct answer is: provide product/service cost information as well as information for internal decision making..

Question 3

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The financial perspective of the balanced scorecard addresses stakeholder concerns about profitability and organizational growth.

Select one:

a. True

b. False

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The correct answer is: True.

Question 4

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The internal business perspective of the balanced scorecard addresses the things that an organization needs to do well to meet customer needs and expectations.

Select one:

a. False

b. True

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Question 5

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An organization’s return on assets (ROA) is an example of a lead indicator.

Select one:

a. True

b. False

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Question 6

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Which of the following statements istrue?

Select one:

a. Management accounting is a subset of cost accounting.

b. Management accounting is a subset of both cost and financial accounting.

c. Cost accounting is a subset of both management and financial accounting.

d. Financial accounting is a subset of cost accounting.

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The correct answer is: Cost accounting is a subset of both management and financial accounting..

Question 7

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In a global economy,

Select one:

a. the international movement of labor is prohibited except for multilingual persons.

b. the international flows of capital and information are common.

c. the trade of goods and services is focused on trade between or among countries on the same continent.

d. all of the above happen in a global economy.

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The correct answer is: the international flows of capital and information are common..

Question 8

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Management and financial accounting are used for which of the following purposes?

Management accounting Financial accounting

Select one:

a. external internal

b. internal internal

c. internal external

d. external external

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The correct answer is: internal external.

Question 9

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Broadly speaking, cost accounting can be defined as a(n)

Select one:

a. system used for providing the government and creditors with information about a company's internal operations.

b. internal reporting system needed by manufacturers to be in compliance with Cost Accounting Standards Board pronouncements.

c. internal reporting system that provides product costing and other information used by managers in performing their functions.

d. external reporting system that is based on activity-based costs.

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The correct answer is: internal reporting system that provides product costing and other information used by managers in performing their functions..

Question 10

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The Institute of Management Accountants' Code of Ethics

Select one:

a. should be viewed as a goal for professional behavior.

b. provides ways to measure departures from ethical behavior.

c. is a legally enforceable contract with all CPAs.

d. is a legally enforceable contract with all management accountants.

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The correct answer is: should be viewed as a goal for professional behavior..

Question 11

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The process of preparing a budget forces coordination and communication throughout the company.

Select one:

a. True

b. False

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Question 12

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One of the steps in planning is making predictions about the future.

Select one:

a. True

b. False

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Question 13

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Employees pay little attention to how their performance is measured.

Select one:

a. True

b. False

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Question 14

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The controller is generally a staff position.

Select one:

a. True

b. False

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Question 15

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A cost concept used for external reporting purposes may not be appropriate for internal, routine reporting to managers.

Select one:

a. True

b. False

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Question 16

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Which of the following statements about the cost-benefit approach is true?

Select one:

a. A cost-benefit approach would not be appropriate for a decision to install a budget system or not.

b. In a cost-benefit analysis, both costs and benefits are easy to obtain.

c. Resources should be spent if the costs of a decision outweigh the benefits of the decision.

d. Resources should be spent if they are expected to better attain company goals in relation to the expected costs of these resources.

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The correct answer is: Resources should be spent if they are expected to better attain company goals in relation to the expected costs of these resources..

Question 17

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Customer response time involves:

Select one:

a. the speed it takes an organization to develop a Total Quality Management (TQM) program

b. the speed it takes to develop a new product

c. the speed at which an organization responds to customer requests

d. the speed it takes a customer to respond to an advertisement and place an order

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The correct answer is: the speed at which an organization responds to customer requests.

Question 18

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Place the five steps in the decision-making process in the correct order:

A = Obtain information

B = Make decisions by choosing among alternatives

C = Identify the problem and uncertainties

D = Implement the decision

E = Make predictions about the future

Select one:

a. C D B E A

b. A E B D C

c. E D A B C

d. C A E B D

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The correct answer is: C A E B D.

Question 19

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An Enterprise Resource Planning System can best be described as:

Select one:

a. a sophisticated means of linking two or more companies to facilitate their planning processes

b. a collection of programs that use a variety of unconnected databases

c. a single database that collects data and feeds it into applications that support each of the company's business activities, such as purchases, production, distribution, and sales

d. a database that is primarily used by a purchasing department to determine the correct amount of a particular supply item to purchase

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The correct answer is: a single database that collects data and feeds it into applications that support each of the company's business activities, such as purchases, production, distribution, and sales.

Question 20

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Which item is NOT an indication of confidentiality under the Standards of Ethical Conduct?

Select one:

a. Keep information confidential except when disclosure is authorized or legally required.

b. Refrain from using confidential information for unethical or illegal advantage.

c. Inform all relevant parties regarding appropriate use of confidential information.

d. All of the above indicate confidentiality.

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The correct answer is: All of the above indicate confidentiality..

Question 21

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Answer the following questions using the information below:

Beginning finished goods, 1/1/20X3 $ 90,000

Ending finished goods, 12/31/20X3 77,000

Cost of goods sold 270,000

Sales revenue 500,000

Operating expenses 155,000

What is operating income for 20X3?

Select one:

a. $75,000

b. $112,000

c. $62,000

d. $230,000

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The correct answer is: $75,000.

Question 22

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Product cost for financial statement purposes may include:

Select one:

a. all costs allowed by government agencies

b. all costs included for pricing and product-mix decisions

c. all costs except marketing costs

d. production costs

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The correct answer is: production costs.

Question 23

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Finished goods inventory would normally include:

Select one:

a. products in their original form intended to be sold without changing their basic form

b. direct materials in stock and awaiting use in the manufacturing process

c. goods fully completed but not yet sold

d. goods partially worked on but not yet fully completed

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The correct answer is: goods fully completed but not yet sold.

Question 24

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Which of the following is NOT a period cost?

Select one:

a. marketing costs

b. direct materials

c. research and development costs

d. general and administrative costs

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The correct answer is: direct materials.

Question 25

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Kym Manufacturing provided the following information for last month:

Sales $12,000

Variable costs 4,000

Fixed costs 1,000

Operating income $7,000

If sales double next month, what is the projected operating income?

Select one:

a. $18,000

b. $14,000

c. $15,000

d. $19,000

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Question 26

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Actual costs are:

Select one:

a. estimated costs

b. the costs incurred

c. forecasted costs

d. budgeted costs

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The correct answer is: the costs incurred.

Question 27

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For last year, Wampum Enterprises reported revenues of $420,000, cost of goods sold of $108,000, cost of goods manufactured of $101,000, and total operating costs of $70,000. Operating income for that year was:

Select one:

a. $319,000

b. $242,000

c. $249,000

d. $312,000

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Question 28

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

Select one:

a. cost object chosen

b. cost tracing system

c. allocation system

d. accounting system

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The correct answer is: cost object chosen.

Question 29

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When 20,000 units are produced, fixed costs are $16 per unit. Therefore, when 40,000 units are produced fixed costs will:

Select one:

a. decrease to $8 per unit

b. remain at $16 per unit

c. total $640,000

d. increase to $32 per unit

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The correct answer is: decrease to $8 per unit.

Question 30

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XIAN Manufacturing produces a unique valve, and has the capacity to produce 50,000 valves annually. Currently XIAN produces 40,000 valves and is thinking about increasing production to 45,000 valves next year. What is the most likely behavior of total manufacturing costs and unit manufacturing costs given this change?

Select one:

a. Total manufacturing costs will increase and unit manufacturing costs will decrease.

b. Total manufacturing costs will increase and unit manufacturing costs will stay the same.

c. Total manufacturing costs will stay the same and unit manufacturing costs will stay the same.

d. Total manufacturing costs will stay the same and unit manufacturing costs will decrease.

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The correct answer is: Total manufacturing costs will increase and unit manufacturing costs will decrease..

Question 31

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The Reddog Company predicts that 3,200 units of material will be used during the year. The expected daily usage is 15 units, there is an expected lead time of 10 days, and there is a safety stock of 200 units. The material is expected to cost $4 per unit. It is estimated that it will cost $25 to place each order. The annual carrying cost is $1 per unit.

b.

Determine the most economical order quantity by use of the formula.

Answer:

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The correct answer is: 400.

Question 32

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A receiving report would include all of the following information except:

Select one:

a. The customer

b. The date the materials were received.

c. The purchase order number

d. What the shipment contained

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The correct answer is:

The customer

.

Question 33

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Assuming that demand is determinable, what is the objective of the economic order quantity (EOQ) model for inventory?

Select one:

a. To order sufficient quantity to economically meet the next period's demand

b. To minimize order costs or carrying costs and maximize the rate of inventory turnover

c. To minimize the total order costs and carrying costs over a period of time

d. To minimize order costs or carrying costs, whichever are higher

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To minimize the total order costs and carrying costs over a period of time

.

Question 34

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The form prepared by the purchasing agent and sent to the vendor to obtain materials is known as a:

Select one:

a. Vendor's invoice

b. Materials requisition

c. Purchase order

d. Purchase requisition

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Purchase order

.

Question 35

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The Bisset Corporation uses Raw Material A in a manufacturing process. Information as to balances on hand, purchases, and requisitions of Raw Material A is given in the following table.

Raw Material A

Date

Transaction

Number of Units

Unit Price

Balance of Units

Jan. 1

Beginning balance

100

$1.40

100

Jan. 24

Purchased

300

$1.55

400

Feb. 8

Issued

80

320

Mar. 16

Issued

140

180

Jun. 11

Purchased

150

$1.62

330

Aug. 18

Issued

130

200

Sep. 6

Issued

110

90

Oct. 15

Purchased

150

$1.70

240

Dec. 29

Issued

140

100

If a perpetual inventory record of Raw Material A is maintained on a FIFO basis, 200 units on hand on August 18 will consist of:

Select one:

a. 150 units @ $1.62 and 50 units @ $1.55

b. 100 units @ $1.40, 80 units @ $1.55 and 20 units @ $1.62

c. 100 units @ $1.55 and 100 units @ $1.62

d. 200 units @ $1.55

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150 units @ $1.62 and 50 units @ $1.55

.

Question 36

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The duties of the purchasing agent would include all of the following except:

Select one:

a. Counting and identifying materials received

b. Compiling information that identifies vendors and prices.

c. Verifying invoices and approving them for payment

d. Placing purchase orders

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Counting and identifying materials received

.

Question 37

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Raw Material A

Date

Transaction

Number of Units

Unit Price

Balance of Units

Jan. 1

Beginning balance

100

$1.40

100

Jan. 24

Purchased

300

$1.55

400

Feb. 8

Issued

80

320

Mar. 16

Issued

140

180

Jun. 11

Purchased

150

$1.62

330

Aug. 18

Issued

130

200

Sep. 6

Issued

110

90

Oct. 15

Purchased

150

$1.70

240

Dec. 29

Issued

140

100

If a perpetual inventory record of Raw Material A is maintained on a FIFO basis, the September 6 issue will consist of:

Select one:

a. 50 units @ $1.40 and 60 units @ $1.55

b. 110 units @ $1.55

c. 50 units @ $1.55 and 60 units @ $1.62

d. 10 units @ $1.40, 80 units @ $1.55 and 20 units @ $1.62

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50 units @ $1.55 and 60 units @ $1.62

.

Question 38

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The form that serves as authorization to withdraw materials from the storeroom is known as the:

Select one:

a. Purchase order

b. Purchase requisition

c. Stores requisition

d. Returned materials report

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Stores requisition

.

Question 39

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The form used to notify the purchasing agent that additional materials are needed is known as a:

Select one:

a. Receiving report

b. Purchase requisition

c. Purchase order

d. Vendor's invoice

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Purchase requisition

.

Question 40

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Raw Material A

Date

Transaction

Number of Units

Unit Price

Balance of Units

Jan. 1

Beginning balance

100

$1.40

100

Jan. 24

Purchased

300

$1.55

400

Feb. 8

Issued

80

320

Mar. 16

Issued

140

180

Jun. 11

Purchased

150

$1.62

330

Aug. 18

Issued

130

200

Sep. 6

Issued

110

90

Oct. 15

Purchased

150

$1.70

240

Dec. 29

Issued

140

100

If a perpetual inventory record of Raw Material A is maintained on a moving average basis, the 140 units issued on March 16 will have a unit cost of:

Select one:

a. $1.55.

b. $1.5125.

c. $1.4375.

d. $1.475

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$1.5125.

Documents

Cost Accounting