Question 1

The optimal level in the trade-off between measurement and error costs is when

Accepted Answer

A) measurement costs are greater than error costs. 
B) measurement costs and error costs are minimized. 
C) measurement costs are less than error costs. 
D) the total of measurement costs and error costs are maximized. 
A) measurement costs are greater than error costs. 
B) measurement costs and error costs are minimized. 
C) measurement costs are less than error costs. 
D) the total of measurement costs and error costs are maximized.

Question 2

Which of the following is NOT an example of a difference between the income statement of a service organization and the income statement of a manufacturing organization?

Accepted Answer

A) A service company will never have work in process. 
B) The service company will not have a finished goods inventory. 
C) Fulfillment costs may be added to cost of goods sold of a service company. 
D) Research and development expenses are not usually a major component of a service organization. 
A) A service company will never have work in process. 
B) The service company will not have a finished goods inventory. 
C) Fulfillment costs may be added to cost of goods sold of a service company. 
D) Research and development expenses are not usually a major component of a service organization.

Question 3

Direct costs

Accepted Answer

A) are incurred for the benefit of the business as a whole. 
B) would continue even if a particular product were discontinued. 
C) are those costs that can be easily and accurately traced to a cost object. 
D) can be assigned to products only by a process of allocation. 
A) are incurred for the benefit of the business as a whole. 
B) would continue even if a particular product were discontinued. 
C) are those costs that can be easily and accurately traced to a cost object. 
D) can be assigned to products only by a process of allocation.

Question 4

Cost management information benefits production, marketing, and customer service systems as well as being a crucial part of managerial decision making.

Accepted Answer

A) True 
 B)False

Question 5

All of the following costs are included in factory overhead EXCEPT

Accepted Answer

A) factory supplies. 
B) indirect labor. 
C) plant foreman's salary. 
D) direct labor. 
A) factory supplies. 
B) indirect labor. 
C) plant foreman's salary. 
D) direct labor.

Question 6

Generally, more managerial objectives can be met with an activity-based system than with a _________ system.

Accepted Answer

The answer of Generally, more managerial objectives can be met...

Question 7

During the month of January, Marcos & Henesey, Inc. had total manufacturing costs of $165,000. It incurred $62,000 of direct labor cost and $40,000 of manufacturing overhead cost during the month. If the materials inventory on January 1 was $5,800 less than the materials inventory on January 31, what was the cost of materials purchased during the month?

Accepted Answer

A) $53,650 
B) $68,800 
C) $58,000 
D) $93,800 
A) $53,650 
B) $68,800 
C) $58,000 
D) $93,800

Question 8

The following is the data for Lauren Enterprises: $\begin{array}{lr}
\text { Selling and administrative expenses } & \$ 75,000 \
\text { Direct materials used } & 265,000 \
\text { Direct labor }(25,000 \text { hours) } & 300,000 \
\text { Factory overhead application rate } & \$ 16 \text { per DLH }
\end{array}$

$\text { Inventories }$
$\begin{array}{lrr}&\text { Beginining } & \text { Ending }\\hline
\text { Direct materials } & \$ 50,000 & \$ 45,000 \
W \text { ork in process } & 75,000 & 90,000 \
\text { Finished goods } & 40,000 & 25,000
\end{array}$ What is the cost of goods sold?

Accepted Answer

A) $565,000 
B) $950,000 
C) $965,000 
D) $980,000 
A) $565,000 
B) $950,000 
C) $965,000 
D) $980,000

Question 9

Which of the following methods of assigning costs is based on convenience or some assumed linkage, and reduces the overall accuracy of the cost assignments?

Accepted Answer

A) direct tracing 
B) driver tracing 
C) allocation 
D) all of the above 
A) direct tracing 
B) driver tracing 
C) allocation 
D) all of the above

Question 10

The assignment of indirect costs to cost objects is referred to as:

Accepted Answer

A) Allocation 
B) Direct tracing 
C) Physical observation 
D) Cost management 
A) Allocation 
B) Direct tracing 
C) Physical observation 
D) Cost management

Question 11

Inventory balances for the Jameson Company in October 2018 are as follows: $$\begin{array} { l c c } 
& \text { October } 1,2018 & \text { October } 31,2018 \
\text { Raw materials } & \$ 27,000 & \$ 21,000 \
\text { Work in process } & 48,000 & 37,200 \
\text { Finished goods } & 108,000 & 90,000
\end{array}$$
During October, purchases of direct materials were $36,000. Direct labor and factory overhead costs were $60,000 and $84,000, respectively.
What is the cost of materials used in production?

Accepted Answer

A) $36,000 
B) $42,000 
C) $47,800 
D) $54,000 
A) $36,000 
B) $42,000 
C) $47,800 
D) $54,000

Question 12

A small engine repair shop purchased materials costing $9,000 in July. The beginning inventory of material parts was $4,500 and the ending inventory of material parts was $4,000. Payments for direct labor for July totaled $27,000, secretarial costs were $2,000, and overhead of $5,000 was incurred. In addition, $5,000 was spent on advertising and $2,000 for the franchise name. Revenue for July was $50,000.
What is the cost of services sold for July?

Accepted Answer

A) $41,500 
B) $43,500 
C) $50,500 
D) $40,500 
A) $41,500 
B) $43,500 
C) $50,500 
D) $40,500

Question 13

The overall objective of accounting information systems is to

Accepted Answer

A) provide information to users. 
B) manage the organization. 
C) prepare financial reports. 
D) report to the government. 
A) provide information to users. 
B) manage the organization. 
C) prepare financial reports. 
D) report to the government.

Question 14

If total warehousing cost for the year amounts to $950,000, and 35 percent of the warehousing activity is associated with finished goods and 65 percent with direct materials, how much of the cost would be charged as a product cost?

Accepted Answer

A) $285,000 
B) $332,500 
C) $617,500 
D) $950,000 
A) $285,000 
B) $332,500 
C) $617,500 
D) $950,000

Question 15

The cost of units completed during a period is called

Accepted Answer

A) cost of goods sold. 
B) cost of goods manufactured. 
C) current manufacturing costs. 
D) finished goods inventory. 
A) cost of goods sold. 
B) cost of goods manufactured. 
C) current manufacturing costs. 
D) finished goods inventory.

Question 16

Which of the following costs is NOT a product cost?

Accepted Answer

A) rent on an office building 
B) indirect labor 
C) repairs on manufacturing equipment 
D) steel used in inventory items produced 
A) rent on an office building 
B) indirect labor 
C) repairs on manufacturing equipment 
D) steel used in inventory items produced

Question 17

Information from the records of the Abel Corporation for July 2018 was as follows: $\begin{array}{lr}
\text { Sales } & \$ 1,230,000 \
\text { Selling and administrative expenses } & 210,000 \
\text { Direct materials used } & 264,000 \
\text { Direct labor } & 300,000 \
\text { Factory overhead * } & 405,000 \
\text { *variable overhead is } \$ 205,000 \text {, fixed overhead is } \$ 200,000 
\end{array}$

$\text { Inventories }$
$\begin{array}{lrr}&\text { July 1, } 2018 & \text { July } 31,2018\\hline
\text { Direct materials } & \$ 36,000 & \$ 42,000 \
\text { Work in process } & 75,000 & 84,000 \
\text { Finished goods } & 69,000 & 57,000
\end{array}$ The total product cost is

Accepted Answer

A) $1,179,000 
B) $969,000 
C) $615,000 
D) $764,000 
A) $1,179,000 
B) $969,000 
C) $615,000 
D) $764,000

Question 18

In an activity-based management system, one is NOT likely to find

Accepted Answer

A) tracing of costs to activities. 
B) only unit-based drivers. 
C) broad flexible product costing. 
D) systemwide performance maximization. 
A) tracing of costs to activities. 
B) only unit-based drivers. 
C) broad flexible product costing. 
D) systemwide performance maximization.

Question 19

The income statement prepared for external reporting is

Accepted Answer

A) based on a functional classification. 
B) referred to as absorption-costing income. 
C) called full-costing income. 
D) all of the above. 
A) based on a functional classification. 
B) referred to as absorption-costing income. 
C) called full-costing income. 
D) all of the above.

Question 20

An integrated cost management system receives information from and provides information to only the controller of a company.

Accepted Answer

A) True 
 B)False

The optimal level in the trade-off between measurement and error costs is when

Which of the following is NOT an example of a difference between the income statement of a service organization and the income statement of a manufacturing organization?

Direct costs

Cost management information benefits production, marketing, and customer service systems as well as being a crucial part of managerial decision making.

All of the following costs are included in factory overhead EXCEPT

Generally, more managerial objectives can be met with an activity-based system than with a _________ system.

Which of the following methods of assigning costs is based on convenience or some assumed linkage, and reduces the overall accuracy of the cost assignments?

The assignment of indirect costs to cost objects is referred to as:

The overall objective of accounting information systems is to

If total warehousing cost for the year amounts to $950,000, and 35 percent of the warehousing activity is associated with finished goods and 65 percent with direct materials, how much of the cost would be charged as a product cost?

The cost of units completed during a period is called

Which of the following costs is NOT a product cost?

In an activity-based management system, one is NOT likely to find

The income statement prepared for external reporting is

An integrated cost management system receives information from and provides information to only the controller of a company.

Introduction to Cost Management

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 2: Basic Cost Management Concepts

The optimal level in the trade-off between measurement and error costs is when

Which of the following is NOT an example of a difference between the income statement of a service organization and the income statement of a manufacturing organization?

Direct costs

Cost management information benefits production, marketing, and customer service systems as well as being a crucial part of managerial decision making.

All of the following costs are included in factory overhead EXCEPT

Generally, more managerial objectives can be met with an activity-based system than with a _________ system.

Which of the following methods of assigning costs is based on convenience or some assumed linkage, and reduces the overall accuracy of the cost assignments?

The assignment of indirect costs to cost objects is referred to as:

The overall objective of accounting information systems is to

If total warehousing cost for the year amounts to $950,000, and 35 percent of the warehousing activity is associated with finished goods and 65 percent with direct materials, how much of the cost would be charged as a product cost?

The cost of units completed during a period is called

Which of the following costs is NOT a product cost?

In an activity-based management system, one is NOT likely to find

The income statement prepared for external reporting is

An integrated cost management system receives information from and provides information to only the controller of a company.

Introduction to Cost Management

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters