Question 1

The principles of timeliness and traceability underlie the estimation of costs and benefits.

Accepted Answer

A) True 
 B)False  False

Question 2

Variability deals with:

Accepted Answer

A) The degree to which we can directly relate a cost or benefit to a specific option. 
B) How activities influence costs and benefits. 
C) The result of performing activities. 
D) The difference across decision options. 
E) None of the above. 
A) The degree to which we can directly relate a cost or benefit to a specific option. 
B) How activities influence costs and benefits. 
C) The result of performing activities. 
D) The difference across decision options. 
E) None of the above. B

Question 3

In June, Ace Manufacturing Plant produced 100 units of propane canisters for sale.The total variable costs were $5,000 and the fixed costs for the plant amounted to $3,000.How much is the unit variable cost for canisters if 120 canisters are produced?

Accepted Answer

A) $50.00 
B) $66.67 
C) $80.00 
D) $41.67 
A) $50.00 
B) $66.67 
C) $80.00 
D) $41.67 A

Question 4

The benefits and costs that arise from the decision-maker's choice of a particular option are controllable.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a not a correct statement?

Accepted Answer

A) A decision maker's control over costs and benefits decrease as the time horizon increases. 
B) A decision maker's control over costs increases as the time horizon increases. 
C) A decision maker's control over benefits increases as the time horizon increases. 
D) Both B and C are incorrect statements. 
A) A decision maker's control over costs and benefits decrease as the time horizon increases. 
B) A decision maker's control over costs increases as the time horizon increases. 
C) A decision maker's control over benefits increases as the time horizon increases. 
D) Both B and C are incorrect statements.

Question 6

A decision maker's control over costs and benefits decreases as the time horizon increases.

Accepted Answer

A) True 
 B)False

Question 7

Which one of the following is the best example of a long-term decision for management of a manufacturing company?

Accepted Answer

A) Increasing the amount of caffeine in the company's soft drink products. 
B) Eliminating excessive use of company supplies. 
C) Building an assembly line for its energy drinks. 
D) Removing manufacturing byproducts that are deemed hazardous for storage. 
A) Increasing the amount of caffeine in the company's soft drink products. 
B) Eliminating excessive use of company supplies. 
C) Building an assembly line for its energy drinks. 
D) Removing manufacturing byproducts that are deemed hazardous for storage.

Question 8

Traceability is:

Accepted Answer

A) The degree to which we can directly relate a cost or benefit to a specific option. 
B) How activities influence costs and benefits. 
C) The result of performing activities. 
D) The difference across decision options. 
E) None of the above. 
A) The degree to which we can directly relate a cost or benefit to a specific option. 
B) How activities influence costs and benefits. 
C) The result of performing activities. 
D) The difference across decision options. 
E) None of the above.

Question 9

Changing our minds about our choice for a long-term decision can be difficult and costly.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following best represents a controllable cost for a manufacturing plant?

Accepted Answer

A) Reducing the number of pages in a product brochure. 
B) Increasing the price of two of the best selling products. 
C) Billing customers for delivery fuel surcharges. 
D) Charging customers for additional production runs of a special ordered product. 
A) Reducing the number of pages in a product brochure. 
B) Increasing the price of two of the best selling products. 
C) Billing customers for delivery fuel surcharges. 
D) Charging customers for additional production runs of a special ordered product.

Question 11

A direct cost can be:

Accepted Answer

A) Only fixed. 
B) Only variable (unit-level). 
C) Either fixed or variable (unit-level). 
D) Neither fixed nor variable (unit-level). 
A) Only fixed. 
B) Only variable (unit-level). 
C) Either fixed or variable (unit-level). 
D) Neither fixed nor variable (unit-level).

Question 12

The Rich Company leases its copier on an annual basis.The lease fee is $1,600 per year plus $.01 per copy for any copies made over 750,000.If the company made 800,000 copies in 2008, its total cost was:

Accepted Answer

A) $1,600 
B) $2,100 
C) $2,400 
D) $1,650 
A) $1,600 
B) $2,100 
C) $2,400 
D) $1,650

Question 13

Step costs change in proportion to the volume of activity.

Accepted Answer

A) True 
 B)False

Question 14

The principle of relevance helps decision makers compare options by focusing on those costs and benefits that matter, and ignoring items that are common and irrelevant.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following items is not an example of a direct cost in the production of a refrigerator?

Accepted Answer

A) Raw materials. 
B) The cost of a machine used only for manufacturing this line of refrigerators. 
C) Salary of factory assembly line workers. 
D) Maintaining the sales office. 
E) All of the above could be direct costs. 
A) Raw materials. 
B) The cost of a machine used only for manufacturing this line of refrigerators. 
C) Salary of factory assembly line workers. 
D) Maintaining the sales office. 
E) All of the above could be direct costs.

Question 16

Steve Johnson has decided to lease a vehicle as opposed to purchasing it.The lease agreement calls for a monthly payment of $400.Any mile driven above 1,000 per month will cost an additional $.10 per mile.Steve's lease cost in January can be considered to be:

Accepted Answer

A) Fixed. 
B) Variable. 
C) Mixed. 
D) Both B and C 
A) Fixed. 
B) Variable. 
C) Mixed. 
D) Both B and C

Question 17

Costs that do not vary at the unit level, the batch level, or the product level are administrative costs.

Accepted Answer

A) True 
 B)False

Question 18

Suppose fixed costs are $500, variable cost is $5 per unit, and step costs are $50 for every 20 unit produced.What is the total cost of producing 25 units?

Accepted Answer

A) $675 
B) $688 
C) $725 
D) $800 
E) $625 
A) $675 
B) $688 
C) $725 
D) $800 
E) $625

Question 19

Given a choice of using relevance or controllability to make effective decisions, when one wants to identify the best choice quickly and efficiently, relevance is the operative principle.

Accepted Answer

A) True 
 B)False

Question 20

The core idea underlying estimation is that costs and benefits are the result of performing activities.

Accepted Answer

A) True 
 B)False

The principles of timeliness and traceability underlie the estimation of costs and benefits.

Variability deals with:

In June, Ace Manufacturing Plant produced 100 units of propane canisters for sale.The total variable costs were $5,000 and the fixed costs for the plant amounted to $3,000.How much is the unit variable cost for canisters if 120 canisters are produced?

The benefits and costs that arise from the decision-maker's choice of a particular option are controllable.

Which of the following is a not a correct statement?

A decision maker's control over costs and benefits decreases as the time horizon increases.

Which one of the following is the best example of a long-term decision for management of a manufacturing company?

Traceability is:

Changing our minds about our choice for a long-term decision can be difficult and costly.

Which of the following best represents a controllable cost for a manufacturing plant?

A direct cost can be:

The Rich Company leases its copier on an annual basis.The lease fee is $1,600 per year plus $.01 per copy for any copies made over 750,000.If the company made 800,000 copies in 2008, its total cost was:

Step costs change in proportion to the volume of activity.

The principle of relevance helps decision makers compare options by focusing on those costs and benefits that matter, and ignoring items that are common and irrelevant.

Which of the following items is not an example of a direct cost in the production of a refrigerator?

Steve Johnson has decided to lease a vehicle as opposed to purchasing it.The lease agreement calls for a monthly payment of $400.Any mile driven above 1,000 per month will cost an additional $.10 per mile.Steve's lease cost in January can be considered to be:

Costs that do not vary at the unit level, the batch level, or the product level are administrative costs.

Suppose fixed costs are $500, variable cost is $5 per unit, and step costs are $50 for every 20 unit produced.What is the total cost of producing 25 units?

Given a choice of using relevance or controllability to make effective decisions, when one wants to identify the best choice quickly and efficiently, relevance is the operative principle.

The core idea underlying estimation is that costs and benefits are the result of performing activities.

Accounting: Information for Decision Making

Cost Flows and Cost Terminology

Techniques for Estimating Fixed and Variable Costs

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Budgetary Control and Variance Analysis

Cost Allocations

Activity-Based Costing Management

Capital Budgeting

Performance Evaluation in Decentralized Organizations

Strategic Planning and Control

Job-Costing Systems

Process-Costing Systems

Refining Systems: Support Activity

Filters

Exam 2: Identifying and Estimating Costs and Benefits

The principles of timeliness and traceability underlie the estimation of costs and benefits.

Variability deals with:

In June, Ace Manufacturing Plant produced 100 units of propane canisters for sale.The total variable costs were $5,000 and the fixed costs for the plant amounted to $3,000.How much is the unit variable cost for canisters if 120 canisters are produced?

The benefits and costs that arise from the decision-maker's choice of a particular option are controllable.

Which of the following is a not a correct statement?

A decision maker's control over costs and benefits decreases as the time horizon increases.

Which one of the following is the best example of a long-term decision for management of a manufacturing company?

Traceability is:

Changing our minds about our choice for a long-term decision can be difficult and costly.

Which of the following best represents a controllable cost for a manufacturing plant?

A direct cost can be:

The Rich Company leases its copier on an annual basis.The lease fee is $1,600 per year plus $.01 per copy for any copies made over 750,000.If the company made 800,000 copies in 2008, its total cost was:

Step costs change in proportion to the volume of activity.

The principle of relevance helps decision makers compare options by focusing on those costs and benefits that matter, and ignoring items that are common and irrelevant.

Which of the following items is not an example of a direct cost in the production of a refrigerator?

Steve Johnson has decided to lease a vehicle as opposed to purchasing it.The lease agreement calls for a monthly payment of $400.Any mile driven above 1,000 per month will cost an additional $.10 per mile.Steve's lease cost in January can be considered to be:

Costs that do not vary at the unit level, the batch level, or the product level are administrative costs.

Suppose fixed costs are $500, variable cost is $5 per unit, and step costs are $50 for every 20 unit produced.What is the total cost of producing 25 units?

Given a choice of using relevance or controllability to make effective decisions, when one wants to identify the best choice quickly and efficiently, relevance is the operative principle.

The core idea underlying estimation is that costs and benefits are the result of performing activities.

Accounting: Information for Decision Making

Cost Flows and Cost Terminology

Techniques for Estimating Fixed and Variable Costs

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Budgetary Control and Variance Analysis

Cost Allocations

Activity-Based Costing Management

Capital Budgeting

Performance Evaluation in Decentralized Organizations

Strategic Planning and Control

Job-Costing Systems

Process-Costing Systems

Refining Systems: Support Activity

Filters