Question 1

Production planning required to prepare the production process for the next product is an example of:

Accepted Answer

A) Product-level cost. 
B) Facility-level cost. 
C) Unit-level cost. 
D) Batch-level cost. 
E) None of the above. 
A) Product-level cost. 
B) Facility-level cost. 
C) Unit-level cost. 
D) Batch-level cost. 
E) None of the above.

Question 2

It is important to keep the time horizon in mind when making decisions because:

Accepted Answer

A) Short term decisions are generally more costly than long term decisions. 
B) We always want to identify choices quickly. 
C) When making future decisions, costs incurred in the past must be considered. 
D) The horizon affects whether a cost or benefit is controllable for the decision. 
E) All of the above are important. 
A) Short term decisions are generally more costly than long term decisions. 
B) We always want to identify choices quickly. 
C) When making future decisions, costs incurred in the past must be considered. 
D) The horizon affects whether a cost or benefit is controllable for the decision. 
E) All of the above are important.

Question 3

Many decisions are difficult to classify as they contain elements of both the short- and long-term.

Accepted Answer

A) True 
 B)False

Question 4

Jason is going to play golf this afternoon and has to choose between two different golf courses.The greens fees to play each are both $18, the cart fees at each course is $9.One course, however, is located 20 miles further than the other.Therefore it would cost approximately an additional $4 in gas to play the course that is further away.Relevant costs total:

Accepted Answer

A) $18 
B) $27 
C) $9 
D) $4 
A) $18 
B) $27 
C) $9 
D) $4

Question 5

Assume you are the owner of a video-rental store.Which of the following would be classified as a long-term decision?

Accepted Answer

A) Purchase of children's video inventory. 
B) Purchase of cleaning supplies. 
C) Deciding whether to purchase a new building. 
D) Deciding whether to hire a new hourly employee for the summer. 
E) None of the above is a long-term decision. 
A) Purchase of children's video inventory. 
B) Purchase of cleaning supplies. 
C) Deciding whether to purchase a new building. 
D) Deciding whether to hire a new hourly employee for the summer. 
E) None of the above is a long-term decision.

Question 6

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.If Steve drives 1,240 miles in the month of January his total cost will be:

Accepted Answer

A) $400 
B) $640 
C) $524 
D) $424 
A) $400 
B) $640 
C) $524 
D) $424

Question 7

Organizations frequently refer to indirect costs as:

Accepted Answer

A) Volume costs. 
B) Variable costs. 
C) Common costs. 
D) Special costs. 
E) Fixed costs. 
A) Volume costs. 
B) Variable costs. 
C) Common costs. 
D) Special costs. 
E) Fixed costs.

Question 8

If only a portion of the cost or revenue pertains to a particular decision option, then it is referred to as a traceable cost or traceable revenue.

Accepted Answer

A) True 
 B)False

Question 9

Relevant benefits are:

Accepted Answer

A) The controllable benefits that differ across decision options. 
B) Past expenditures that cannot be changed. 
C) Benefits that do not change as the volume of activity changes. 
D) Always created by variable costs. 
E) None of the above. 
A) The controllable benefits that differ across decision options. 
B) Past expenditures that cannot be changed. 
C) Benefits that do not change as the volume of activity changes. 
D) Always created by variable costs. 
E) None of the above.

Question 10

The HomeAmour Company operates their production and administrative activities from a single facility.Which of the following would be an example of a facility-level cost?

Accepted Answer

A) Salary of the Chief Operating Officer. 
B) Raw materials used to produce units. 
C) Depreciation on the equipment used in the factory. 
D) Freight paid on finished units shipped to customers. 
A) Salary of the Chief Operating Officer. 
B) Raw materials used to produce units. 
C) Depreciation on the equipment used in the factory. 
D) Freight paid on finished units shipped to customers.

Question 11

Which of the following statements relating to relevance and controllability is not correct?

Accepted Answer

A) Using the concept of relevance does not reduce the number of costs and benefits to consider. 
B) If the status quo is a feasible option, then all controllable costs and benefits are relevant. 
C) When using the principle of controllability to identify the incremental costs and benefits relative to the status quo, calculate the value of each option, and choose the one with the lowest value. 
D) Both A and C are incorrect. 
E) A, B, and C are incorrect. 
A) Using the concept of relevance does not reduce the number of costs and benefits to consider. 
B) If the status quo is a feasible option, then all controllable costs and benefits are relevant. 
C) When using the principle of controllability to identify the incremental costs and benefits relative to the status quo, calculate the value of each option, and choose the one with the lowest value. 
D) Both A and C are incorrect. 
E) A, B, and C are incorrect.

Question 12

In the short-run, organizations often are not able to substantially alter their abilities to deliver products or services, making levels of capacity resources non-controllable.

Accepted Answer

A) True 
 B)False

Question 13

Considering only controllable costs and benefits in an analysis:

Accepted Answer

A) Always reduces the number of costs and benefits needing to be measured. 
B) Never reduces the number of costs and benefits needing to be measured. 
C) Reduces only the number of costs to be measured if they are controllable. 
D) Will not reduce the number of costs and benefits to be measured if the status quo is an available option. 
A) Always reduces the number of costs and benefits needing to be measured. 
B) Never reduces the number of costs and benefits needing to be measured. 
C) Reduces only the number of costs to be measured if they are controllable. 
D) Will not reduce the number of costs and benefits to be measured if the status quo is an available option.

Question 14

Variable (unit-level) costs per unit:

Accepted Answer

A) Increase as production increases. 
B) Decrease as production decreases. 
C) Stay the same at any level of production. 
D) Increase as production decreases. 
A) Increase as production increases. 
B) Decrease as production decreases. 
C) Stay the same at any level of production. 
D) Increase as production decreases.

Question 15

Factory rent is an example of:

Accepted Answer

A) Product-level cost. 
B) Facility-level cost. 
C) Unit-level cost. 
D) Batch-level cost. 
E) None of the above. 
A) Product-level cost. 
B) Facility-level cost. 
C) Unit-level cost. 
D) Batch-level cost. 
E) None of the above.

Question 16

Advertising and research and development costs are examples of:

Accepted Answer

A) Product-level cost. 
B) Facility-level cost. 
C) Unit-level cost. 
D) Batch-level cost. 
E) None of the above. 
A) Product-level cost. 
B) Facility-level cost. 
C) Unit-level cost. 
D) Batch-level cost. 
E) None of the above.

Question 17

A sunk cost is:

Accepted Answer

A) A cost that can be directly traced to a decision option. 
B) A past expenditure that cannot be changed. 
C) A cost that does not change as the volume of activity changes. 
D) A controllable cost. 
E) None of the above. 
A) A cost that can be directly traced to a decision option. 
B) A past expenditure that cannot be changed. 
C) A cost that does not change as the volume of activity changes. 
D) A controllable cost. 
E) None of the above.

Question 18

When making decisions, a general rule would be:

Accepted Answer

A) Fixed costs are always relevant. 
B) Variable (unit-level) costs are always irrelevant. 
C) Future costs and revenues are always relevant. 
D) Future costs and revenues which differ are always relevant. 
A) Fixed costs are always relevant. 
B) Variable (unit-level) costs are always irrelevant. 
C) Future costs and revenues are always relevant. 
D) Future costs and revenues which differ are always relevant.

Question 19

The owner of Mom & Pop's Hardware Store purchased a knife sharpener last year in order to allow the store to offer services in sharpening all types of blades.The cost of the equipment was $5,200 but Pop now feels that the store needs to generate additional revenue of $200 per month in order to have made the purchase worthwhile.With regard to making the decision of whether to continue to offer the service, the original cost of the sharpener can be considered:

Accepted Answer

A) Controllable. 
B) Mixed. 
C) Sunk. 
D) Relevant. 
A) Controllable. 
B) Mixed. 
C) Sunk. 
D) Relevant.

Question 20

Step costs relate only to variable costs.

Accepted Answer

A) True 
 B)False

Production planning required to prepare the production process for the next product is an example of:

It is important to keep the time horizon in mind when making decisions because:

Many decisions are difficult to classify as they contain elements of both the short- and long-term.

Assume you are the owner of a video-rental store.Which of the following would be classified as a long-term decision?

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.If Steve drives 1,240 miles in the month of January his total cost will be:

Organizations frequently refer to indirect costs as:

If only a portion of the cost or revenue pertains to a particular decision option, then it is referred to as a traceable cost or traceable revenue.

Relevant benefits are:

The HomeAmour Company operates their production and administrative activities from a single facility.Which of the following would be an example of a facility-level cost?

Which of the following statements relating to relevance and controllability is not correct?

In the short-run, organizations often are not able to substantially alter their abilities to deliver products or services, making levels of capacity resources non-controllable.

Considering only controllable costs and benefits in an analysis:

Variable (unit-level) costs per unit:

Factory rent is an example of:

Advertising and research and development costs are examples of:

A sunk cost is:

When making decisions, a general rule would be:

Step costs relate only to variable costs.

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

Production planning required to prepare the production process for the next product is an example of:

It is important to keep the time horizon in mind when making decisions because:

Many decisions are difficult to classify as they contain elements of both the short- and long-term.

Assume you are the owner of a video-rental store.Which of the following would be classified as a long-term decision?

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.If Steve drives 1,240 miles in the month of January his total cost will be:

Organizations frequently refer to indirect costs as:

If only a portion of the cost or revenue pertains to a particular decision option, then it is referred to as a traceable cost or traceable revenue.

Relevant benefits are:

The HomeAmour Company operates their production and administrative activities from a single facility.Which of the following would be an example of a facility-level cost?

Which of the following statements relating to relevance and controllability is not correct?

In the short-run, organizations often are not able to substantially alter their abilities to deliver products or services, making levels of capacity resources non-controllable.

Considering only controllable costs and benefits in an analysis:

Variable (unit-level) costs per unit:

Factory rent is an example of:

Advertising and research and development costs are examples of:

A sunk cost is:

When making decisions, a general rule would be:

Step costs relate only to variable costs.

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