Question 1

Which of the following is not a type of quality cost?

Accepted Answer

A) External failure costs. 
B) Internal failure costs. 
C) Prevention costs. 
D) Appraisal costs. 
E) All of the answers are correct. 
A) External failure costs. 
B) Internal failure costs. 
C) Prevention costs. 
D) Appraisal costs. 
E) All of the answers are correct.

Question 2

Callaway Corp., which began business at the start of the current year, had the following data: Planned and actual production: 40,000 units Sales: 38,000 units at $15 per unit Production costs: Variable: $5 per unit Fixed: $260,000 Selling and administrative costs: Variable: $1 per unit Fixed: $32,000 The contribution margin that the company would disclose on a variable-costing income statement is:

Accepted Answer

A) $0. 
B) $120,000. 
C) $166,500. 
D) $342,000. 
E) None of the answers is correct. 
A) $0. 
B) $120,000. 
C) $166,500. 
D) $342,000. 
E) None of the answers is correct.

Question 3

Consider the following statements about absorption costing and variable costing: I.Variable costing is consistent with contribution reporting and cost-volume-proﬁt analysis. II.Absorption costing must be used for external ﬁnancial reporting. III.A number of companies use both absorption costing and variable costing. Which of the above statements is (are) true?

Accepted Answer

A) I only. 
B) II only. 
C) III only. 
D) I and II. 
E) I, II, and III. 
A) I only. 
B) II only. 
C) III only. 
D) I and II. 
E) I, II, and III.

Question 4

Under variable costing, ﬁxed manufacturing overhead is:

Accepted Answer

A) expensed immediately when incurred. 
B) never expensed. 
C) applied directly to Finished-Goods Inventory. 
D) applied directly to Work-in-Process Inventory. 
E) treated in the same manner as variable manufacturing overhead. 
A) expensed immediately when incurred. 
B) never expensed. 
C) applied directly to Finished-Goods Inventory. 
D) applied directly to Work-in-Process Inventory. 
E) treated in the same manner as variable manufacturing overhead.

Question 5

What is the difference between observable and hidden quality costs? Explain and give at least one example of each.

Accepted Answer

While student examples may vary, here is

Question 6

When discussing the costs of quality, the costs of determining whether defects exist are known as appraisal costs.

Accepted Answer

A) True 
 B)False

Question 7

The following data relate to Lebeaux Corporation for the year just ended:   Which of the following statements is correct?

Accepted Answer

A) Lebeaux's variable-costing income statement would show a gross margin of $270,000. 
B) Lebeaux's variable-costing income statement would show a contribution margin of $330,000. 
C) Lebeaux's absorption-costing income statement would show a contribution margin of $330,000. 
D) Lebeaux's absorption-costing income statement would show a gross margin of $330,000. 
E) Lebeaux's absorption-costing income statement would show a gross margin of $145,000. 
A) Lebeaux's variable-costing income statement would show a gross margin of $270,000. 
B) Lebeaux's variable-costing income statement would show a contribution margin of $330,000. 
C) Lebeaux's absorption-costing income statement would show a contribution margin of $330,000. 
D) Lebeaux's absorption-costing income statement would show a gross margin of $330,000. 
E) Lebeaux's absorption-costing income statement would show a gross margin of $145,000.

Question 8

For external-reporting purposes, generally accepted accounting principles require that net income be based on:

Accepted Answer

A) absorption costing. 
B) variable costing. 
C) direct costing. 
D) semivariable costing. 
E) activity-based costing. 
A) absorption costing. 
B) variable costing. 
C) direct costing. 
D) semivariable costing. 
E) activity-based costing.

Which of the following is not a type of quality cost?

Under variable costing, ﬁxed manufacturing overhead is:

What is the difference between observable and hidden quality costs? Explain and give at least one example of each.

When discussing the costs of quality, the costs of determining whether defects exist are known as appraisal costs.

The following data relate to Lebeaux Corporation for the year just ended: Which of the following statements is correct?

For external-reporting purposes, generally accepted accounting principles require that net income be based on:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Inventory Management and Economic Order Quantity (EOQ) Analysis

Filters

Exam 8: Variable Costing and the Costs of Quality and Sustainability

Which of the following is not a type of quality cost?

Under variable costing, ﬁxed manufacturing overhead is:

What is the difference between observable and hidden quality costs? Explain and give at least one example of each.

When discussing the costs of quality, the costs of determining whether defects exist are known as appraisal costs.

The following data relate to Lebeaux Corporation for the year just ended: Which of the following statements is correct?

For external-reporting purposes, generally accepted accounting principles require that net income be based on:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Inventory Management and Economic Order Quantity (EOQ) Analysis

Filters