Question 1

Management accounting is concerned with:

Accepted Answer

A)  the company as a whole, rather than with its segments. 
B)  providing information to internal decision makers. 
C)  meeting the requirements of generally accepted accounting principles. 
D)  recording the financial history of an organisation. 
A)  the company as a whole, rather than with its segments. 
B)  providing information to internal decision makers. 
C)  meeting the requirements of generally accepted accounting principles. 
D)  recording the financial history of an organisation. B

Question 2

Manufacturing costs flow through an accounting system as products physically move through a factory.

Accepted Answer

The answer of Manufacturing costs flow through an accounting system...

Question 3

Service departments often provide service to:

Accepted Answer

A)  revenue-producing departments only. 
B)  other service departments only. 
C)  both revenue-producing and service departments. 
D)  shareholders. 
A)  revenue-producing departments only. 
B)  other service departments only. 
C)  both revenue-producing and service departments. 
D)  shareholders. C

Question 4

Consider the plant layout shown below:   This layout would likely encourage manufacturing personnel to:

Accepted Answer

A)  specialise in one process. 
B)  be cross-trained in more than one process. 
C)  act in the best interests of shareholders. 
D)  act in the best interests of customers. 
A)  specialise in one process. 
B)  be cross-trained in more than one process. 
C)  act in the best interests of shareholders. 
D)  act in the best interests of customers.

Question 5

Fixed costs such as rent, rates, and administration salaries are normally also classified as overhead costs.

Accepted Answer

A) True 
 B)False

Question 6

In traditional-based costing, overheads are apportioned based on one volume measure, whereas in activity-based costing, overheads are apportioned according to cost drivers.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following are not production costs?

Accepted Answer

A)  Direct materials 
B)  Indirect labour 
C)  Selling expenses 
D)  Indirect materials 
A)  Direct materials 
B)  Indirect labour 
C)  Selling expenses 
D)  Indirect materials

Question 8

Adel Department Store incurred $8000 of indirect advertising costs for its operations. The following data were collected for its three departments:
  How much of the indirect advertising costs would have been allocated to the Clothing Department if direct advertising costs were the allocation base?

Accepted Answer

A)  $1600 
B)  $2000 
C)  $4000 
D)  $8000 
A)  $1600 
B)  $2000 
C)  $4000 
D)  $8000

Question 9

Which of the following is true of activity-based costing?

Accepted Answer

A)  Overhead is allocated using direct labour hours. 
B)  Record keeping is less than under functional-based costing. 
C)  Overhead is allocated using only activity measures. 
D)  Overhead may be allocated using activity and volume-based measures. 
A)  Overhead is allocated using direct labour hours. 
B)  Record keeping is less than under functional-based costing. 
C)  Overhead is allocated using only activity measures. 
D)  Overhead may be allocated using activity and volume-based measures.

Question 10

With advanced manufacturing technology, indirect costs have become a greater portion of total costs.

Accepted Answer

A) True 
 B)False

Question 11

The primary difference between a product cost and a period cost is that:

Accepted Answer

A)  product costs are associated with specific goods, and period costs are not. 
B)  product costs are incurred by manufacturers, and period costs by service providers. 
C)  only product costs are recorded as expenses. 
D)  period costs become part of cost of goods sold but product costs do not. 
A)  product costs are associated with specific goods, and period costs are not. 
B)  product costs are incurred by manufacturers, and period costs by service providers. 
C)  only product costs are recorded as expenses. 
D)  period costs become part of cost of goods sold but product costs do not.

Question 12

What will fixed costs do when activity increases but remains within the relevant range of activity?

Accepted Answer

A)  Increase 
B)  Remain the same 
C)  Decrease 
D)  Display an erratic behaviour 
A)  Increase 
B)  Remain the same 
C)  Decrease 
D)  Display an erratic behaviour

Question 13

Opulent Baked Goods, Inc. makes two kinds of breads, Plain and Fancy. The owner has asked you to determine the cost of the two products so that he may know how to reasonably price his baked goods. The plain bread can be prepared and baked in large batches, while the fancy bread is made one loaf at a time. He has provided the following information about the manufacturing (baking) process for the 200 000 loaves of each of the two products for the year.
   Overhead costs (annual budget amounts):

Accepted Answer

(a)
 @#IMG-DLM& @#IMG-DLM& @#IMG-DLM& (b)
 @#IMG-DLM& ** Note:
$34 000

Question 14

Unit costs help managers make decisions about:

Accepted Answer

A)  continuing to offer a product for sale. 
B)  resource allocation. 
C)  product pricing. 
D)  all of the above. 
A)  continuing to offer a product for sale. 
B)  resource allocation. 
C)  product pricing. 
D)  all of the above.

Question 15

If the allocated overhead using a predetermined overhead rate is less than the actual overhead costs, the difference is:

Accepted Answer

A)  expensed to the statement of comprehensive income. 
B)  recognised as income in the statement of comprehensive income. 
C)  recognised as part of inventory on the balance sheet. 
D)  expensed to the cost of goods sold. 
A)  expensed to the statement of comprehensive income. 
B)  recognised as income in the statement of comprehensive income. 
C)  recognised as part of inventory on the balance sheet. 
D)  expensed to the cost of goods sold.

Question 16

Product costs are held as assets until sold, whereas period costs are expensed in the period in which they are incurred.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is not true of absorption costing?

Accepted Answer

A)  When sales equal production, absorption costing yields the same profit as variable costing. 
B)  When production exceeds sales, absorption costing shows a lower profit than variable costing does. 
C)  When sales exceed production, absorption costing shows a lower profit than variable costing does. 
D)  Absorption costing allocated both fixed and variable overheads to product cost. 
A)  When sales equal production, absorption costing yields the same profit as variable costing. 
B)  When production exceeds sales, absorption costing shows a lower profit than variable costing does. 
C)  When sales exceed production, absorption costing shows a lower profit than variable costing does. 
D)  Absorption costing allocated both fixed and variable overheads to product cost.

Question 18

The relevant range of activity relates to the levels of activity that the firm has experienced in past periods.

Accepted Answer

A) True 
 B)False

Question 19

Knowledge of unit costs is necessary to companies for many reasons. Which of the following are uses of unit cost information? I. Valuation of inventories
II) Controlling costs
III) Setting selling prices

Accepted Answer

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

Question 20

Your friend, Bumble Beasley, just graduated from State University with a degree in business. He is planning to start his own consulting firm, and has asked you for accounting advice. Specifically, he has the following questions:
   Respond to Bumble's questions.

Accepted Answer

The answer of Your friend, Bumble Beasley, just graduated from...

Management accounting is concerned with:

Manufacturing costs flow through an accounting system as products physically move through a factory.

Service departments often provide service to:

Consider the plant layout shown below: This layout would likely encourage manufacturing personnel to:

Fixed costs such as rent, rates, and administration salaries are normally also classified as overhead costs.

In traditional-based costing, overheads are apportioned based on one volume measure, whereas in activity-based costing, overheads are apportioned according to cost drivers.

Which of the following are not production costs?

Adel Department Store incurred $8000 of indirect advertising costs for its operations. The following data were collected for its three departments: How much of the indirect advertising costs would have been allocated to the Clothing Department if direct advertising costs were the allocation base?

Which of the following is true of activity-based costing?

With advanced manufacturing technology, indirect costs have become a greater portion of total costs.

The primary difference between a product cost and a period cost is that:

What will fixed costs do when activity increases but remains within the relevant range of activity?

Unit costs help managers make decisions about:

If the allocated overhead using a predetermined overhead rate is less than the actual overhead costs, the difference is:

Product costs are held as assets until sold, whereas period costs are expensed in the period in which they are incurred.

Which of the following statements is not true of absorption costing?

The relevant range of activity relates to the levels of activity that the firm has experienced in past periods.

Knowledge of unit costs is necessary to companies for many reasons. Which of the following are uses of unit cost information? I. Valuation of inventories II) Controlling costs III) Setting selling prices

Your friend, Bumble Beasley, just graduated from State University with a degree in business. He is planning to start his own consulting firm, and has asked you for accounting advice. Specifically, he has the following questions: Respond to Bumble's questions.

Introduction to Accounting

Types of Organisations and the Financial Reporting Framework

Ethics and Corporate Governance

Wealth and the Measurement of Profit

Presentation of Financial Position and the Worksheet

Presentation of Financial Performance and the Worksheet

Presentation of Cash Flows

Accounting for Selected Assets

Liabilities and Sources of Financing

Financial Statement Analysis

Worksheet to Debits and Credits

An Introduction to Management Accounting: a Strategic Perspective

Performance Measurement and the Balanced Scorecard

Budgets

Cost-Volume-Profit Analysis

Accounting for Decision Making: With and Without Resource Constraints

Capital Investment Decisions

Filters

Exam 14: Costs and Cost Behaviour

Management accounting is concerned with:

Manufacturing costs flow through an accounting system as products physically move through a factory.

Service departments often provide service to:

Consider the plant layout shown below: This layout would likely encourage manufacturing personnel to:

Fixed costs such as rent, rates, and administration salaries are normally also classified as overhead costs.

In traditional-based costing, overheads are apportioned based on one volume measure, whereas in activity-based costing, overheads are apportioned according to cost drivers.

Which of the following are not production costs?

Adel Department Store incurred $8000 of indirect advertising costs for its operations. The following data were collected for its three departments: How much of the indirect advertising costs would have been allocated to the Clothing Department if direct advertising costs were the allocation base?

Which of the following is true of activity-based costing?

With advanced manufacturing technology, indirect costs have become a greater portion of total costs.

The primary difference between a product cost and a period cost is that:

What will fixed costs do when activity increases but remains within the relevant range of activity?

Unit costs help managers make decisions about:

If the allocated overhead using a predetermined overhead rate is less than the actual overhead costs, the difference is:

Product costs are held as assets until sold, whereas period costs are expensed in the period in which they are incurred.

Which of the following statements is not true of absorption costing?

The relevant range of activity relates to the levels of activity that the firm has experienced in past periods.

Knowledge of unit costs is necessary to companies for many reasons. Which of the following are uses of unit cost information? I. Valuation of inventories II) Controlling costs III) Setting selling prices

Your friend, Bumble Beasley, just graduated from State University with a degree in business. He is planning to start his own consulting firm, and has asked you for accounting advice. Specifically, he has the following questions: Respond to Bumble's questions.

Introduction to Accounting

Types of Organisations and the Financial Reporting Framework

Ethics and Corporate Governance

Wealth and the Measurement of Profit

Presentation of Financial Position and the Worksheet

Presentation of Financial Performance and the Worksheet

Presentation of Cash Flows

Accounting for Selected Assets

Liabilities and Sources of Financing

Financial Statement Analysis

Worksheet to Debits and Credits

An Introduction to Management Accounting: a Strategic Perspective

Performance Measurement and the Balanced Scorecard

Budgets

Cost-Volume-Profit Analysis

Accounting for Decision Making: With and Without Resource Constraints

Capital Investment Decisions

Filters