Question 1

Theoretically,a decision maker would probably be willing to buy cost management information if:

Accepted Answer

A) It is accurate. 
B) It is consistent with management objectives. 
C) It is timely. 
D) Its value is equal to or greater than its cost. 
A) It is accurate. 
B) It is consistent with management objectives. 
C) It is timely. 
D) Its value is equal to or greater than its cost.

Question 2

Fisher,Inc.recently lost a portion of its records in an office fire.The following information was salvaged from the accounting records.  
Direct labor cost incurred during the period amounted to 1.5 times the factory overhead.The CFO of Fisher,Inc.has asked you to recalculate the following accounts and to report to him by the end of the day.
What is the amount of total manufacturing cost?

Accepted Answer

A) $50,000. 
B) $52,000. 
C) $56,000. 
D) $58,000.
$56,000 = $31,000 + $15,000 + $10,000
Where $15,000 = 1.5($10,000) 
A) $50,000. 
B) $52,000. 
C) $56,000. 
D) $58,000.
$56,000 = $31,000 + $15,000 + $10,000
Where $15,000 = 1.5($10,000)

Question 3

The income statement for a merchandising company includes:

Accepted Answer

A) Direct Labor. 
B) Factory Overhead. 
C) Total Manufacturing Cost. 
D) Cost of Goods Sold. 
A) Direct Labor. 
B) Factory Overhead. 
C) Total Manufacturing Cost. 
D) Cost of Goods Sold.

Question 4

Stephenson Company's computer system recently crashed,erasing much of the Company's financial data.The following accounting information was discovered soon afterwards on the CFO's backup computer disk.  
Direct labor cost incurred during the period amounted to 1.5 times the factory overhead.The CFO of Stephenson Company has asked you to recalculate the following accounts and report to him by week's end.What should be the amount of total manufacturing cost?

Accepted Answer

A) $138,500. 
B) $131,000. 
C) $142,500. 
D) $121,000.
$131,000 = $8,500 Direct Materials + $73,500 Direct Labor + $49,000 Overhead
Where $73,500 = 1.5($49,000) 
A) $138,500. 
B) $131,000. 
C) $142,500. 
D) $121,000.
$131,000 = $8,500 Direct Materials + $73,500 Direct Labor + $49,000 Overhead
Where $73,500 = 1.5($49,000)

Question 5

A manager of a small manufacturing firm is interested in knowing what the company's product costs are.Which of the following would be considered a product cost for the manager's company?

Accepted Answer

A) Direct materials. 
B) Product design cost. 
C) Office expenses. 
D) Selling expenses. 
E) Advertising expense. 
A) Direct materials. 
B) Product design cost. 
C) Office expenses. 
D) Selling expenses. 
E) Advertising expense.

Question 6

Which characteristic is the most critical about information in the decision-making process?

Accepted Answer

A) Relevance. 
B) Timeliness. 
C) Accuracy. 
D) Cost. 
A) Relevance. 
B) Timeliness. 
C) Accuracy. 
D) Cost.

Question 7

Variable costs within the relevant range for a firm are assumed:

Accepted Answer

A) Not to vary per unit. 
B) Not to vary in total. 
C) To be nonlinear. 
D) To be curvilinear. 
A) Not to vary per unit. 
B) Not to vary in total. 
C) To be nonlinear. 
D) To be curvilinear.

Question 8

Assume the following information pertaining to Cub Company:  
Total manufacturing cost is calculated to be:

Accepted Answer

A) $332,000. 
B) $306,000. 
C) $280,000. 
D) $331,000. 
E) $307,000. 
A) $332,000. 
B) $306,000. 
C) $280,000. 
D) $331,000. 
E) $307,000.

Question 9

Assume the following information pertaining to Cub Company:  
Direct labor used is calculated to be:

Accepted Answer

A) $110,000. 
B) $136,000. 
C) $111,000. 
D) $84,000. 
E) $112,000. 
A) $110,000. 
B) $136,000. 
C) $111,000. 
D) $84,000. 
E) $112,000.

Question 10

Which of the following best describes a fixed cost?

Accepted Answer

A) It may change in total when such change is unrelated to changes in production volume. 
B) It may change in total when such change is related to changes in production volume. 
C) It is constant per unit of change in production volume. 
D) It may change in total when such change depends on production volume within the relevant range. 
A) It may change in total when such change is unrelated to changes in production volume. 
B) It may change in total when such change is related to changes in production volume. 
C) It is constant per unit of change in production volume. 
D) It may change in total when such change depends on production volume within the relevant range.

Question 11

In order to assure that accounting information is accurate and to avoid potentially costly mistakes in the decision making process,firms should:

Accepted Answer

A) Design and monitor an effective system of internal accounting controls. 
B) Have the internal auditors and controller each check the accounting data before it is released to management. 
C) Purchase an accounting system that is designed specifically for the industry in which the firm conducts business. 
D) Develop and implement a code of ethics. 
A) Design and monitor an effective system of internal accounting controls. 
B) Have the internal auditors and controller each check the accounting data before it is released to management. 
C) Purchase an accounting system that is designed specifically for the industry in which the firm conducts business. 
D) Develop and implement a code of ethics.

Question 12

The following data pertains to Lam Co.'s manufacturing operations:  
Additional information for the month of April:  
Overhead is applied at $10 per direct labor hour.
For the month of April,conversion cost incurred was:

Accepted Answer

A) $30,000. 
B) $40,000. 
C) $70,000. 
D) $72,000.
Labor hours - $30,000/$7.50 = 4,000 hours
Conversion of labor plus applied overhead = $30,000 + 4,000 x $10 = $70,000 
A) $30,000. 
B) $40,000. 
C) $70,000. 
D) $72,000.
Labor hours - $30,000/$7.50 = 4,000 hours
Conversion of labor plus applied overhead = $30,000 + 4,000 x $10 = $70,000

Question 13

Lester-Sung,Inc.is a large general construction firm in the commercial building industry.The following is a list of costs incurred by this company:
1)The cost of a laborer for 8 hours at $6.00 an hour.
2)The cost of insurance for the carpenters.
3)The cost of 1,000 board feet of 2x4 lumber.
4)The CEO's salary.
Required: Classify each cost above using the following categories:
(a)Selling and administrative cost
(b)Direct material
(c)Direct labor
(d)Overhead cost

Accepted Answer

The answer of Lester-Sung,Inc.is a large general construction firm in...

Question 14

Tierney Construction,Inc.recently lost a portion of its financial records in an office theft.The following accounting information remained in the office files:  
Direct labor cost incurred during the period amounted to 2.5 times the factory overhead.The CFO of Tierney Construction,Inc.has asked you to recalculate the following accounts and to report to him by the end of tomorrow.
What should be the amount of total manufacturing cost?

Accepted Answer

A) $83,000. 
B) $94,000. 
C) $108,000. 
D) $75,000.
= $94,000 = $24,000 Direct Materials Used + $50,000 Direct Labor + $20,000
Overhead = $94,000 Total Manufacturing Cost
Where Direct Labor = 2.5($20,000)= $50,000 
A) $83,000. 
B) $94,000. 
C) $108,000. 
D) $75,000.
= $94,000 = $24,000 Direct Materials Used + $50,000 Direct Labor + $20,000
Overhead = $94,000 Total Manufacturing Cost
Where Direct Labor = 2.5($20,000)= $50,000

Question 15

The Gray Company has a staff of five clerks in its general accounting department.Three clerks who work during the day perform sundry accounting tasks;the two clerks who work in the evening are responsible for (1)collecting the cost data for the various jobs in process,(2)verifying manufacturing material and labor reports,and (3)supplying production reports to the supervisors by the next morning.The salaries of these two clerks who work at night should be classified as:

Accepted Answer

A) Period costs. 
B) Direct costs. 
C) Product costs. 
D) Indirect costs. 
A) Period costs. 
B) Direct costs. 
C) Product costs. 
D) Indirect costs.

Question 16

The following information was taken from the accounting records of Elliott Manufacturing Corp.Unfortunately,some of the data were destroyed by a computer malfunction.  
Work in process inventory at January 1,2010 is calculated to be:

Accepted Answer

A) $5,000. 
B) $9,000. 
C) $6,000. 
D) $8,000. 
E) $7,000. 
A) $5,000. 
B) $9,000. 
C) $6,000. 
D) $8,000. 
E) $7,000.

Question 17

The change in total cost associated with each change in the quantity of the cost driver is:

Accepted Answer

A) Average cost. 
B) Controllable cost. 
C) Variable cost. 
D) Unit cost. 
A) Average cost. 
B) Controllable cost. 
C) Variable cost. 
D) Unit cost.

Question 18

Williams Company is an East Coast producer of electronic furnace air filters.A significant jump in new housing starts in the region has triggered a 25 percent increase in orders for the filter units,especially the quality model that Williams sells for $270.Six weeks after increasing production to supply the increased orders,the assistant controller notices some unusual unit cost data in the monthly report she is preparing.Prior and current month unit values are given below:

Accepted Answer

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Required:
(1)Could you suggest some po

Question 19

Structural cost drivers are to executional cost drivers as:

Accepted Answer

A) Long-term is to short-term. 
B) Fixed is to variable. 
C) Total is to partial. 
D) Direct is to indirect. 
A) Long-term is to short-term. 
B) Fixed is to variable. 
C) Total is to partial. 
D) Direct is to indirect.

Question 20

Strategic analysis uses which of the following to help a firm improve its competitive position through an analysis of product and production complexity?

Accepted Answer

A) Differential cost drivers. 
B) Discretionary cost drivers. 
C) Structural cost drivers. 
D) Marginal cost drivers. 
A) Differential cost drivers. 
B) Discretionary cost drivers. 
C) Structural cost drivers. 
D) Marginal cost drivers.

Theoretically,a decision maker would probably be willing to buy cost management information if:

The income statement for a merchandising company includes:

A manager of a small manufacturing firm is interested in knowing what the company's product costs are.Which of the following would be considered a product cost for the manager's company?

Which characteristic is the most critical about information in the decision-making process?

Variable costs within the relevant range for a firm are assumed:

Assume the following information pertaining to Cub Company: Total manufacturing cost is calculated to be:

Assume the following information pertaining to Cub Company: Direct labor used is calculated to be:

Which of the following best describes a fixed cost?

In order to assure that accounting information is accurate and to avoid potentially costly mistakes in the decision making process,firms should:

The following data pertains to Lam Co.'s manufacturing operations: Additional information for the month of April: Overhead is applied at $10 per direct labor hour. For the month of April,conversion cost incurred was:

The following information was taken from the accounting records of Elliott Manufacturing Corp.Unfortunately,some of the data were destroyed by a computer malfunction. Work in process inventory at January 1,2010 is calculated to be:

The change in total cost associated with each change in the quantity of the cost driver is:

Structural cost drivers are to executional cost drivers as:

Strategic analysis uses which of the following to help a firm improve its competitive position through an analysis of product and production complexity?

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Profit Planning: Cost-Volume-Profit Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing,Theory of Constraints,and Strategic Pricing

Operational Performance Measurement: Sales and Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource- Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 3: Basic Cost Management Concepts

Theoretically,a decision maker would probably be willing to buy cost management information if:

The income statement for a merchandising company includes:

A manager of a small manufacturing firm is interested in knowing what the company's product costs are.Which of the following would be considered a product cost for the manager's company?

Which characteristic is the most critical about information in the decision-making process?

Variable costs within the relevant range for a firm are assumed:

Assume the following information pertaining to Cub Company: Total manufacturing cost is calculated to be:

Assume the following information pertaining to Cub Company: Direct labor used is calculated to be:

Which of the following best describes a fixed cost?

In order to assure that accounting information is accurate and to avoid potentially costly mistakes in the decision making process,firms should:

The following data pertains to Lam Co.'s manufacturing operations: Additional information for the month of April: Overhead is applied at $10 per direct labor hour. For the month of April,conversion cost incurred was:

The following information was taken from the accounting records of Elliott Manufacturing Corp.Unfortunately,some of the data were destroyed by a computer malfunction. Work in process inventory at January 1,2010 is calculated to be:

The change in total cost associated with each change in the quantity of the cost driver is:

Structural cost drivers are to executional cost drivers as:

Strategic analysis uses which of the following to help a firm improve its competitive position through an analysis of product and production complexity?

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Profit Planning: Cost-Volume-Profit Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing,Theory of Constraints,and Strategic Pricing

Operational Performance Measurement: Sales and Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource- Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers

Management Compensation, Business Analysis, and Business Valuation

Filters