Question 1

Budgeting is the most commonly used tool for planning and control.

Accepted Answer

A) True 
 B)False

Question 2

Under absorption costing,if a manager's bonus is tied to operating profit,then increasing inventory levels compared to last year would result in:

Accepted Answer

A) increasing the manager's bonus. 
B) decreasing the manager's bonus. 
C) not affecting the manager's bonus. 
D) being unable to determine the manager's bonus using only the above information. 
A) increasing the manager's bonus. 
B) decreasing the manager's bonus. 
C) not affecting the manager's bonus. 
D) being unable to determine the manager's bonus using only the above information.

Question 3

For a computer manufacturer,period costs include the cost of:

Accepted Answer

A) assembly-line equipment. 
B) labour used for assembly and packaging. 
C) the keyboard. 
D) distribution. 
A) assembly-line equipment. 
B) labour used for assembly and packaging. 
C) the keyboard. 
D) distribution.

Question 4

Which of the following is a fixed cost for a motor car manufacturing plant?

Accepted Answer

A) Windows for each car produced 
B) Administrative salaries 
C) Sales commissions 
D) Electricity used by assembly-line machines 
A) Windows for each car produced 
B) Administrative salaries 
C) Sales commissions 
D) Electricity used by assembly-line machines

Question 5

Manufacturing overhead costs in a motor car manufacturing plant MOST likely include:

Accepted Answer

A) steering wheel costs. 
B) labour costs of the painting department. 
C) sales commissions. 
D) indirect material costs such as lubricants. 
A) steering wheel costs. 
B) labour costs of the painting department. 
C) sales commissions. 
D) indirect material costs such as lubricants.

Question 6

Answer the following questions using the information below:
The SouthAus Company manufactures several different products.Unit costs associated with Product ADE108 are as follows:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 40 \
\text { Direct manufacturing labour } & 8 \
\text { Variable manufacturing overhead } & 12 \
\text { Fixed manufacturing overhead } & 23 \
\text { Sales commissions (2\% of sales) } & 6 \
\text { Administrative salaries } & 9 \underline { 9 } \
\quad \text { Total } & \$ 98
\end{array}$$
-What are the inventoriable costs per unit associated with Product ADE108?

Accepted Answer

A) $48 
B) $66 
C) $60 
D) $83 
A) $48 
B) $66 
C) $60 
D) $83

Question 7

The contribution-margin format of the income statement:

Accepted Answer

A) calculates gross margin. 
B) is used with absorption costing. 
C) is used with variable costing. 
D) distinguishes between manufacturing and nonmanufacturing costs. 
A) calculates gross margin. 
B) is used with absorption costing. 
C) is used with variable costing. 
D) distinguishes between manufacturing and nonmanufacturing costs.

Question 8

When the unit level of inventory increases during an accounting period,operating profit is greater under variable costing than absorption costing.

Accepted Answer

A) True 
 B)False

Question 9

Inventoriable costs for external reporting purposes are also called:

Accepted Answer

A) product costs. 
B) variable costs. 
C) period costs. 
D) direct manufacturing costs. 
A) product costs. 
B) variable costs. 
C) period costs. 
D) direct manufacturing costs.

Question 10

________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs.

Accepted Answer

A) Absorption costing 
B) Fixed costing 
C) Mixed costing 
D) Variable costing 
A) Absorption costing 
B) Fixed costing 
C) Mixed costing 
D) Variable costing

Question 11

'Prime costs' include:

Accepted Answer

A) only direct materials. 
B) direct materials and manufacturing overhead costs. 
C) direct materials and direct manufacturing labour costs. 
D) direct manufacturing labour and manufacturing overhead costs. 
A) only direct materials. 
B) direct materials and manufacturing overhead costs. 
C) direct materials and direct manufacturing labour costs. 
D) direct manufacturing labour and manufacturing overhead costs.

Question 12

Answer the following questions using the information below:
Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes:
The budgeted denominator level is 800 units.
Units produced total 1000 units.
Units sold total 950 units.
Beginning inventory was zero.
The fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-Woggoon Nature Corporation has provided the following information:
$\begin{array}{lr}
\text { Beginning fixed manufacturing overhead in inventory } & \$ 60000 \
\text { Ending fixed manufacturing overhead in inventory } & 45000 \
\text { Beginning variable manufacturing overhead in inventory } & \$ 30000 \
\text { Ending variable manufacturing overhead in inventory } & 14250\\\text { Fixed selling and administrative costs } & \$ 724000 \
\text { Units produced } & 5000 \text { units } \
\text { Units sold } & 4800 \text { units }
\end{array}$
What is the difference between operating profits under absorption costing and variable costing?

Accepted Answer

A) $750 
B) $7500 
C) $15 000 
D) $30 750 
A) $750 
B) $7500 
C) $15 000 
D) $30 750

Question 13

Answer the following questions using the information below:
Wangaratta Corporation incurred fixed manufacturing costs of $6000 during 2018.Other information for 2018 includes:
The budgeted denominator level is 1000 units.
Units produced total 750 units.
Units sold total 600 units.
Beginning inventory was zero.
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-Fixed manufacturing costs included in ending inventory total:

Accepted Answer

A) 0 
B) $1200 
C) $900 
D) $1500 
A) 0 
B) $1200 
C) $900 
D) $1500

Question 14

O'Reilly Manufacturing provided the following information for last month:
$$\begin{array} { l r } 
\text { Sales } & \$ 20000 \
\text { Variable costs } & 6000 \
\text { Fixed costs } & \underline { 5000 } \
\text { Operating profit } & \$ 9000
\end{array}$$
If sales double next month,what is the projected operating profit?

Accepted Answer

A) $14 000 
B) $12 000 
C) $23 000 
D) $18 000 
A) $14 000 
B) $12 000 
C) $23 000 
D) $18 000

Question 15

For service sector companies,period costs in the income statement are all costs not related to the cost of goods purchased for resale.

Accepted Answer

A) True 
 B)False

Question 16

Period costs:

Accepted Answer

A) include only fixed costs. 
B) should be treated as an indirect cost rather than as a direct manufacturing cost. 
C) seldom influence financial success or failure. 
D) include the cost of selling,delivering,and after-sales support for customers. 
A) include only fixed costs. 
B) should be treated as an indirect cost rather than as a direct manufacturing cost. 
C) seldom influence financial success or failure. 
D) include the cost of selling,delivering,and after-sales support for customers.

Question 17

Which of the following is a variable cost for an insurance company?

Accepted Answer

A) CEO's salary 
B) Property taxes 
C) Rent 
D) Sales commissions 
A) CEO's salary 
B) Property taxes 
C) Rent 
D) Sales commissions

Question 18

Cost accumulation is the collection of cost data in some organised way by means of an accounting system.

Accepted Answer

A) True 
 B)False

Question 19

For retail sector companies,inventoriable costs include:

Accepted Answer

A) incoming freight costs. 
B) insurance costs for the goods. 
C) the cost of the goods themselves. 
D) All of these answers are correct. 
A) incoming freight costs. 
B) insurance costs for the goods. 
C) the cost of the goods themselves. 
D) All of these answers are correct.

Question 20

Lindwall Corporation has reported operating profit of $30 000 and a fixed overhead cost rate is $20 per unit for the current accounting period.Under variable costing,if this company produces 100 more units of inventory,then operating profit:

Accepted Answer

A) is indeterminable. 
B) will increase by $2000. 
C) will not be affected. 
D) will increase by $2000 only if the 100 additional units of inventory are sold. 
A) is indeterminable. 
B) will increase by $2000. 
C) will not be affected. 
D) will increase by $2000 only if the 100 additional units of inventory are sold.

Budgeting is the most commonly used tool for planning and control.

Under absorption costing,if a manager's bonus is tied to operating profit,then increasing inventory levels compared to last year would result in:

For a computer manufacturer,period costs include the cost of:

Which of the following is a fixed cost for a motor car manufacturing plant?

Manufacturing overhead costs in a motor car manufacturing plant MOST likely include:

The contribution-margin format of the income statement:

When the unit level of inventory increases during an accounting period,operating profit is greater under variable costing than absorption costing.

Inventoriable costs for external reporting purposes are also called:

________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs.

'Prime costs' include:

O'Reilly Manufacturing provided the following information for last month: Sales \ 20000 Variable costs 6000 Fixed costs Operating profit \ 9000 If sales double next month,what is the projected operating profit?

For service sector companies,period costs in the income statement are all costs not related to the cost of goods purchased for resale.

Period costs:

Which of the following is a variable cost for an insurance company?

Cost accumulation is the collection of cost data in some organised way by means of an accounting system.

For retail sector companies,inventoriable costs include:

Lindwall Corporation has reported operating profit of $30 000 and a fixed overhead cost rate is $20 per unit for the current accounting period.Under variable costing,if this company produces 100 more units of inventory,then operating profit:

Management Accounting in Context

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters

Exam 2: Different Costs for Different Purposes

Budgeting is the most commonly used tool for planning and control.

Under absorption costing,if a manager's bonus is tied to operating profit,then increasing inventory levels compared to last year would result in:

For a computer manufacturer,period costs include the cost of:

Which of the following is a fixed cost for a motor car manufacturing plant?

Manufacturing overhead costs in a motor car manufacturing plant MOST likely include:

The contribution-margin format of the income statement:

When the unit level of inventory increases during an accounting period,operating profit is greater under variable costing than absorption costing.

Inventoriable costs for external reporting purposes are also called:

________ is a method of inventory costing in which only variable manufacturing costs are included as inventoriable costs.

'Prime costs' include:

O'Reilly Manufacturing provided the following information for last month: Sales \ 20000 Variable costs 6000 Fixed costs Operating profit \ 9000 If sales double next month,what is the projected operating profit?

For service sector companies,period costs in the income statement are all costs not related to the cost of goods purchased for resale.

Period costs:

Which of the following is a variable cost for an insurance company?

Cost accumulation is the collection of cost data in some organised way by means of an accounting system.

For retail sector companies,inventoriable costs include:

Lindwall Corporation has reported operating profit of $30 000 and a fixed overhead cost rate is $20 per unit for the current accounting period.Under variable costing,if this company produces 100 more units of inventory,then operating profit:

Management Accounting in Context

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters