Question 1

In making product mix and pricing decisions,managers should focus on:

Accepted Answer

A) variable costs. 
B) total costs. 
C) unit costs. 
D) fixed costs. 
A) variable costs. 
B) total costs. 
C) unit costs. 
D) fixed costs.

Question 2

When making decisions about strategy design and strategy implementation,managers must understand which revenues and costs to consider and which ones to ignore.

Accepted Answer

A) True 
 B)False

Question 3

For last year,Ulladula Enterprises reported revenues of $420 000,cost of goods sold of $108 000,cost of goods manufactured of $101 000,and total operating costs of $70 000.Operating profit for that year was:

Accepted Answer

A) $312 000 
B) $249 000 
C) $319 000 
D) $242 000 
A) $312 000 
B) $249 000 
C) $319 000 
D) $242 000

Question 4

The cost driver of a variable cost is the level of activity or volume for which change causes proportionate changes in the ________ cost.

Accepted Answer

A) variable 
B) fixed 
C) mixed 
D) allocated 
A) variable 
B) fixed 
C) mixed 
D) allocated

Question 5

________ manufacturing costs are all manufacturing costs that are related to the cost object (work in process and then finished goods)but cannot be traced to that cost object in an economically feasible way.

Accepted Answer

A) Fixed 
B) Unit 
C) Indirect 
D) Direct 
A) Fixed 
B) Unit 
C) Indirect 
D) Direct

Question 6

Operating profit is sales revenue minus cost of goods manufactured.

Accepted Answer

A) True 
 B)False

Question 7

Fixed costs have no cost driver in the short run,but may have a cost driver in the long run.

Accepted Answer

A) True 
 B)False

Question 8

Costs that are initially recorded as assets and expensed when sold are called:

Accepted Answer

A) fixed costs. 
B) variable costs. 
C) inventoriable costs. 
D) period costs. 
A) fixed costs. 
B) variable costs. 
C) inventoriable costs. 
D) period costs.

Question 9

Ruggles Company has provided the following data for the year ended 30 September 2018.
 $\begin{array}{lr}
\text { Sales: } & 24000 \text { units at } \$ 50 \text { each } \
\text { Expected and actual production: } & 30000 \text { units } \
\text { Manufacturing costs incurred: } &\
\text { Variable: } & \$ 525000 \
\text { Fixed: } & \$ 372000\
\text { Nonmanufacturing costs incurred: }\
\text { Variable: } & \$ 144800 \
\text { Fixed: } & \$ 77400 \
\text { Beginning inventories: } & \text { none }
\end{array}$  
Required:
a.Determine operating profit using the variable-costing approach.
b.Determine operating profit using the absorption-costing approach.
c.Explain why operating profit is not the same under the two approaches.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.24 000 × $50 = $1 200 000 sales
($525

Question 10

Debated items that some companies include as direct manufacturing labour include:

Accepted Answer

A) holiday pay. 
B) fringe benefits. 
C) training time. 
D) All of these answers are correct. 
A) holiday pay. 
B) fringe benefits. 
C) training time. 
D) All of these answers are correct.

Question 11

What is cost tracing?

Accepted Answer

A) The assignment of direct costs to the chosen cost object 
B) The process of determining the actual cost of the cost object 
C) The process of tracking both direct and indirect costs associated with a cost object 
D) A function of cost allocation 
A) The assignment of direct costs to the chosen cost object 
B) The process of determining the actual cost of the cost object 
C) The process of tracking both direct and indirect costs associated with a cost object 
D) A function of cost allocation

Question 12

Service sector companies report:

Accepted Answer

A) only finished goods inventory. 
B) direct materials inventory. 
C) no inventory accounts. 
D) only work-in-process inventory. 
A) only finished goods inventory. 
B) direct materials inventory. 
C) no inventory accounts. 
D) only work-in-process inventory.

Question 13

Actual costs and budgeted costs are two different terms referring to the same thing.

Accepted Answer

A) True 
 B)False

Question 14

Indirect costs of a cost object are related to the particular cost object but cannot be traced to it in an economically feasible (cost-effective)way.

Accepted Answer

A) True 
 B)False

Question 15

Coonabarabran Realty bought a 2000-hectare island for $10 000 000 and divided it into 200 equal size lots.
As the lots are sold,they are cleared at an average cost of $5000.
Storm drains and driveways are installed at an average cost of $8000 per site.
Sales commissions are 10% of selling price.
Administrative costs are $850 000 per year.
The average selling price was $160 000 per lot during 2017 when 50 lots were sold.
During 2018,the company bought another 2000-hectare island for $10 000 000 and developed it exactly the same way.Lot sales in 2018 totalled 300 with an average selling price of $160 000.All costs were the same as in 2017.
Required:
Prepare income statements for both years using both absorption and variable costing methods.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Coonabarabran Realty bought a 2000-hectare island for...

Question 16

Answer the following questions using the information below:
Alice Opals produces and sells a mantel clock for $100 per unit.In 2018,100 000 clocks were produced and 80 000 were sold.Other information for the year includes:
 $\begin{array}{lr}
\text { Direct materials } & \$ 30.00 \text { per unit } \
\text { Direct manufacturing labour } & \$ 2.00 \text { per unit } \
\text { Variable manufacturing costs } & \$ 3.00 \text { per unit } \
\text { Sales commissions } & \$ 5.00 \text { per part } \
\text { Fixed manufacturing costs } & \$ 25.00 \text { per unit } \
\text { Administrative expenses, all fixed } & \$ 15.00 \text { per unit }
\end{array}$
-What is the inventoriable cost per unit using absorption costing?

Accepted Answer

A) $32 
B) $35 
C) $60 
D) $80 
A) $32 
B) $35 
C) $60 
D) $80

Question 17

Generally,managers are more confident about the accuracy of ________ costs of cost objects.

Accepted Answer

A) variable 
B) fixed 
C) direct 
D) indirect 
A) variable 
B) fixed 
C) direct 
D) indirect

Question 18

Variable costs:

Accepted Answer

A) include most personnel costs and depreciation on machinery. 
B) are always indirect costs. 
C) increase in total when the actual level of activity increases. 
D) can always be traced directly to the cost object. 
A) include most personnel costs and depreciation on machinery. 
B) are always indirect costs. 
C) increase in total when the actual level of activity increases. 
D) can always be traced directly to the cost object.

Question 19

Direct costing is a perfect way to describe the variable costing inventory method.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

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

In making product mix and pricing decisions,managers should focus on:

When making decisions about strategy design and strategy implementation,managers must understand which revenues and costs to consider and which ones to ignore.

For last year,Ulladula Enterprises reported revenues of $420 000,cost of goods sold of $108 000,cost of goods manufactured of $101 000,and total operating costs of $70 000.Operating profit for that year was:

The cost driver of a variable cost is the level of activity or volume for which change causes proportionate changes in the ________ cost.

________ manufacturing costs are all manufacturing costs that are related to the cost object (work in process and then finished goods)but cannot be traced to that cost object in an economically feasible way.

Operating profit is sales revenue minus cost of goods manufactured.

Fixed costs have no cost driver in the short run,but may have a cost driver in the long run.

Costs that are initially recorded as assets and expensed when sold are called:

Debated items that some companies include as direct manufacturing labour include:

What is cost tracing?

Service sector companies report:

Actual costs and budgeted costs are two different terms referring to the same thing.

Indirect costs of a cost object are related to the particular cost object but cannot be traced to it in an economically feasible (cost-effective)way.

Generally,managers are more confident about the accuracy of ________ costs of cost objects.

Variable costs:

Direct costing is a perfect way to describe the variable costing inventory method.

Bradman Corporation has reported operating profit of $30 000 and a fixed overhead cost rate is $20 per unit for the current accounting period.Under absorption costing,if this company now produces an additional 100 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

In making product mix and pricing decisions,managers should focus on:

When making decisions about strategy design and strategy implementation,managers must understand which revenues and costs to consider and which ones to ignore.

For last year,Ulladula Enterprises reported revenues of $420 000,cost of goods sold of $108 000,cost of goods manufactured of $101 000,and total operating costs of $70 000.Operating profit for that year was:

The cost driver of a variable cost is the level of activity or volume for which change causes proportionate changes in the ________ cost.

________ manufacturing costs are all manufacturing costs that are related to the cost object (work in process and then finished goods)but cannot be traced to that cost object in an economically feasible way.

Operating profit is sales revenue minus cost of goods manufactured.

Fixed costs have no cost driver in the short run,but may have a cost driver in the long run.

Costs that are initially recorded as assets and expensed when sold are called:

Debated items that some companies include as direct manufacturing labour include:

What is cost tracing?

Service sector companies report:

Actual costs and budgeted costs are two different terms referring to the same thing.

Indirect costs of a cost object are related to the particular cost object but cannot be traced to it in an economically feasible (cost-effective)way.

Generally,managers are more confident about the accuracy of ________ costs of cost objects.

Variable costs:

Direct costing is a perfect way to describe the variable costing inventory method.

Bradman Corporation has reported operating profit of $30 000 and a fixed overhead cost rate is $20 per unit for the current accounting period.Under absorption costing,if this company now produces an additional 100 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