Question 1

When using a two stage activity-based costing system,which of the following is NOT a legitimate step?

Accepted Answer

A)  Identify a cost pool for each significant activity. 
B)  Assign the indirect resource cost to the appropriate cost pool. 
C)  Allocate the costs in each pool to products or services using multiple cost drivers. 
D)  Select an allocation base for each cost pool. 
A)  Identify a cost pool for each significant activity. 
B)  Assign the indirect resource cost to the appropriate cost pool. 
C)  Allocate the costs in each pool to products or services using multiple cost drivers. 
D)  Select an allocation base for each cost pool.

Question 2

Monthly indirect production costs are $400,000.The cost-allocation base for indirect costs is machine hours.The budgeted capacity for the month is 40,000 machine hours.Product X used 5,000 machine hours,Product Y used 15,000 machine hours and Product Z used 20,000 machine hours.How much of the indirect costs are allocated to Products X and Y?
$\begin{array}{ll}&\text { Product X }&\text { Product Y }\
\text { A) } &\$ 2,500 & \$ 7,500 \
\text { B) }& \$ 5,000 & \$ 15,000 \
\text { C) } &\$ 50,000 & \$ 150,000
\end{array}$
D) none of the above

Accepted Answer

The answer of Monthly indirect production costs are $400,000.The cost-allocation...

Question 3

Process maps are used ________.

Accepted Answer

A)  to make investment decisions regarding capital assets 
B)  as a guide for strategic decisions 
C)  as a tool for managers to understand operations 
D)  for operational control 
A)  to make investment decisions regarding capital assets 
B)  as a guide for strategic decisions 
C)  as a tool for managers to understand operations 
D)  for operational control

Question 4

An example of a strategic management decision is the selection of the product mix that maximizes profits.

Accepted Answer

A) True 
 B)False

Question 5

A manufacturer has three types of inventory that include Raw Materials Inventory,Work-In-Process Inventory and Merchandise Inventory.

Accepted Answer

A) True 
 B)False

Question 6

What is the final step in the four-step process to allocate indirect costs to cost objects?

Accepted Answer

A)  Accumulate indirect costs for a period of time in a cost pool. 
B)  Select an allocation base for each cost pool. 
C)  Multiply the percentage of total cost-allocation units used for each cost object by the total costs in the cost pool to determine the cost allocated to each cost object. 
D)  Measure the units of the cost-allocation base used for each cost object and compute the total units used for all cost objects. 
A)  Accumulate indirect costs for a period of time in a cost pool. 
B)  Select an allocation base for each cost pool. 
C)  Multiply the percentage of total cost-allocation units used for each cost object by the total costs in the cost pool to determine the cost allocated to each cost object. 
D)  Measure the units of the cost-allocation base used for each cost object and compute the total units used for all cost objects.

Question 7

Due to the decline in indirect costs in most companies,allocating indirect costs is no longer necessary to determine accurate product costs.

Accepted Answer

A) True 
 B)False

Question 8

Traditional costing systems generally allocate nonproduction value-chain costs to products.

Accepted Answer

A) True 
 B)False

Question 9

Companies must assign all nonproduction costs to cost objects for internal management purposes.

Accepted Answer

A) True 
 B)False

Question 10

Investors need more detailed information about products or services than managers.

Accepted Answer

A) True 
 B)False

Question 11

A cost object is anything for which a separate measurement of costs is desired.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following types of organizations need cost accounting?

Accepted Answer

A)  manufacturing firms and service organizations only 
B)  service organizations and nonprofit organizations only 
C)  manufacturing firms and nonprofit organizations only 
D)  all types of organizations 
A)  manufacturing firms and service organizations only 
B)  service organizations and nonprofit organizations only 
C)  manufacturing firms and nonprofit organizations only 
D)  all types of organizations

Question 13

A merchandising company has Raw Materials Inventory.

Accepted Answer

A) True 
 B)False

Question 14

Cost assignment is attaching costs to one or more cost objects,such as activities and departments.

Accepted Answer

A) True 
 B)False

Question 15

A cost is a sacrifice of resources for a particular purpose.

Accepted Answer

A) True 
 B)False

Question 16

Company activities such as processing orders,billing customers,and moving materials can be cost objects.

Accepted Answer

A) True 
 B)False

Question 17

A cost pool is a group of individual costs that is allocated to cost objects.

Accepted Answer

A) True 
 B)False

Question 18

Godwin Company has identified the following activities related to indirect production costs:
$$\begin{array} { l l l } 
\text { Activity } & \text { Activity Costs } & \text { Cost Drivers } \
\text { Machine Setup } & \$ 180,000 & 1,500 \text { setup hours } \
\text { Materials Handling } & \$ 50,000 & 12,500 \text { pounds of materials } \
\text { Electric Power } & \$ 20,000 & 20,000 \text { kilowatt hours }
\end{array}$$
Godwin Company has obtained the following data concerning two products:
$\begin{array}{lll}&\text { Prodirct } A&\text { Prodirct } B\
\text { Number of units produced } & 4,000 & 20,000 \
\text { Direct materials cost } & \$ 20,000 & \$ 25,000 \
\text { Direct labor cost } & \$ 12,000 & \$ 20,000 \
\text { Number of setup hours } & 100 & 120 \
\text { Pounds of materials used } & 500 & 1,500 \
\text { Kilowatt-hours } & 1,000 & 2,000
\end{array}$
Using activity-based costing,what is the total production cost per unit for Product B?

Accepted Answer

A)  $1.12 per unit 
B)  $2.25 per unit 
C)  $3.00 per unit 
D)  $3.37 per unit 
A)  $1.12 per unit 
B)  $2.25 per unit 
C)  $3.00 per unit 
D)  $3.37 per unit

Question 19

A hospital radiology department has the following activities:
$\begin{array} { ll  }\text { Activity Number }&\text { Activity Description }\
1& \text {Repair X-ray equipment } \
2& \text { Taking $ X $-ray with $ X $-ray equipment} \
3& \text {Wait time between patients } \
4& \text { Repeating an $ X $-ray because the $ X $-ray technician forgot to} \
& \text {load the film in the $ \mathrm{X} $-ray equipment } \
\end{array}$

Which activity is a value-added activity?

Accepted Answer

A)  Activity 1 
B)  Activity 2 
C)  Activity 3 
D)  Activity 4 
A)  Activity 1 
B)  Activity 2 
C)  Activity 3 
D)  Activity 4

Question 20

Which of the following statements is FALSE?

Accepted Answer

A)  Traditional costing systems generally assign only production costs to products. 
B)  Traditional costing systems use a single cost pool for all indirect production costs. 
C)  Traditional cost systems work well with simple production processes. 
D)  Traditional cost systems allocate a cost pool to cost objects using multiple cost drivers. 
A)  Traditional costing systems generally assign only production costs to products. 
B)  Traditional costing systems use a single cost pool for all indirect production costs. 
C)  Traditional cost systems work well with simple production processes. 
D)  Traditional cost systems allocate a cost pool to cost objects using multiple cost drivers.

When using a two stage activity-based costing system,which of the following is NOT a legitimate step?

Process maps are used ________.

An example of a strategic management decision is the selection of the product mix that maximizes profits.

A manufacturer has three types of inventory that include Raw Materials Inventory,Work-In-Process Inventory and Merchandise Inventory.

What is the final step in the four-step process to allocate indirect costs to cost objects?

Due to the decline in indirect costs in most companies,allocating indirect costs is no longer necessary to determine accurate product costs.

Traditional costing systems generally allocate nonproduction value-chain costs to products.

Companies must assign all nonproduction costs to cost objects for internal management purposes.

Investors need more detailed information about products or services than managers.

A cost object is anything for which a separate measurement of costs is desired.

Which of the following types of organizations need cost accounting?

A merchandising company has Raw Materials Inventory.

Cost assignment is attaching costs to one or more cost objects,such as activities and departments.

A cost is a sacrifice of resources for a particular purpose.

Company activities such as processing orders,billing customers,and moving materials can be cost objects.

A cost pool is a group of individual costs that is allocated to cost objects.

Which of the following statements is FALSE?

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 4: Cost Management Systems and Activity-Based Costing

When using a two stage activity-based costing system,which of the following is NOT a legitimate step?

Process maps are used ________.

An example of a strategic management decision is the selection of the product mix that maximizes profits.

A manufacturer has three types of inventory that include Raw Materials Inventory,Work-In-Process Inventory and Merchandise Inventory.

What is the final step in the four-step process to allocate indirect costs to cost objects?

Due to the decline in indirect costs in most companies,allocating indirect costs is no longer necessary to determine accurate product costs.

Traditional costing systems generally allocate nonproduction value-chain costs to products.

Companies must assign all nonproduction costs to cost objects for internal management purposes.

Investors need more detailed information about products or services than managers.

A cost object is anything for which a separate measurement of costs is desired.

Which of the following types of organizations need cost accounting?

A merchandising company has Raw Materials Inventory.

Cost assignment is attaching costs to one or more cost objects,such as activities and departments.

A cost is a sacrifice of resources for a particular purpose.

Company activities such as processing orders,billing customers,and moving materials can be cost objects.

A cost pool is a group of individual costs that is allocated to cost objects.

Which of the following statements is FALSE?

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters