Question 1

Which of the following costs of a manufactured product is a period cost?

Accepted Answer

A)  Direct material 
B)  Manufacturing overhead 
C)  Indirect material 
D)  Sales commission 
A)  Direct material 
B)  Manufacturing overhead 
C)  Indirect material 
D)  Sales commission D

Question 2

Sally Strong is the production manager of Eldervale Winery. Her role includes overseeing the production and bottling processes of Eldervale Winery's three product lines: sparkling wine, red wine and white wine. Which of the following is most likely to be an example of a controllable cost for Sally?

Accepted Answer

A)  The costs associated with bottling wine 
B)  The costs associated with advertising Eldervale wine on national TV 
C)  The costs associated with liaising with distributors to export wine to China 
D)  The costs associated with obtaining finance from banks 
A)  The costs associated with bottling wine 
B)  The costs associated with advertising Eldervale wine on national TV 
C)  The costs associated with liaising with distributors to export wine to China 
D)  The costs associated with obtaining finance from banks A

Question 3

Which of the following statements is false?
i. Qualitative information is not relevant for planning purposes.
ii. Production costs are important for planning purposes, but selling and administration costs are not.
iii. Information on revenues is not important for planning purposes.

Accepted Answer

A)  i 
B)  iii 
C)  i and iii 
D)  i, ii and iii 
A)  i 
B)  iii 
C)  i and iii 
D)  i, ii and iii D

Question 4

If production increases, variable cost will:

Accepted Answer

A)  remain constant on a per unit basis. 
B)  increase by a variable amount. 
C)  vary on a per unit basis. 
D)  remain unchanged. 
A)  remain constant on a per unit basis. 
B)  increase by a variable amount. 
C)  vary on a per unit basis. 
D)  remain unchanged.

Question 5

Product costs comprise:

Accepted Answer

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

Question 6

Which is the correct order of cost incurrence in the value chain?

Accepted Answer

A)  R&D, Product design, Manufacturing, Marketing, Distribution, Customer support 
B)  R&D, Product design, Customer support, Marketing, Distribution, Manufacturing 
C)  R&D, Product design, Manufacturing, Distribution, Customer support, Selling 
D)  R&D, Product design, Manufacturing, Distribution, Marketing, Customer support 
A)  R&D, Product design, Manufacturing, Marketing, Distribution, Customer support 
B)  R&D, Product design, Customer support, Marketing, Distribution, Manufacturing 
C)  R&D, Product design, Manufacturing, Distribution, Customer support, Selling 
D)  R&D, Product design, Manufacturing, Distribution, Marketing, Customer support

Question 7

Manufacturing costs
Manufacturing costs are costs that are incurred within the factory area. Describe the three components of manufacturing costs. Identify the costs that might be incurred in the manufacture of a Levi Strauss shirt.

Accepted Answer

Manufacturing costs are usually divided

Question 8

Cost of goods purchased includes the:

Accepted Answer

A)  purchase cost. 
B)  transportation inward cost. 
C)  storage cost. 
D)  purchase cost AND transportation inward cost. 
A)  purchase cost. 
B)  transportation inward cost. 
C)  storage cost. 
D)  purchase cost AND transportation inward cost.

Question 9

Product costs are:

Accepted Answer

A)  expended as they are incurred. 
B)  inventoriable costs. 
C)  period costs. 
D)  expended as they are incurred AND inventoriable costs. 
A)  expended as they are incurred. 
B)  inventoriable costs. 
C)  period costs. 
D)  expended as they are incurred AND inventoriable costs.

Question 10

Which of the following statements is true?

Accepted Answer

A)  The word cost has the same meaning in all situations in which it is used. 
B)  Cost data, once classified and recorded, can be used for any purpose. 
C)  Different cost concepts and classifications are used for different purposes. 
D)  None of the given answers 
A)  The word cost has the same meaning in all situations in which it is used. 
B)  Cost data, once classified and recorded, can be used for any purpose. 
C)  Different cost concepts and classifications are used for different purposes. 
D)  None of the given answers

Question 11

A courier company may view kilometres driven as a possible cost driver.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is false?

Accepted Answer

A)  Costing is common to both traditional and modern management accounting. 
B)  Activity-based costing is common to both traditional and modern management accounting. 
C)  Performance measurement is common to both traditional and modern management accounting. 
D)  Modern performance measurement covers a range of critical success factors. 
A)  Costing is common to both traditional and modern management accounting. 
B)  Activity-based costing is common to both traditional and modern management accounting. 
C)  Performance measurement is common to both traditional and modern management accounting. 
D)  Modern performance measurement covers a range of critical success factors.

Question 13

As activity level decreases, unit variable cost:

Accepted Answer

A)  increases proportionately with activity. 
B)  decreases proportionately with activity. 
C)  remains constant. 
D)  decreases by a fixed amount. 
A)  increases proportionately with activity. 
B)  decreases proportionately with activity. 
C)  remains constant. 
D)  decreases by a fixed amount.

Question 14

Lenco Industries has cost of goods manufactured of $65 000 in May. The finished goods inventory at the end of May was $20 000 and the cost of goods sold during May was $75 000.
The inventory in finished goods at the beginning of May was:

Accepted Answer

A)  $5000. 
B)  $30 000. 
C)  $10 000. 
D)  $20 000. 
A)  $5000. 
B)  $30 000. 
C)  $10 000. 
D)  $20 000.

Question 15

Refer to the following data.  
The product costs are:

Accepted Answer

A)  $15 000 
B)  $182 000 
C)  $190 000 
D)  $332 000 
A)  $15 000 
B)  $182 000 
C)  $190 000 
D)  $332 000

Question 16

In the short term, which of the following costs would be classified as uncontrollable?

Accepted Answer

A)  Raw materials 
B)  Stationery expenses 
C)  Loan interest 
D)  Entertainment expenses 
A)  Raw materials 
B)  Stationery expenses 
C)  Loan interest 
D)  Entertainment expenses

Question 17

Whether a cost is classified as direct or indirect will depend on:

Accepted Answer

A)  the nature of the cost object. 
B)  whether the cost can be economically traced to the cost object. 
C)  whether the organisation is in a manufacturing or service industry 
D)  the nature of the cost object AND whether the cost can be economically traced to the cost object. 
A)  the nature of the cost object. 
B)  whether the cost can be economically traced to the cost object. 
C)  whether the organisation is in a manufacturing or service industry 
D)  the nature of the cost object AND whether the cost can be economically traced to the cost object.

Question 18

Fairchild Pty Ltd began April with a finished goods inventory of $25 000. The cost of goods manufactured during the month was $40 000 and the cost of goods sold during April was $50 000.
The inventory remaining in finished goods at the end of April was:

Accepted Answer

A)  $35 000. 
B)  $25 000. 
C)  $20 000. 
D)  $15 000. 
A)  $35 000. 
B)  $25 000. 
C)  $20 000. 
D)  $15 000.

Question 19

A responsibility centre:

Accepted Answer

A)  refers to a unit of business where all the associated costs are considered as 'direct costs'. 
B)  refers to a unit of a business where the manager is held accountable for activities and performance. 
C)  is another term for 'business division'. 
D)  is a term applicable only to manufacturing companies. 
A)  refers to a unit of business where all the associated costs are considered as 'direct costs'. 
B)  refers to a unit of a business where the manager is held accountable for activities and performance. 
C)  is another term for 'business division'. 
D)  is a term applicable only to manufacturing companies.

Question 20

Costs that are incurred to obtain future benefits beyond 12 months are known as:

Accepted Answer

A)  assets. 
B)  liabilities. 
C)  revenue. 
D)  expenses. 
A)  assets. 
B)  liabilities. 
C)  revenue. 
D)  expenses.

Exam 2: Management Accounting: Cost Terms and Concepts

Which of the following costs of a manufactured product is a period cost?

Sally Strong is the production manager of Eldervale Winery. Her role includes overseeing the production and bottling processes of Eldervale Winery's three product lines: sparkling wine, red wine and white wine. Which of the following is most likely to be an example of a controllable cost for Sally?

Which of the following statements is false? i. Qualitative information is not relevant for planning purposes. ii. Production costs are important for planning purposes, but selling and administration costs are not. iii. Information on revenues is not important for planning purposes.

If production increases, variable cost will:

Product costs comprise:

Which is the correct order of cost incurrence in the value chain?

Manufacturing costs Manufacturing costs are costs that are incurred within the factory area. Describe the three components of manufacturing costs. Identify the costs that might be incurred in the manufacture of a Levi Strauss shirt.

Cost of goods purchased includes the:

Product costs are:

Which of the following statements is true?

A courier company may view kilometres driven as a possible cost driver.

Which of the following statements is false?

As activity level decreases, unit variable cost:

Lenco Industries has cost of goods manufactured of $65 000 in May. The finished goods inventory at the end of May was $20 000 and the cost of goods sold during May was $75 000. The inventory in finished goods at the beginning of May was:

Refer to the following data. The product costs are:

In the short term, which of the following costs would be classified as uncontrollable?

Whether a cost is classified as direct or indirect will depend on:

Fairchild Pty Ltd began April with a finished goods inventory of $25 000. The cost of goods manufactured during the month was $40 000 and the cost of goods sold during April was $50 000. The inventory remaining in finished goods at the end of April was:

A responsibility centre:

Costs that are incurred to obtain future benefits beyond 12 months are known as:

Management Accounting: Information for Creating Value and Managing Resources

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Managing and Reporting Performance

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

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