Question 1

Unless overtime and idle time are caused by a particular job, they are treated as:

Accepted Answer

A)  a part of direct labour expense. 
B)  a part of manufacturing overhead. 
C)  associated with a particular product. 
D)  a part of manufacturing overhead AND associated with a particular product. 
A)  a part of direct labour expense. 
B)  a part of manufacturing overhead. 
C)  associated with a particular product. 
D)  a part of manufacturing overhead AND associated with a particular product.

Question 2

Which of the following terms accurately describes all three manufacturing costs (i.e. direct materials, direct labour and manufacturing overhead)?

Accepted Answer

A)  Product costs 
B)  Variable costs 
C)  Direct costs 
D)  Both direct costs and product costs 
A)  Product costs 
B)  Variable costs 
C)  Direct costs 
D)  Both direct costs and product costs

Question 3

Eldervale Winery is a producer of premium wine. Which of the following is an example of an upstream cost?

Accepted Answer

A)  The costs associated with storing wine barrels. 
B)  The costs associated with designing the labels on a wine bottle. 
C)  The costs associated with delivering products to customers. 
D)  The costs associated with quality inspection. 
A)  The costs associated with storing wine barrels. 
B)  The costs associated with designing the labels on a wine bottle. 
C)  The costs associated with delivering products to customers. 
D)  The costs associated with quality inspection.

Question 4

Fixed costs:

Accepted Answer

A)  vary directly with changes in activity level. 
B)  in total remain unchanged as activity levels change. 
C)  vary on a per unit basis. 
D)  B and C 
A)  vary directly with changes in activity level. 
B)  in total remain unchanged as activity levels change. 
C)  vary on a per unit basis. 
D)  B and C

Question 5

Choose the statement that best completes this sentence: 'Traditional management accounting focuses on ....'

Accepted Answer

A)  budgeting systems, financial performance measures and cost control. 
B)  financial performance measures, external reporting and cost elimination. 
C)  non-financial performance measures, external reporting and cost control. 
D)  external reporting, labour-related activity measures and cost elimination. 
A)  budgeting systems, financial performance measures and cost control. 
B)  financial performance measures, external reporting and cost elimination. 
C)  non-financial performance measures, external reporting and cost control. 
D)  external reporting, labour-related activity measures and cost elimination.

Question 6

In relation to the activities of the value chain of a manufacturing company, primary processes include accounting and legal activities.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the following data.  
The prime costs are:

Accepted Answer

A)  $190 000. 
B)  $40 000. 
C)  $150 000. 
D)  $142 000. 
A)  $190 000. 
B)  $40 000. 
C)  $150 000. 
D)  $142 000.

Question 8

Only long-term decisions require an understanding of costs.

Accepted Answer

A) True 
 B)False

Question 9

Inventoriable costs include direct materials, direct labour, manufacturing overheads and period costs for that accounting period.

Accepted Answer

A) True 
 B)False

Question 10

As activity level increases, total variable costs:

Accepted Answer

A)  increase proportionately with activity. 
B)  decrease proportionately with activity. 
C)  increase by a fixed amount. 
D)  decrease by a fixed amount. 
A)  increase proportionately with activity. 
B)  decrease proportionately with activity. 
C)  increase by a fixed amount. 
D)  decrease by a fixed amount.

Question 11

Behaviour of fixed and variable costs.
Compare and contrast the behaviour of fixed and variable costs in total and per unit.

Accepted Answer

Total fixed costs remain unchanged with

Question 12

Costs that are expended during the period in which the costs are incurred are called:

Accepted Answer

A)  product costs. 
B)  inventoriable costs. 
C)  period costs. 
D)  indirect costs. 
A)  product costs. 
B)  inventoriable costs. 
C)  period costs. 
D)  indirect costs.

Question 13

The value chain begins with providing products that will be valued by customers.

Accepted Answer

A) True 
 B)False

Question 14

The Casual Furniture Company manufactures outdoor furniture and incurred the following costs during the month of January:  
The period costs are:

Accepted Answer

A)  $0. 
B)  $7000. 
C)  $25 000. 
D)  $30 500. 
A)  $0. 
B)  $7000. 
C)  $25 000. 
D)  $30 500.

Question 15

The equation to calculate total manufacturing costs = cost of goods manufactured - beginning work in process + ending work in process.

Accepted Answer

A) True 
 B)False

Question 16

The Casual Furniture Company manufactures outdoor furniture and incurred the following costs during the month of January:  
The prime costs are:

Accepted Answer

A)  $30 000. 
B)  $50 000. 
C)  $65 000. 
D)  $50 500. 
A)  $30 000. 
B)  $50 000. 
C)  $65 000. 
D)  $50 500.

Question 17

In the manufacturing firm, inventories consist of:

Accepted Answer

A)  raw materials, cost of goods manufactured during the period and finished goods. 
B)  raw materials, work in process and finished goods. 
C)  raw materials, finished goods and cost of goods sold. 
D)  cost of goods manufactured and cost of goods sold. 
A)  raw materials, cost of goods manufactured during the period and finished goods. 
B)  raw materials, work in process and finished goods. 
C)  raw materials, finished goods and cost of goods sold. 
D)  cost of goods manufactured and cost of goods sold.

Question 18

During the year, any inventory that is sold is transferred to the finished goods account.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not a period cost?

Accepted Answer

A)  Marketing costs 
B)  Administrative costs 
C)  Research and development 
D)  Factory overheads 
A)  Marketing costs 
B)  Administrative costs 
C)  Research and development 
D)  Factory overheads

Question 20

Indirect materials include:

Accepted Answer

A)  materials that are incorporated into the finished product. 
B)  materials required for the production process, which do not become an integral part of the finished product. 
C)  direct materials that are so insignificant in cost that it becomes unimportant to trace their costs to specific products. 
D)  materials required for the production process, which do not become an integral part of the finished product AND direct materials that are so insignificant in cost that it becomes unimportant to trace their costs to specific products. 
A)  materials that are incorporated into the finished product. 
B)  materials required for the production process, which do not become an integral part of the finished product. 
C)  direct materials that are so insignificant in cost that it becomes unimportant to trace their costs to specific products. 
D)  materials required for the production process, which do not become an integral part of the finished product AND direct materials that are so insignificant in cost that it becomes unimportant to trace their costs to specific products.

Exam 2: Management Accounting: Cost Terms and Concepts

Unless overtime and idle time are caused by a particular job, they are treated as:

Which of the following terms accurately describes all three manufacturing costs (i.e. direct materials, direct labour and manufacturing overhead)?

Eldervale Winery is a producer of premium wine. Which of the following is an example of an upstream cost?

Fixed costs:

Choose the statement that best completes this sentence: 'Traditional management accounting focuses on ....'

In relation to the activities of the value chain of a manufacturing company, primary processes include accounting and legal activities.

Refer to the following data. The prime costs are:

Only long-term decisions require an understanding of costs.

Inventoriable costs include direct materials, direct labour, manufacturing overheads and period costs for that accounting period.

As activity level increases, total variable costs:

Behaviour of fixed and variable costs. Compare and contrast the behaviour of fixed and variable costs in total and per unit.

Costs that are expended during the period in which the costs are incurred are called:

The value chain begins with providing products that will be valued by customers.

The Casual Furniture Company manufactures outdoor furniture and incurred the following costs during the month of January: The period costs are:

The equation to calculate total manufacturing costs = cost of goods manufactured - beginning work in process + ending work in process.

The Casual Furniture Company manufactures outdoor furniture and incurred the following costs during the month of January: The prime costs are:

In the manufacturing firm, inventories consist of:

During the year, any inventory that is sold is transferred to the finished goods account.

Which of the following is not a period cost?

Indirect materials include:

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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