Question 1

Costs that can be significantly influenced by a particular manager are:

Accepted Answer

A)  product costs. 
B)  period costs. 
C)  controllable costs. 
D)  administrative costs. 
A)  product costs. 
B)  period costs. 
C)  controllable costs. 
D)  administrative costs.

Question 2

Variable costs:

Accepted Answer

A)  vary indirectly with changes in activity level 
B)  vary directly with changes in activity level 
C)  vary on a per unit basis 
D)  vary indirectly with changes in activity level AND vary on a per unit basis 
A)  vary indirectly with changes in activity level 
B)  vary directly with changes in activity level 
C)  vary on a per unit basis 
D)  vary indirectly with changes in activity level AND vary on a per unit basis

Question 3

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)  $7 000 
C)  $25 000 
D)  $30 500 
A)  $0 
B)  $7 000 
C)  $25 000 
D)  $30 500

Question 4

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 5

Only long-term decisions require an understanding of costs.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)  The costs associated with storing wine for customers 
B)  The costs associated with designing the labels on a wine bottle 
C)  The costs associated with researching a new variety of grapes 
D)  The costs associated with quality testing 
A)  The costs associated with storing wine for customers 
B)  The costs associated with designing the labels on a wine bottle 
C)  The costs associated with researching a new variety of grapes 
D)  The costs associated with quality testing

Question 7

Which of the following statements is false?

Accepted Answer

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

Question 8

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 9

Fixed costs per unit decrease as activity levels increase.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements correctly completes this sentence? 'For a firm that manufactures floor tiles,when the tiles are completed and ready for sale …'

Accepted Answer

A)  there is no change in the value of the firm's assets. 
B)  the firm's total assets are decreased. 
C)  the firm's total cost of the goods sold is increased. 
D)  the firm's work in process inventory is increased. 
A)  there is no change in the value of the firm's assets. 
B)  the firm's total assets are decreased. 
C)  the firm's total cost of the goods sold is increased. 
D)  the firm's work in process inventory is increased.

Question 11

Refer to the following data.The conversion costs are:

Accepted Answer

A)  $150 000 
B)  $142 000 
C)  $182 000 
D)  $190 000 
A)  $150 000 
B)  $142 000 
C)  $182 000 
D)  $190 000

Question 12

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 13

Direct and indirect cost classification is based on cost behaviour in relation to changes in the level of activity.

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 conversion costs are:

Accepted Answer

A)  $34 500 
B)  $29 500 
C)  $20 000 
D)  $35 000 
A)  $34 500 
B)  $29 500 
C)  $20 000 
D)  $35 000

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

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)  $5 000 
B)  $30 000 
C)  $10 000 
D)  $20 000 
A)  $5 000 
B)  $30 000 
C)  $10 000 
D)  $20 000

Question 17

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

Accepted Answer

A)  $90 000 
B)  $83 000 
C)  $65 000 
D)  $63 000 
A)  $90 000 
B)  $83 000 
C)  $65 000 
D)  $63 000

Question 18

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 19

Prime costs is the term given to direct labour and direct materials,as they are the major costs directly associated with the manufacture of a product.

Accepted Answer

A) True 
 B)False

Question 20

Conventional cost management systems use production volume as the measure of activity.Contemporary systems might use which of the following as activity measures:

Accepted Answer

A)  number of batches 
B)  number of customers 
C)  number of product lines 
D)  All of the given answers 
A)  number of batches 
B)  number of customers 
C)  number of product lines 
D)  All of the given answers

Exam 2: Management Accounting: Cost Terms and Concepts

Costs that can be significantly influenced by a particular manager are:

Variable costs:

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

A responsibility centre….

Only long-term decisions require an understanding of costs.

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

Which of the following statements is false?

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

Fixed costs per unit decrease as activity levels increase.

Which of the following statements correctly completes this sentence? 'For a firm that manufactures floor tiles,when the tiles are completed and ready for sale …'

Refer to the following data.The conversion costs are:

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

Direct and indirect cost classification is based on cost behaviour in relation to changes in the level of activity.

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

Refer to the following data.The product costs are:

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:

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

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

Prime costs is the term given to direct labour and direct materials,as they are the major costs directly associated with the manufacture of a product.

Conventional cost management systems use production volume as the measure of activity.Contemporary systems might use which of the following as activity measures:

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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