Question 1

Costs that can be traced to a particular cost object are called:

Accepted Answer

A)  direct costs 
B)  indirect costs 
C)  product costs 
D)  manufacturing costs 
A)  direct costs 
B)  indirect costs 
C)  product costs 
D)  manufacturing costs

Question 2

Idle time is:

Accepted Answer

A)  frequently an avoidable cost 
B)  classified as overhead 
C)  caused by events such as equipment breakdown and new set-ups of production runs 
D)  All of the given answers 
A)  frequently an avoidable cost 
B)  classified as overhead 
C)  caused by events such as equipment breakdown and new set-ups of production runs 
D)  All of the given answers

Question 3

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 4

Refer to the following data.The non-manufacturing costs are:

Accepted Answer

A)  $15 000 
B)  $70 000 
C)  $182 000 
D)  $372 000 
A)  $15 000 
B)  $70 000 
C)  $182 000 
D)  $372 000

Question 5

Which of the following is not an example of a variable cost?

Accepted Answer

A)  Straight-line depreciation on a machine expected to last 5 years. 
B)  Wages paid to assembly line workers at a local manufacturing plant. 
C)  Timber used to make outdoor furniture. 
D)  Commissions paid to sales personnel. 
A)  Straight-line depreciation on a machine expected to last 5 years. 
B)  Wages paid to assembly line workers at a local manufacturing plant. 
C)  Timber used to make outdoor furniture. 
D)  Commissions paid to sales personnel.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Manufacturing organisations have four inventory accounts - raw materials,work in process,cost of goods sold and finished goods.

Accepted Answer

A) True 
 B)False

Question 8

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 9

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 10

The Casual Furniture Company manufactures outdoor furniture and incurred the following costs during the month of January.The manufacturing overhead is:

Accepted Answer

A)  $14 500 
B)  $15 000 
C)  $9500 
D)  $9 000 
A)  $14 500 
B)  $15 000 
C)  $9500 
D)  $9 000

Question 11

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 12

Which of the following statements is correct in relation to determining whether a cost is direct or indirect?

Accepted Answer

A)  The wider the definition of the cost object the more costs that will be indirect costs. 
B)  The number of cost items that can be classified as direct costs does not depend on the definition of cost objects. 
C)  The narrower the definition of the cost object the more costs that will be direct costs. 
D)  The wider the definition of the cost object the more costs that will be direct costs. 
A)  The wider the definition of the cost object the more costs that will be indirect costs. 
B)  The number of cost items that can be classified as direct costs does not depend on the definition of cost objects. 
C)  The narrower the definition of the cost object the more costs that will be direct costs. 
D)  The wider the definition of the cost object the more costs that will be direct costs.

Question 13

Costs that managers cannot significantly influence are classified as uncontrollable costs.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is true? A cost is:

Accepted Answer

A)  always an expense 
B)  always an asset 
C)  can be either an expense or an asset 
D)  always a liability 
A)  always an expense 
B)  always an asset 
C)  can be either an expense or an asset 
D)  always a liability

Question 15

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 16

Mydas Ltd operates a large factory which manufactures three types of motor vehicles,including family cars,sports cars and motorcycles.If the cost object is a motorcycle,which of the following is a direct cost?

Accepted Answer

A)  The costs of wheels on the motorcycle 
B)  The salary of the factory general manager 
C)  The salary of the factory quality inspector 
D)  The windscreen wipers on a family car 
A)  The costs of wheels on the motorcycle 
B)  The salary of the factory general manager 
C)  The salary of the factory quality inspector 
D)  The windscreen wipers on a family car

Question 17

Depreciation of factory equipment would be classified as:

Accepted Answer

A)  indirect material 
B)  indirect labour 
C)  manufacturing overhead 
D)  a sundry expense 
A)  indirect material 
B)  indirect labour 
C)  manufacturing overhead 
D)  a sundry expense

Question 18

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

Question 19

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 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

Question 20

On-costs on direct labour are classified as:

Accepted Answer

A)  direct labour 
B)  indirect labour 
C)  manufacturing overhead 
D)  either direct labour or indirect labour depending on the decision made by the firm 
A)  direct labour 
B)  indirect labour 
C)  manufacturing overhead 
D)  either direct labour or indirect labour depending on the decision made by the firm

Exam 2: Management Accounting: Cost Terms and Concepts

Costs that can be traced to a particular cost object are called:

Idle time is:

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:

Refer to the following data.The non-manufacturing costs are:

Which of the following is not an example of a variable cost?

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

Manufacturing organisations have four inventory accounts - raw materials,work in process,cost of goods sold and finished goods.

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:

The Casual Furniture Company manufactures outdoor furniture and incurred the following costs during the month of January.The manufacturing overhead is:

As activity level increases,total variable costs:

Which of the following statements is correct in relation to determining whether a cost is direct or indirect?

Costs that managers cannot significantly influence are classified as uncontrollable costs.

Which of the following statements is true? A cost is:

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

Mydas Ltd operates a large factory which manufactures three types of motor vehicles,including family cars,sports cars and motorcycles.If the cost object is a motorcycle,which of the following is a direct cost?

Depreciation of factory equipment would be classified as:

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.

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 an example of a controllable cost for Sally?

On-costs on direct labour are classified 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

Filters