Deck 6: Cost Classification and Management Accounting

Question 1

Which of the following best describes a fixed cost ?

A)remains constant irrespective of the level of activity
B)represents a fixed proportion of total costs
C)increases proportionately with output
D)has a direct relationship with output

Answer 1

remains constant irrespective of the level of activity

Question 2

The weighted average method of stock valuation would be most appropriate for ………….

A)chemical manufacturer
B)a food retailer
C)a building contractor
D)a motor components retailer

Answer 2

chemical manufacturer

Question 3

Direct labour costs will include……………

A)all labor costs attributable to product
B)direct labor costs plus any bonuses
C)total direct labor hours at the normal hourly rate of pay
D)direct labor costs plus any bonuses and overtime premium

Answer 3

total direct labor hours at the normal hourly rate of pay

Question 4

Management accounting is said to meet:

A)the internal accounting needs of the organization
B)the needs of laws that govern company financial reporting.
C)the regulatory requirements of the organization
D)the external accounting needs of the organisation.

Question 5

Which one of the following is not a recognised cost classification?

A)time
B)function
C)performance
D)type

Question 6

Direct costs are also known as:

A)indirect cost
B)overhead costs
C)prime costs
D)marginal costs

Question 7

Indirect costs are also known as

A)direct cost
B)overhead costs
C)prime costs
D)marginal costs

Question 8

Which of the following is not true?

A)managerial accounting information is prepared for internal users
B)managerial accounting information is not required by various laws
C)there are specific standards of acceptability for managerial accounting
D)the structure of managerial accounting practice is relatively flexible

Question 9

Which of the following are basic inventories for a manufacturer?

A)indirect materials, goods in process, and raw materials
B)finished goods, raw materials, and direct materials
C)raw materials, goods in process, and finished goods
D)raw materials, factory overhead, and direct labour

Question 10

The three basic elements of the cost of a manufactured product are:

A)indirect materials, indirect labour, and manufacturing overhead
B)merchandise inventory, work in process, and finished goods inventory
C)direct materials, work in process, and finished goods inventory
D)direct materials, direct labour, and manufacturing overhead

Question 11

A cost which changes in proportion to changes in volume of activity is called

A)fixed cost
B)controllable cost
C)variable cost
D)opportunity cost

Question 12

A 'direct' cost is a cost that is classified by:

A)behaviour
B)traceability
C)controllability
D)relevance

Question 13

A 'product' cost is a cost that is classified by:

A)behaviour
B)function
C)controllability
D)relevance

Question 14

Which of the following is a period cost?

A)direct materials
B)indirect materials
C)factory utilities
D)administrative expenses