Question 1

A resource-cost driver is used to allocate costs from an activity-cost pool to a cost object.

Accepted Answer

A) True 
 B)False

Question 2

A _______________ driver is used to allocate costs from a resource-cost pool to activity-cost pools.

Accepted Answer

A) activity-cost 
B) resource-cost 
C) target price 
D) primary

Question 3

A cost driver is a grouping of individual indirect cost items that have the same cost driver.

Accepted Answer

A) True 
 B)False

Question 4

A major difference between job costing and process costing is the extent of averaging used to calculate the unit costs of products or services.

Accepted Answer

A) True 
 B)False

Question 5

By using a matrix initially to match a service category with a type of costing system,managers and management accountants are able to refine the design of the system to suit the requirements of their organisation.

Accepted Answer

A) True 
 B)False

Question 6

When does output-cost cross-subsidisation commonly occur?
_____________________________________________________________________________________________
____________________________________________________________________________________________

Accepted Answer

The answer of When does output-cost cross-subsidisation commonly occur?
_____________________________________________________________________________________________
____________________________________________________________________________________________...

Question 7

Managers use a process-costing system when the cost object is a distinct output called a job.

Accepted Answer

A) True 
 B)False

Question 8

If you identify as many direct costs as is economically feasible,this ____________ the amount of costs classified as indirect.

Accepted Answer

A) increases 
B) reduces 
C) doesn't affect 
D) eliminates

Question 9

Bondi Hospital uses a job-costing system for all patients who have surgery.In March,the pre-operating room (PRE-OP)and operating room (OR)had budgeted allocation bases of 4000 nursing hours and 2000 nursing hours,respectively.The budgeted nursing overhead charges for each department for the month were $168 000 and $132 000,respectively.The hospital floor for surgery patients had budgeted overhead costs of $1 200 000 and 15 000 nursing hours for the month.For patient Fred Adams,actual hours incurred were eight and four hours,respectively,in the PRE-OP and OR rooms.He was in the hospital for 4 days (96 hours).Other costs related to Adams were:
 $\begin{array}{|c|c|c|c|}
\hline & \text { PRE-OP } & \text { OR } & \text { In-room } \
\hline & \text { Costs } & \underline{\text { Costs }} & \text { Costs } \
\hline \text { Patient medicine } & \$ 200 & \$ 500 & \$ 2400 \
\hline \text { Direct nursing time } & \$ 1000 & \$ 2000 & \$ 3000 \
\hline
\end{array}$ 
The hospital uses a budgeted overhead rate for applying overhead to patient stays.
Required:
What is the total cost of the stay of patient Fred Adams?
_____________________________________________________________________________________________
____________________________________________________________________________________________

Accepted Answer

The answer of Bondi Hospital uses a job-costing system for...

Question 10

An operation is a standardised method or technique performed repetitively,often on different materials,resulting in different finished goods.

Accepted Answer

A) True 
 B)False

Question 11

Used labour capacity,the amount of productive capacity available over and above that used to meet consumer demand in the current period.

Accepted Answer

A) True 
 B)False

Question 12

Managers use a job-costing system when the output comprises many homogenous (identical or almost identical)units.

Accepted Answer

A) True 
 B)False

Question 13

In a homogeneous resource-cost pool,all of the costs have the same or a similar _________________ relationship with a single cost driver.

Accepted Answer

A) cause-and-effect 
B) inverse 
C) positive 
D) negative

Question 14

_______________ cross-subsidisation means that if management under-costs one of its outputs,then it will over-cost at least one of its other outputs.

Accepted Answer

A) Input-cost 
B) Output-price 
C) Output-cost 
D) Input-price

Question 15

Why might a costing system that has worked reasonably well in the past might no longer do so?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Why might a costing system that has...

Question 16

What can choices among costing systems significantly affect?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of What can choices among costing systems significantly...

Question 17

What is under-costing?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of What is under-costing?
_____________________________________________________________________________________________
_____________________________________________________________________________________________...

Question 18

Many managers believe that calculating the indirect cost rate ________________ provides a more representative and reasonable way to assign indirect costs to jobs.

Accepted Answer

A) monthly 
B) biweekly 
C) daily 
D) annually

Question 19

The budgeted cost-driver rate measures actual capacity utilisation.

Accepted Answer

A) True 
 B)False

Question 20

When the job continues across accounting periods,costs remain in work in process until the job has been completed.

Accepted Answer

A) True 
 B)False

Exam 5: Estimating the Cost of Producing Services

A resource-cost driver is used to allocate costs from an activity-cost pool to a cost object.

A _______________ driver is used to allocate costs from a resource-cost pool to activity-cost pools.

A cost driver is a grouping of individual indirect cost items that have the same cost driver.

A major difference between job costing and process costing is the extent of averaging used to calculate the unit costs of products or services.

By using a matrix initially to match a service category with a type of costing system,managers and management accountants are able to refine the design of the system to suit the requirements of their organisation.

When does output-cost cross-subsidisation commonly occur? _

Managers use a process-costing system when the cost object is a distinct output called a job.

If you identify as many direct costs as is economically feasible,this ____________ the amount of costs classified as indirect.

An operation is a standardised method or technique performed repetitively,often on different materials,resulting in different finished goods.

Used labour capacity,the amount of productive capacity available over and above that used to meet consumer demand in the current period.

Managers use a job-costing system when the output comprises many homogenous (identical or almost identical)units.

In a homogeneous resource-cost pool,all of the costs have the same or a similar _________________ relationship with a single cost driver.

_______________ cross-subsidisation means that if management under-costs one of its outputs,then it will over-cost at least one of its other outputs.

Why might a costing system that has worked reasonably well in the past might no longer do so? _ _

What can choices among costing systems significantly affect? _ _

What is under-costing? _ _

Many managers believe that calculating the indirect cost rate ________________ provides a more representative and reasonable way to assign indirect costs to jobs.

The budgeted cost-driver rate measures actual capacity utilisation.

When the job continues across accounting periods,costs remain in work in process until the job has been completed.

Exam 5: Estimating the Cost of Producing Services

A resource-cost driver is used to allocate costs from an activity-cost pool to a cost object.

A _______________ driver is used to allocate costs from a resource-cost pool to activity-cost pools.

A cost driver is a grouping of individual indirect cost items that have the same cost driver.

A major difference between job costing and process costing is the extent of averaging used to calculate the unit costs of products or services.

By using a matrix initially to match a service category with a type of costing system,managers and management accountants are able to refine the design of the system to suit the requirements of their organisation.

When does output-cost cross-subsidisation commonly occur? _____________________________________________________________________________________________ ____________________________________________________________________________________________

Managers use a process-costing system when the cost object is a distinct output called a job.

If you identify as many direct costs as is economically feasible,this ____________ the amount of costs classified as indirect.

An operation is a standardised method or technique performed repetitively,often on different materials,resulting in different finished goods.

Used labour capacity,the amount of productive capacity available over and above that used to meet consumer demand in the current period.

Managers use a job-costing system when the output comprises many homogenous (identical or almost identical)units.

In a homogeneous resource-cost pool,all of the costs have the same or a similar _________________ relationship with a single cost driver.

_______________ cross-subsidisation means that if management under-costs one of its outputs,then it will over-cost at least one of its other outputs.

Why might a costing system that has worked reasonably well in the past might no longer do so? _____________________________________________________________________________________________ _____________________________________________________________________________________________

What can choices among costing systems significantly affect? _____________________________________________________________________________________________ _____________________________________________________________________________________________

What is under-costing? _____________________________________________________________________________________________ _____________________________________________________________________________________________

Many managers believe that calculating the indirect cost rate ________________ provides a more representative and reasonable way to assign indirect costs to jobs.

The budgeted cost-driver rate measures actual capacity utilisation.

When the job continues across accounting periods,costs remain in work in process until the job has been completed.

When does output-cost cross-subsidisation commonly occur? _

Why might a costing system that has worked reasonably well in the past might no longer do so? _ _

What can choices among costing systems significantly affect? _ _

What is under-costing? _ _