An Introduction To Cost Terms And Purposes

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Questions Bank

The Manager and Management Accounting
An Introduction to Cost Terms and Purposes
Cost-Volume-Profit Analysis
Job Costing
Activity-Based Costing and Activity-Based Management
Master Budget and Responsibility Accounting
Flexible Budgets, Direct-Cost Variances, and Management Control
Flexible Budgets, Overhead Cost Variances, and Management Control
Inventory Costing and Capacity Analysis
Determining How Costs Behave
Decision Making and Relevant Information
Strategy, Balanced Scorecard, and Strategic Profitability Analysis
Pricing Decisions and Cost Management
Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis
Allocation of Support-Department Costs, Common Costs, and Revenues
Cost Allocation: Joint Products and Byproducts
Process Costing
Spoilage, Rework, and Scrap
Balanced Scorecard: Quality and Time
Inventory Management, Just-in-Time, and Simplified Costing Methods
Capital Budgeting and Cost Analysis
Management Control Systems, Transfer Pricing, and Multinational Considerations
Performance Measurement, Compensation, and Multinational Considerations

All Questions

Question 1

Free

Multiple Choice

Which of the following would be considered an actual cost of a current period?

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The $25 of materials in a manufactured chair that is ready to be shipped to the customer

The $22 of direct material cost per unit assumed in the actual budget of a manufacturer of chairs

The expected cost of materials for a chair as a result of engineering specifications

The average of historical material cost data for a chair manufactured in several past accounting periods

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Question 2

Free

Multiple Choice

The collection of cost data in an organized way, such as in various categories such as materials, labor, and manufacturing overhead, is called:

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cost application

cost accumulation

cost assignment

cost reporting

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Question 3

Free

Multiple Choice

Budgeted costs are ________ .

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the costs incurred this year

the costs incurred last year

planned or expected costs

competitor's costs

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Question 4

Free

Multiple Choice

Cost assignment ________ .

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includes future and arbitrary costs

associates accumulated costs with certain cost objects

is the same as cost accumulation

is the difference between budgeted and actual costs

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Question 5

Free

Multiple Choice

A cost system determines the cost of a cost object by ________ .

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accumulating and then assigning costs

accumulating costs

assigning and then accumulating costs

assigning costs

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Question 6

True/False

A cost object is anything for which a cost measurement is desired.

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True

False

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Question 7

True/False

Costs are accounted for in two basic stages: assignment followed by accumulation.

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True

False

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Question 8

True/False

An actual cost is the cost incurred-a historical or past cost.

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True

False

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Question 9

True/False

Accountants define a cost as the amount of money spent on a resource.

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True

False

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Question 10

True/False

A cost is a resource sacrificed or forgone to achieve a specific objective.

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True

False

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Question 11

True/False

Managers use assigned cost information to make decisions and implement them.

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True

False

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Question 12

Essay

Lucas Manufacturing has three cost objects that it uses to accumulate costs for its manufacturing plants. They are:
Cost object #1:The physical buildings and equipment
Cost object #2:The use of buildings and equipment
Cost object #3:The availability and use of manufacturing labor
The following manufacturing overhead cost categories are found in the accounting records:
a.Depreciation on buildings and equipment
b.Lubricants for machines
c.Property insurance
d.Supervisors salaries
e.Fringe benefits
f.Property taxes
g.Utilities
Required:
Assign each of the above costs to the most appropriate cost object.

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Question 13

Multiple Choice

Which of the following factors affect the direct/indirect classification of a cost?

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the level of budgeted profit for the next year

the estimation of time required to complete the order

the ability to execute an order in the most cost-efficient manner

the design where a particular area is dedicated to a specific cost object

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Question 14

Multiple Choice

All of the following are factors affecting direct versus indirect cost classification except:

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materiality of the cost

cost accuracy

information technology's ability to trace costs in an economically feasible way

design of operations

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Question 15

Multiple Choice

When costs can be traced to a particular cost object in an economically feasible way, the cost is a:

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direct cost

indirect cost

allocated cost

budgeted cost

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Question 16

Multiple Choice

Which of the following statements about the direct/indirect cost classification is true?

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Indirect costs are always traced.

Indirect costs are always allocated.

The design of sales target affects the direct/indirect classification.

The direct/indirect classification depends on the cost control measures.

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Question 17

Multiple Choice

Cost tracing is ________ .

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the assignment of direct costs to the chosen cost object

a function of cost allocation

the process of tracking both direct and indirect costs associated with a cost object

the process of determining the actual cost of the cost object

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Question 18

Multiple Choice

Cost allocation is ________ .

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the process of tracking both direct and indirect costs associated with a cost object

the process of determining the opportunity cost of a cost object chosen

the assignment of indirect costs to the chosen cost object

made based on material acquisition document

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Question 19

Multiple Choice

The determination of a cost as either direct or indirect depends upon the ________ .

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accounting standards

tax system chosen

inventory valuation

cost object chosen

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Question 20

Multiple Choice

Classifying a cost as either direct or indirect depends upon ________ .

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the behavior of the cost in response to volume changes

whether the cost is expensed in the period in which it is incurred

whether the cost can be traced to a particular cost object in an economically feasible way

whether a cost is fixed or variable

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