Quiz
ACC 102 Final Review
Questions in this quiz (100)
1Product costs for a manufacturing company consists of direct materials, direct labor and overhead
- ATrue
- BFalse
2Period cost and product cost are synonymous terms.
- ATrue
- BFalse
3For a manufactured product, all costs are incurred to get the product ready for sale are included in the inventory value of the product.
- ATrue
- BFalse
4Period costs are not considered when costing products for inventory.
- ATrue
- BFalse
5The two primary types of cost behavior are fixed and variable.
- ATrue
- BFalse
6Direct materials are the only materials in a product.
- ATrue
- BFalse
7Wages of machine operators and other workers involved in actually shaping the product are classified as direct labor costs.
- ATrue
- BFalse
8(Direct Materials + Direct Labor + Overhead) / Total Number of Units Produced = Product Unit Cost
- ATrue
- BFalse
9At the end of an accounting period, the balance in the Finished Goods Inventory account is made up of the costs of products completed but not sold as of that d ate.
- ATrue
- BFalse
10Under activity-based costing (ABC), a product's unit cost may include assigned overhead from several cost pools
- ATrue
- BFalse
11Which of the following is not included in the purchase cost of merchandise inventory?
- Apurchase discounts
- Boverhead costs
- Cfreight-in costs
- Dpurchase returns and allowances
12An example of a period cost is
- Aadvertising costs
- Bindirect materials
- Cproduct design costs
- Ddirect materials
13Which of the following is a typical example of a variable cost?
- Asales commissions
- Brent
- Cdepreciation
- Dsalaries
14Materials and supplies that cannot be traced conveniently to specific products are called
- Aindirect materials
- Braw materials
- Cminor materials
- Ddirect materials
15When a company calculates its product unit cost using estimated costs, it is using which cost measurement method?
- Astandard costing
- Bactual costing
- Cfull costing
- Dnormal costing
16Maintenance on factory building
- A(OH) Overhead
- B(DL) Direct Labor
- C(DM) Direct Materials
17Cream
- A(DL) Direct Labor
- B(OH) Overhead
- C(DM) Direct Materials
18In a process costing system, each product is assigned is the assigned the same amount of costs.
- ATrue
- BFalse
19Companies that produce custom-made products usually use a process costing system.
- ATrue
- BFalse
20The typical product costing system in a factory incorporates parts of both job order costing and process costing to create a hybrid system.
- ATrue
- BFalse
21In a job order costing system, when the goods are sold, the Cost of Goods Sold account is increased, and the Finished Goods Inventory account is decreased for the selling price of the goods sold.
- ATrue
- BFalse
22A zero balance in Finished Goods Inventory at the start of the period means all previously completed products have shipped
- ATrue
- BFalse
23In a job order costing system, indirect labor costs are transferred to the Overhead account by increasing the Factory payroll account and decreasing the Overhead account.
- ATrue
- BFalse
24In a job order costing system, when supplies are issued from inventory to production, the Overhead account is increased.
- ATrue
- BFalse
25In a job order costing system, indirect labor costs incurred are charged to the Work in Process Inventory account.
- ATrue
- BFalse
26To prepare financial statements at the end of the accounting period, the actual overhead cost for the period and the estimated overhead that was applied during the period must be reconciled in both job order and process costing systems.
- ATrue
- BFalse
27If applied overhead exceeds actual overhead, cost of good sold must be reduced by the amount of the overcharge in a job costing system.
- ATrue
- BFalse
28Job costing and process costing are systems of
- Ainventory costing
- Bcost flow assumptions
- Cproduct costing
- Dproduct pricing
29Product costs appear on the income statement in the form of
- Acost of goods sold
- Bmaterial inventory
- Csales commissions
- Dnone of these
30A company should use process costing rather than job order costing if
- Aproduction is only partially completed during the accounting period
- Bthe produce is produced in bathes only as orders are received
- Cthe product is composted of mass-produced homogenous units
- Dthe product goes through several stages of production
31Which of the following characteristics applies to process costing, but does not apply to job order costing?
- Athe need for averaging
- Bthe use of equivalent units
- Cseparate, identifiable jobs
- Dthe use of predetermined overhead rates
32The basic document for keeping track of costs in a job order costing system is a
- Ajob order cost card
- Blabor time card
- Cprocess cost report
- Dmaterials requisition form
33Cost behavior is defined as the manner in which cost respond to changes in volume or activity.
- ATrue
- BFalse
34Total variable and fixed costs will be the same regardless of how many units are produced.
- ATrue
- BFalse
35Fixed costs always remain constant.
- ATrue
- BFalse
36Normal capacity is the average annual level of operating capacity needed to meet expected sales demand, adjusted for seasonal changes and industry and economic cycles.
- ATrue
- BFalse
37Regression analysis can be performed using one or more activities to predict costs.
- ATrue
- BFalse
38Cost-volume profit analysis assumes a constant sales mix.
- ATrue
- BFalse
39The contribution margin equals total fixed costs at the breakeven point.
- ATrue
- BFalse
40If revenue was $120,000,000, variable costs were $90,000,000, and fixed costs were $15,000,000, then the contribution margin ratio was 25%.
- ATrue
- BFalse
41If targeted sales are 12,000 units, the sales price/unit is $70, fixed costs are #130,000, and variable costs are $40/unit, then planned profit must be $230,000.
- ATrue
- BFalse
42For profit planning purposes, the following equation is used: Target Sales Units = (FC + P) divided by CM per Unit.
- ATrue
- BFalse
43Which of the following statements most accurately explains the behavior of costs?
- Athere is no norm; rather costs can be fixed, variable or a combination of both
- Bthe majority of costs are variable per unit of production
- Cthe majority of costs are fixed per unit of production
- Dcosts can be fixed or variable, but usually not a combination of both
44An insurance company pays its employees a commission of 6% on each sale. What is the proper classification of the cost of sales commissions?
- Aconstant cost
- Bvariable cost
- Cmixed cost
- Dfixed cost
45Suppose a company rents a building for $250,000/year for the purpose of manufacturing between 80,000 and 140,000 units (the relevant range of activity). The rental cost per unit of production will __________________ as production levels increase.
- Abehave in a nonlinear fashion
- Bincrease
- Cdecrease
- Dremain fixed
46When fixed costs are $18,000 and the contribution margin per unit is $4, the breakeven point is
- A4,500 units
- B2,230 units
- C$22,300
- D$72,000
47If the contribution margin on a new product line is $15, fixed costs are $165,000, and the total market for the product is 22,000 units, then the breakeven analysis would recommend that the company.
- Aabandon the new product line
- Bdecrease the sales price per unit
- Cincrease the fixed costs (such as advertising) to lower the breakeven units
- Dadopt the new product line
48Identify the following as fixed costs (FC), variable costs (VC), or mixed costs (MC):
Direct Materials- AFC
- BVC
- CMC
49Identify the following as fixed costs (FC), variable costs (VC), or mixed costs (MC):
Electricity- AFC
- BVC
- CMC
50Identify the following as fixed costs (FC), variable costs (VC), or mixed costs (MC):
Factory building rent- AFC
- BVC
- CMC
51Identify the following as fixed costs (FC), variable costs (VC), or mixed costs (MC):
Advertising Expense- AFC
- BVC
- CMC
52Identify the following as fixed costs (FC), variable costs (VC), or mixed costs (MC):
Shipping Expense- AFC
- BVC
- CMC
53Identify the following as fixed costs (FC), variable costs (VC), or mixed costs (MC):
Insurance on the factory building- AFC
- BVC
- CMC
54Identify the following as fixed costs (FC), variable costs (VC), or mixed costs (MC):
Costs of Good Sold- AFC
- BVC
- CMC
55A performance management and evaluation system is mainly utilized to account for and report on financial performance.
- ATrue
- BFalse
56A performance management and evaluation system allows a company to identify how well it is doing, where it is going, and what improvements will make it more profitable.
- ATrue
- BFalse
57A responsibility center whose manager is held accountable for both revenues and costs and for the resulting operating income is called a profit center.
- ATrue
- BFalse
58A flexible budget is derived by multiplying actual unit output by the standard unit costs.
- ATrue
- BFalse
59When calculating ROI, assets invested represent the average of the beginning and ending asset balances for a given period.
- ATrue
- BFalse
60How effective a performance management and evaluation system is depends on how well the goals of the entire compare coordinated rather than on how well the goals of responsibility centers, managers, and the entire organizations will be well coordinated.
- ATrue
- BFalse
61Tying compensation incentives to performance targets decreases the likelihood that the goals of responsibility centers, managers, and the entire organization will be well coordinated.
- ATrue
- BFalse
62Incentive awards are utilized mainly to encourage long-term performance.
- ATrue
- BFalse
63A manager can improve the economic value of an investment center by decreasing assets.
- ATrue
- BFalse
64Cost of capital is the maximum desired rate of return on a particular investment.
- ATrue
- BFalse
65A performance management and evaluation system is a set of procedure that account for and report on
- Aqualitative performance
- Bquantitative performance
- Cemployee performance
- Dqualitative and quantitative performance
66Which of the following is an example of a performance measurement?
- Aproduct quality
- Bnumber of customer complaints
- Ccustomer satisfaction
- Dall of these choices
67The manager of Center A is responsible for generating cash inflows and incurring costs with the goal of making money for the company. The manager has no responsibility for assets. What type of responsibility center is Center A.
- Acost center
- Bdiscretionary cost center
- Cprofit center
- Drevenue center
68In developing performance measures, management must consider which of the following?
- Ahow should we measure?
- Bhow can managers monitor financial performance?
- Cwhat should we measure?
- Dall of these choices.
69Budgeting is the process of identifying, gathering, summarizing, and communicating financial and nonfinancial information about an organization's future activities.
- ATrue
- BFalse
70A budget can contain nonfinancial information.
- ATrue
- BFalse
71Participating budgeting involves only personnel at top levels of the organization.
- ATrue
- BFalse
72The short-term plan or budget involves every part of the enterprise and is much more detailed than the long-term plan.
- ATrue
- BFalse
73Projected financial statements are the final product of the budgeting process.
- ATrue
- BFalse
74Operating budgets are plans used in daily operations.
- ATrue
- BFalse
75The direct materials purchases budget reflect both the quantity and cost of direct materials purchases.
- ATrue
- BFalse
76The overhead budget must be separate into variable and fixed cost segments.
- ATrue
- BFalse
77The direct labor budget is needed to prepare the production budget.
- ATrue
- BFalse
78A company seeks to have as much cash as possible on hand. Cash budgeting helps to accomplish this.
- ATrue
- BFalse
79A company seeks to have as much cash as possible on hand. Cash budgeting helps to accomplish this.
- ATrue
- BFalse
80A company seeks to have as much cash as possible on hand. Cash budgeting helps to accomplish this.
- ATrue
- BFalse
81Budgets
- Ashould contain both revenues and expenses
- Bcontain as much information as possible
- Care presented in dollars only; nondollar data should be excluded
- Dare synonymous with managing an organization
82Which type of budgeting utilizes employes at all levels of the company?
- Agroup budgeting
- Bselective budgeting
- Ctarget budgeting
- Dparticipative budgeting
83A master budget is a compilation of forecasts for the coming year or operating cycle by various departments or functions within an organization. What is the most basic forecast made in a master budget?
- Asales forecast
- Bproduction forecast
- Clabor forecast
- Dmaterials forecast
84A master budget is a compilation of forecasts for the coming year or operating cycle by various departments or functions within an organization. What is the most basic forecast made in a master budget?
- Asales forecast
- Bproduction forecast
- Clabor forecast
- Dmaterials forecast
85The first budget to be prepared when making a master budget is the
- Asales budget
- Bproduction budget
- Ccash budget
- Ddirect labor budget
86Which of the following would most likely be considered a short-term goal?
- Amodernization and expansion of the plant
- Ba product line change
- Ca unit sales forecast
- Da marketing plan to gain a higher percentage of control of the market in five years.
87Once standard costs for direct materials, direct labor and variable and fixed overhead have been developed, a total standard unit cost can be determined over time.
- ATrue
- BFalse
88Variance analysis involves computing the difference between standard and actual costs.
- ATrue
- BFalse
89The final step in variance analysis is determining the cause of the variance.
- ATrue
- BFalse
90The flexible budget formula is an equation that determines unexpected costs at any level of output.
- ATrue
- BFalse
91The "flex" in the flexible budget formula occurs in the variable cost segment.
- ATrue
- BFalse
92Another name for a flexible budget is a variable budget.
- ATrue
- BFalse
93Comparing "what did happen" with "what should have happened" aids in the performance evaluation of a company.
- ATrue
- BFalse
94A production manager usually is responsible for direct material used and direct labor hours used.
- ATrue
- BFalse
95It is not necessary to provide an area on the performance report for a manager's reasons for variances.
- ATrue
- BFalse
96Variance analysis includes all of the following except:
- Ataking corrective action
- Binvestigating all variances
- Cdeveloping performance measures to track activities causing the variance
- Didentification of the cause
97A summary of expected costs for a range of activity levels that is geared to changes in the level of productive output is the definition of a
- Acontinuous budget
- Bflexible budget
- Cmaster budget
- Dperiod budget
98The primary difference between a fixed (static) budget and a flexible budget is that a fixed budget
- Acannot be change after the period begins, whereas a flexible budget can be changed after the period ends
- Bis concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales.
- Cis a plan for a simple level of production, whereas a flexible budget is several plans (one for each of several production levels)
- Dincludes only fixed costs, whereas a flexible budget includes only variable costs
99If a company's flexible budget formula is $9.50 per unit plus $68,550, what would be the total budget for evaluating operating performance if 23,850 units were sold and 28,460 units were produced.
- A$295,125
- B$338,920
- C$309,985
- D$226,575
100A flexible budget is most useful
- Afor budgeting and planning purposes
- Bwhen actual output equals budget output
- Cas a cost control tool to help evaluate performance
- Dwhen a product's cost structure includes variable costs only
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