1. (TCO 1) A difference between actual costs and planned costs (Points : 4)

should be investigated if the amount is exceptional.

indicates that the planned cost was poorly estimated.

indicates that the manager is doing a poor job.

should be ignored unless it involves the cost of ingredients.

2. (TCO 1) Which of the following is not likely to be a fixed cost? (Points : 4)

Direct materials



Salary of the human resources director

3. (TCO 2) Which of the following is a manufacturing cost? (Points : 4)

Direct material

Advertising expense

Depreciation of the office equipment used by the sales staff

Salary of the company president

4. (TCO 2) A job-order costing system is likely used by a (Points : 4)

soft drink bottler

breakfast cereal manufacturer

paint manufacturer

custom home builder

5. (TCO 3) Why is it necessary to compute equivalent units separately for materials and conversion costs? (Points : 4)

Mistakes are made in the accounting for these costs

Materials and conversion enter the production process at different rates

Conversion costs are more difficult to estimate

None of the above reasons are true

6. (TCO 3) In the assembly department, all the direct materials are added at the beginning of the processing. Beginning Work in Process inventory consists of 2,000 units with a direct materials cost of $31,860. During the period, 15,000 units are started and direct materials costing $250,000 are charged to the department. If there are 1,000 units in ending inventory, what is the cost per equivalent unit? (Points : 4)





7. (TCO 4) The range of activity for which estimates of cost behavior are likely to be accurate is the (Points : 4)

incremental range

margin of safety

relevant range

range of opportunity

8. (TCO 4) The contribution margin per unit is the difference between (Points : 4)

total revenue and total fixed costs

selling price and variable costs per unit

anticipated level of sales and break-even sales

budgeted fixed costs and actual fixed costs

9. (TCO 5) Which of the following is treated as a product cost in full costing? (Points : 4)

Sales commissions

Administrative salaries

Factory supervisor

Security at corporate headquarters

10. (TCO 5) When the number of units sold is equal to the number of units produced, net income using full costing will be (Points : 4)

greater than net income under variable costing

equal to net income using variable costing

less than income using variable costing

none of the above

11. (TCO 6) A contract which specifies that the suppler will be paid for the cost of production as well as some fixed amount or percentage of cost is called a(n) (Points : 4)

approved overrun.

cost-plus contract.

allocation plan.

indirect cost budget.

12. (TCO 6) The traditional approach to cost allocation (Points : 4)

tends to over-cost high volume core products.

usually requires more cost pools than ABC.

attempts to identify the activities that cause costs.

produces more accurate costs than any other method.

13. (TCO 7) Which of the following is not a term used to describe the additional costs incurred as a result of selecting one decision over another? (Points : 4)

Differential costs

Sunk costs

Relevant costs

Incremental costs

1. (TCO 7) Two or more products that result from common inputs are called (Points : 4)

split products

joint products

combination products

common products

2. (TCO 8) Activity based pricing seeks to (Points : 4)

charge customers with the costs they are creating.

make greater profits by charging all customers more.

maintain all customers in the customer base.

all of the above.

3. (TCO 8) When deciding to accept or reject a special order, which of the following costs would most likely not be relevant? (Points : 4)

The wages of direct labor to make the order.

Depreciation on the machinery used to make the order.

The raw material used to make the order.

The electricity used to run the machine to make the order.

4. (TCO 9) The required rate of return used to compute net present value is related to the firm’s (Points : 4)

contribution margin.

depreciation methods.

fixed costs.

cost of capital.

5. (TCO 9) Projects with a negative present value will always have a(n) (Points : 4)

payback period longer than three years.

internal rate of return less than the required rate of return.

negative accounting rate of return.

series of cash outflows that total more than the initial cost of the project.

6. (TCO 10) In a bottom-up approach to budgeting (Points : 4)

the CFO alone determines the budget.

only the budget for the next month is prepared.

lower level managers are the primary source of budget information.

the production budget is prepared before the sales budget.

7. (TCO 10) Which budget is prepared first? (Points : 4)

Cash disbursement budget

Production budget

Capital budget

Sales budget

8. (TCO 10) The difference between standard costs and budgeted costs is that standard costs (Points : 4)

refer to a single unit while budgeted costs refer to the cost, at standard, for the total number of budgeted units.

are calculated under ideal conditions, while budgeted costs are calculated for attainable conditions.

are calculated for material while budgeted costs are calculated for labor.

are part of the management accounting system, while budgets are part of the financial accounting system.

9. (TCO 10) Which of the following are components of a direct labor variance? (Points : 4)

Rate and efficiency

Attainable and ideal

Price and quantity

Volume and controllable

10. (TCO 10) The type of center that has responsibility for generating revenue as well as controlling costs is a(n) (Points : 4)

investment center.

cost center.

business center.

profit center.

11. (TCO 10) Which of the following is not an advantage of decentralization for a company? (Points : 4)

Subunit managers have better information.

Subunit managers will act to benefit the organization as a whole.

Subunit managers can respond quicker to changing circumstances.

Subunit managers can receive training to move into top level management positions.

12. (TCO 10) Which ratio measures the rate earned on total capital provided by the owners? (Points : 4)

Return on assets

Return on stockholders’ equity

Earnings per share

Price earnings ratio