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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