Cost Acct Quiz 5-7

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In general, accounting records accumulate cost information to its behavior (ie variable and fixed)

F

The engineering method of determining cost behavior is particularly useful for totally new activities or products.

T

The relevant range represents those activity levels for which valid cost relationships have been observed.

T

A scattergraph is useful for identifying outliers/irrelevant data points.

T

The quality of the cost equation depends on collecting appropriate data.

T

A manager is trying to estimate the manufacturing costs of a new product. The company makes several other products that utilize some of the same manufacturing procedures as the new product. Which cost estimate method would be the best method to determine the total cost of manufacturing the new product?
A Engineering estimates
B Regression analysis
C Account Analysis
D Scattergraph
E High-low

`

In the cost equation TC=F+VX, X is best described as the:
A costs that do not vary with changes in the activity level.
B costs that do vary with changes in the activity level.
C total cost estimate at a particular activity level.
D activity level used to estimate the total cost

D

In the cost equation TC+F+VX, V is best described as:
A costs that do not vary with changes in the activity level.
B intercept of the cost equation
C slope of the cost equation
D activity level used to estimate the dependent variable

C

Which of the following cost estimation methods finds the variable portion of a mixed cost before calculating the fixed portion?
A Scattergraph
B High-Low
C Account analysis
D Linear regression
E engineering approach

B

A disadvantage of the high-low method of cost analysis is that it:
A typically results in totally inaccurate cost formula
B is too time consuming to apply
C uses only two data points, which may not be representative of normal conditions
D relies totally on the judgement of the person performing the cost analysis

C

In the standard regression equation of y=a+bx, the letter a is best described as the:
A independent variable
B dependent variable
C slope of the equation
D intercept of the equation

D

In determining cost behavior in business, the cost function is often expressed as Y= a+bX. Which on the the following cost estimate methods should NOT be used in estimating fixed and variable costs for the equation?
A Scattergraph method
B Simple regression
C High-Low point method
D Multiple regression
E Management analysis of data

E (D ok)

Which of the following is the difference between variable costs and fixed costs?
A variable costs per unity fluctuate and fixed CPU remain constant
B variable CPU are fixed over the relevant range and fixed CPU are variable
C Total variable costs are variable over the relevant range and fixed in the long term, while fixed costs never change
D Variable CPU change in varying increments, while fixed CPU change in equal units
E total variable costs can be varied by mgnt, while fixed costs are uncontrollable

B

Which of the following is NOT a data problem an analyst must watch for when estimating cost behavior?
A missing data
B Outliers
C Allocated Costs
D Depreciable Assets

D

In the standard regression equation of y=a+bx, the letter y is best described at the:
A independent variable
B dependent variable
C slope of the equation
D intercept of the equation

B

In general, indirect costs are allocated, while direct costs are assigned.

T

One of the most common decisions facing managers is determining the price at which to sell one of their product or provide services.

T

Individual product costs are relevant for managerial decision-making but irrelevant for preparing the financial statements.

F

The term "product" often refers to an organization's output and includes both tangible items (eg chair, desk) and intangible items ( services provided)

T

All cost allocations of common costs have a certain degree of arbitrariness to them is, common costs by nature, are allocated to cost objects on a somewhat arbitrary basis.

T

"beginning Balance" plus Transfers Out + ending balance + Transfers In

F

Companies that manufacture paint are more likely to use batch production methods than job-costing production methods.

T

Service companies are more likely to use job-order costing methods than batch production costing methods.

T

Which of the following statements is (are) true regarding product costing?
A individual product costs are relevant for managerial decision-making but irrelevant for preparing the financial statements
B A common decision facing managers is determining the price at which to sell their product or provide their services.
A only A is true
B only B is true
C Both A and B are true
D neither A nor B is true

B

Which of the following statements are false regarding cost allocations and product costing?
A It is easier to determine the individual product cost for a manufacturer than it is for a wholesaler
B In general, indirect costs are assigned, while direct costs are allocated.
A only A is false
B Only B is false
C Both A and B are false
D neither A nor B is false

C

The Cost Flow Diagram includes all of the following except:
A Selling expenses
B DM
C DL
D FMOH
E VMOH

A

The basix cost flow model is:
A BB+TO=TI+EB
B BB+TO-TI=EB
C EB=BB+TI-TO
D EB-BB=TO-TI
E EB+TI-TO=BB

C

When a manufacturing company has a highly automated manufacturing plant producing many different products, what is probably the most appropriate basis of applying OH costs to WIP?
A DL hours
B DL $
C Maching H
D Cost of materials

C

In a labor intensive company in which more OH is used by more highly skilled and paid ees, which activity base would be most appropriate for applying OH to production?
A DL$
B DM$
C DLH
D MH
E Sales value of the product produced

A

Cost pools are:
A costs that are accumulated before being allocated to cost objects on some common basis
B costs that are relevant to decision making but irrelevant to financial reporting
C product costs that are assigned to cost objects using DL or MH
D accounts in the product life cycle from research and development to customer service

A (on test)

A job is a cost object that can only be easily and conveniently distinguished from other cost objects

T

The sum of the balances in a set of subsidiary accounts = the balance of the corresponding control account

T

Job shops have three types of inventory accounts: FG, WIP and materials

T

The cost in the ending FG inventory account consists of DM, DL, MOH of all jobs still in process at the end of the period.

F

The cost of the indirect material purchased during the period is debited to the materials inventory account

F (T)

In general, MOH costs are allocated to specific jobs based on a relatively arbitrary allocation base:

T

MOH is only recorded on the job cost sheets when (a) financial statements are prepared or (b) a job is complete

T

For which of the following businesses would the job order cost system be appropriate?
A auto repair shop
B crude oil refinery
C drug manufacturer
D beer distillery

A

Which of the following is not a characteristic of job costing?
A Each job is distinguishable from the other jobs
B Identical units are produced on an ongoing basis
C Job cost data are used for setting prices and bids
D It is possible to compare actual costs with estimated costs

B

Which of the following companies would most likely use job costing?
A paper manufacturer
B paint producer
C breakfast cereal maker
D advertising agency

D

The journal entry to record the completion of a job in a job order costing system is:
A WIP - D
Material - C

B Material - D
Purchased - C

C COGS - D
FG - C

D FG -D
WIP - C

E Purchases - D
COGS - C

D (on test)

The journal entry to record requisitions of material for new jobs started during the period is:
A WIP - D
Material - C
B Material - D
Purchased - C

C COGS - D
FG - C

D FG -D
WIP - C

E Purchases - D
COGS - C

A

Which of the following documents is used as a basis for posting to the DM section of the job cost sheet?
A Purchase requisition
B material req
C Receiving report
D Purchase order
E Time Card

B

Which of the following documents is used as the basis for posting to the DL section of the job cost sheet?
A Purchase requisition
B material req
C Receiving report
D Purchase order
E Time Card

E

Which of the following accounts is used to accumulate the actual MOH costs incurred during a period?
A Applied MOH
B WIP
C MOH Control
D COGS
E FG

C

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