Cost Acct Quiz 8-10

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The equivalent unit concept refers to the actual amount of work during the period stated in terms of the work required to complete an equal number of whole units.

T

The number of units in the beginning WIP Inventory plus the units transferred out during the period equals the number of units started during the period plus the number of units in the ending WIP Inventory.

F

If materials are only added at the beginning of the production process, then the degree of completion for the materials in the ending WIP is always 100%

T

In the Weighted-average approach, the number of physical units transferred out cannot be greater than the equivalent number of units produced during the period.

T

FIFO process costing transfers out the costs in the beginning inventory before transferring out the costs associated with units started and completed.

T

If the beginning WIP inventory is zero, FIFO and weighted-average process costing will assign the same amount to the units transferred out.

T

The degree of completion associated with prior department costs is always 100%.

T

Which of the following statements is (are) true regarding product costing?
A. 20 cans of paint that are 25% full are equivalent to 4 cans of paint that are completely full.
B. The equivalent unit concept refers to the actual amount of work during the period stated in terms of whole units.
a. only A
b. only B
c. Both a and b
D None

B

Which of the following organizations would most likely use a process costing system?
A. gasoline refinery
B. Auto retailer
C. Airplane manufacturer
D. Public accounting

A

Of the following process costing steps, which must be done last?
A. Compute the EU of production
B. Compute the cost per EU of production
C. Measure the physical flow of resources
D. Identify the product costs to account for.

B

If the units in the beginning WIP inventory are greater that the units in the ending WIP inventory, then the units transferred out are:
A. more than the units started during the period
B. equal to the EU of production
C. less than the units started during the period
D. equal to the actual work done during the period

A

Iin order to compute EU of production using FIFO method of process costing, work for the period must be broken down to units.
A. completed during the period and units in ending inventory
B. Started during the period and units transferred out during the period.
C. Completed from the BI, started and completed during the month, and units in EI
D. processed during the period and units completed during the period.

C

Which of the following statements is (are) true?
I. for cost control, the FIFO method of process costing is better then the weighted-average method.
II. The weighted-average method of process costing assigns more cost to units completed (TO) than FIFO.
A. I only
B II only
C Both i and II
D none

A

Operations costing systems are used when the products have:
A. used standardized method that is repeatedly performed.
B. common characteristics and no individual characteristics
C. individual characteristics and no common characteristics
D. some common characteristics and some individual characteristics

D

POHR can be used in all of the following systems except:
A. job costing
B. process costing
C. operations costing
D actual costing

D

9- Applied MOH for product costing purposes may lead to inappropriate managerial decisions because s single cost driver is used as the allocation base.

T

ABC is a second-stage allocation system that (I) allocates cost activities and (2) then products based on their activities

T

The best cost drivers are activities that are causally related to the costs being allocated.

T

The first-stage allocations in ABC allocates costs to departments using appropriate cost drivers.

F

ABC provides more detailed measures of costs than do plant wide or departments allocations methods.

T

ABC can be applied to administrative activities (eg purchasing) but not to marketing activities.

F

Which of the following statements is (are) true regarding the potential effects of using reported product costs for decisions making?
A. Traditional product costing (eg job and process costing) are designed primarily to accumulate cost information for financial reporting
B. Applied MOH for product costing purposes may lead to inappropriate managerial decisions because a single cost driver is used as the allocation base.
a. only A
b. only B
c. both A and B
d. none

C

ABC is a costing technique that uses a two stage allocation process. Which of the following statements best describes these two stages?
A. The costs are assigned to activities, and then to the products based upon their use of the activities
B. The costs are assigned to departments, and then to the products based upon their use fo activity resources.
C. Service department costs are allocated to the production departments, and then to the products based upon their use of the activities.
D. Indirect costs are assigned to activities, and then to the products based upon the direct cost resources used by the activities.

A

Which of the following statements are true?
A. One of the lessons learned from ABC is that all costs are really a function of volume.
B. The primary purpose of the plant wide and department allocations methods is allocating direct costs to specific products.
C. A problem with ABC is that it requires more record keeping than other methods.
D. Service department allocations are required for the plant wide and department allocations methods.

C

Cost pools are used with:
Plant wide rates (PWR)
Department Rates (DR)
A PWR not DR
B Not PWR yes DR
C Not PWR or DR
D Both

D

The electricity used for computerized machinery would be classified as a(n)
A. volume related activity
B. batch related activity
C product related activity
D facility related activity

A

Which of the following measures is used by traditional costing systems as an allocation base for allocating OH costs to the units produced?
A. volume related activity
B. batch related activity
C product related activity
D facility related activity

A

Which of the following measures is used by ABC systems as an allocation base for allocating OH costs to the units produced?
A. volume related activity
B. batch related activity
C product related activity
D facility related activity
E. AOTA

E

Which one of the following accounts is not used in an ABC system?
A. materials inventory
B. WIP inventory
C. FG Inventory
D OH Applied
E Allocation Incurred

E

Companies using ABC have learned that costs are a function of:
A. volume and activities
B. time and complexities
C. volume and time
D. resources and time
E. volume and resources.

A

10- ABC Management uses the information provided by ABC to identify ways to improve operations.

T

one lesson learned form companies that have implemented an ABC system is it has always provided more benefits than its cost.

F

In general, the capacity-level costs in ABC system are variable costs.

F

Managerial decisions based on ABC information affect only volume-level, batch-lever, and product-level costs.

F

When developing and ABC system, the identification of appropriate cost drivers follows a detailed analysis involved in producing a product or providing a service.

T

The cost driver rate is computed by dividing the total cost per activity by the estimated number of units.

F

Which of the following activities is most likely to be classified as value-added for a manufacturing company?
A. storing
B. ordering
C. inspecting
D. assembling

D

Which of the following items would not be used as the cost driver for a volume level cost in an ABC management system?
A. DLH
B. MH
C. Units produced
D. square footage

D

ABC information cannot be used my managerial decision makers to evaluate the ;
A. profitability of a customer
B. market potential of a product
C. cost of using a particular supplier
D. whether to continue providing a service

B

The unused resources capacity is the difference between the resources supplied and the resources:
A. purchased
B. wasted
C. used
D. on hand

C

The amount of resources in and ABC system for a specific activity is computed by multiplying the:
A. cost driver and the actual cost driver volume
B. cost driver and the planned cost driver volume
C. OH rate and the actual driver volume
D. OH rate and the planned cost driver volume

A

The amount of production possible under normal working conditions, including planned downtime and scheduled vacations is called:
A. actual capacity
B. normal capacity
C. practical capacity
D. theoretical capacity

C

Which of the following in an example of a prevention cost?
A. machine inspection
B. warranty inspections
C. Field testing
D. marketing costs

A

Which of the following items is included in almost all quality control systems?
A. Quality related waiting time
B. Quality planning and analysis
C. Excess or obsolete inventory
D. Quality related OT

B

In and ABC system, cost reduction is accomplished by identifying and eliminated;
All Cost drivers (DC)
Nonvalue-added activities (NVA)
A. no DC no NVA
B. DC and NVA
C. no DC yes NVA
D. yes DC no NVA

C

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