Cost Acct Quiz 11,13,16

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The human resources department in a manufacturing company would be considered a service department.

T

It is possible for a service department to be a final cost center in a merchandising organization.

F

One reason to allocate service department costs to user departments is to encourage the user departments to monitor the service department costs.

T

The direct method allocates costs directly to intermediate cost centers, ignoring final cost centers.

F

An organization with two service departments, but only one user department, does not need to allocate its service department costs.

T

Once an allocation is made from a service department using the direct method, no further allocations are made back to that department.

T

Service departments costs are
A. generally treated as period costs rather than product costs
B. reported as selling and admin expenses on the income statement
C. eventually applied by the user depart to the units produced.
D. seldom found in manufacturing orgs.

C

A managements purpose for allocating joint costs of a processing center to the various products produced is:
A. established inventory values for unsold units
B. record accurate cost of sales by product line
C. compute total processing cost variances by product
D. report correct standard product costs for comparative analysis

A

Which of the following service depts would use space occupied (square footage) to allocate its costs to user departs?
A. materials handling
B. Cafeteria
C. Custodial Services
D. Cost Accounting
E. Engineering

C

Which of the following departments is not a service dept in a typical manufacturing company?
A. Assembly
B. Accounting
C. HR
D. info processing

A

Criteria for selecting allocation bases should not include:
A. direct, traceable benefits from service
B. the extent of facilities provided
C. the ease of making the allocation
D. sales dollars generated during the period

D

Which of the following cost items is not allocatable as join costs when a single manufacturing process produces several main products and several by-products?
A. DM
B. VOH
C. DL
D. FOH
E. Freight-out

E

For purposes of allocating joint costs to joint products, the net realizable value at split-off is equal to
A. final sales price reduced by cost to complete after split-off
B. sales price less a normal profit margin at the point of sale
C. separable product cost plus a normal profit margin
D. total sales value less joint costs at point of split-off

A

Which of the following is not a physical measure that can be used for allocating joint costs using the physical quantities method.
A. Tons of steel
B ounces of gold
C Dollars of labor
D Feet of lumber

C

Products with a relatively minor sales value are called
A. scrap
B. spoilage
C. by-products
D. main products

C

A budget is a plan, stated in financial terms, of how an organization expects to carry out its activities and meet its goals.

T

A master budget consists of (a) organizational goals, (b) strategic long-range profit plan, and (c) tactical short-term profit plan

T

Most master budgets are prepared in the month immediately proceeding the budget year.

F

Sales projections are often the most difficult part of budgeting process because it involves a considerable amount of subjectivity.

T

The production budget allows management to plan for the resources needed to meet the current sales demand and ensure that inventory levels are sufficient for future sales.

T

The required production (units) is equal to the budgeted sales (units) plus the units in the ending inventory less the units in the beginning inventory.

T

The production budget must be prepared before the DM, DL and OH budget can be prepared.

T

Long-range planning as a management function is more important
A. at top management
B. at lower management
C. at middle management
D. for staff functions than line functions
E. for line functions than staff functions

A

A static budget
A. drops the current month or quarter and adds a future month or quarter as the current month or quarter is completed.
B. presents a statement of expectations for a period of time but does not present a firm commitment.
C. presents the plan for only one level of activity and does not adjust for changes in activity levels.
D. presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels.
E. divides the activities of individual responsibility centers into a series of packages which are ranked ordinally.

C

A continuous (rolling) budget
A. drops the current month or quarter and adds a future month or quarter as the current month or quarter is completed.
B. presents a statement of expectations for a period of time but does not present a firm commitment.
C. presents the plan for only one level of activity and does not adjust for changes in activity levels.
D. presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels.
E. divides the activities of individual responsibility centers into a series of packages which are ranked ordinally.

A

In general, the first budget prepared is the
A. production budget
B. DL budget
C. sales budget
D. OH budget
E. capital expenditures budget

C

The forecasting method in which individual forecasts of group members are submitted anonymously and evaluated by the group as a whole is called
A. trend analysis
B. econometric models
C. Delphi Technique
D. regression analysis

C

Which one of the following budgets would be the last one prepared in the master budget preparation process?
A. MOH budget
B. COGS budget
C. Marketing cost budget
D. DL budget
E. Cash budget

E

Which of the following types of accounts would not be included on a budgeted balance sheet?
A. cash
B. assets
C. liabilities
D. OE
E. revenues

E

Which of the following budgets is not required in wholesale org?
A. cash
B. sales
C. production
D. COGS
E. marketing and admin expenses

C

Variances are the difference between actual results and budgeted results.

T

A favorable variance always implies that actual results exceeded budgeted results.

F

In general, and holding all other things constant, an unfavorable variance decreases operating profit.

T

The terms "master budget" and "flexible budget" mean the same thing and can be used interchangeably.

F

The decomposition of the operating profit variance into revenue and cost variance provides additional information for control and decision making.

T

The slope of the flexible budget line is the variable cost unit.

T

If the actual total costs are above the flexible budget-line, then the total cost variance is unfavorable.

T

Variance analysis is more useful for cost centers than for revenue centers.

F

In general, the terms favorable and unfavorable are used to describe the effect of variance on:
A. net income
B. sales revenue
C. production costs
D. operating expense
E. balance sheet

A

Which of the following variances will always be favorable when actual sales exceeds budgets sales.
A. variable cost
B. fixed cost
C. sales revenue
D. operating profit
E. CM

C

The intercept of the flexible budget-line is total
A. sales
B. VC
C. FC
D. CM
E. assets

C

When using a flexible budget, what will happen to fixed costs on a per-unit basis as production increases within the relevant range?
A. Decrease
B. Increase
C. Remain unchanged
D. Fixed costs are not considered in flexible budgeting

A

When using a flexible budget, what will happen to variable costs on a per-unit basis as production increases within the relevant range?
A. Decrease
B. Increase
C. Remain unchanged
D. fixed costs are not considered in flexible budgeting

C

If the total materials variance for a given operation is favorable, why must this variance be further evaluated to price and usage?
A. There is no need to further evaluate the total if it is favorable
B. GAAP require that all variances be analyzed in three stages
C. All variances must appear in the annual report
D. A further evaluation lets management evaluate the efficiency of the purchasing and production functions.

D

If a company uses POHR for allocating OH costs, the production volume variance is the
A. underapplied or overapplied variable cost element OH
B. underapplied or overapplied fixed cost element of OH
C. difference in budgeted costs and actual costs of fixed OH items
D. difference in budgeted costs and actual costs of variable OH costs

B

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