A cost driver is a variable that causes costs.
It is important that the manager assigned to lead a responsibility center be held accountable for its operations.
Budgeting is primarily used to determine year-end bonuses based on managerial and organizational performance.
Cost information used for one managerial deciasion could be irrelevant for another managerial decision.
Which of the following activities would not be considered a value-added activity?
E. Customer Service
Differential costs are:
A. The difference in total costs that resule form selecting one choice instead of another.
B.The profit forgone by selecting one choice instead of another.
C. A cost that continues to be incurred in the absence of activity.
D. A cost common to all choices in questions and not clearly allocable to any of them.
A cost can either be an asset for an expense.
An opportunity cost is the benefit forgone by selecting one alternative over another alternative.
Labor costs are traditionally the largenst cost category for service organizations.
Which of the following accounts would be a period cost rather than a product cost?
A. Depreciation on manufacturing machinery
B. Maintenance on factory machines
C. Production manager's salary
D. Direct Labor
For a manufacturing company, which of the following is an example of a period rather than a production cost?
A. Wages of salespersons
B. Salaries of machine operators
C. Insurance on factory equipemnt
D. Depreciation of factory equipment
XYZ COmpany manufacturers a single product. The product's prime costs consist of:
A. DL and DM
B. DM and FOH
C. DL and FOH
D. DM, DL and FOH
E. DM, DL and vairable FOH
A. include only the prime costs of manufacturing a product
B. include only the convertsion costs of providing a service
C. exclude fixed manufacturing costs
D. are regarded as assets until the units are sold
E. are regarded as expenses whren costs are incurred
Direct materials issued to production is found by:
A. Subtracting ending WIP for total WIP during the period
B. Adding beginning DMI and the delivered cost of DM
C. Subtracting ending DMI form DM available for production
D. Adding delivered costs of materials, labor and MOH
E. Subtracting purchase discounts and pirchases returns and allowances from purchases of DM plus freight-in.
The term "gross margin" for a manufacturing firm refers to the excess of sales over;
A. COGS, excluding fixed indirect manufacturing costs
B. all variable costs, including variable marketing and admin costs
C. COGS, iincluding fixed indirect manufacturing costs
D. variable costs, excluding variable markeing and admin costs
E. fixed infirect manufacturing costs
CVP analysis assumes that the production volume equals sales volume so that any changes in unit prices can be ignored.
Operating profit is the unit CM multiplied by the number of units minus the fixed component of the cost.
Profit = CM unit X - F
The break-even point in sales dollars is fixed cost divided by the MC ration.
Which of the following whould not cause the break-even point to change?
A. Sales price increases
B. Fixed costs decreases
C. Sales volume decreases
D. Variable costs per unit increases
E. Product mix shifts towards the cheaper products
If the fixed costs for a product decrease and the variable costs (as a percentage of sales dollars) decrease, what will be the effect on the MC ratio and the break-even point repectively?
A. D UP
B. UP D
C. D D
D. UP UP
Breakeven analysis assumes that over the relevant range:
A. Total Fixed Costs are nonlinear
B. Total Costs are unchanged
C. Unit variable Costs are unchanged
D. Unit Revenues are nonlinear
If there is only one alternative course of action and the status quo is unacceptable, then there is really no decision to make.
Differential analysis cannot be used for long-run decision because it cannot incorporate the timing of revenues and costs (ie Time value of money)
When deciding whether or not to accept a special order, a decision maker should focus on differential costs instead of full costs.
Target costs = the difference between the target selling price and the desired profit margin.
In the short-run, plant capacity is fixed and product choises have to be made that optimize the use of the available capacity.
The relevance of a particular cost to a decision is determined by the;
A. riskiness of the decision
B. number of decision variables
C. amount of the cost
D. potential effect on the decision
E. accuracy of the cost
Which of the following costs are irrelevant for a special order that will allow an organization to utilize some of its present idle capacity?
D. Unavoidable FOH
E. Differential sales commission
Which of the following statements about the theory of constraints are true?
A. The theory fo constraints focuses on determining the optimal product mix when one or more resources restrict the attainment of a goal or objective.
B. The theory fo constraints focuses on maximizing the rate of throughbut contribution while minimizing investment and other operating costs.
C. None of the above
D. Both A and B
The time from initial R&D to the time that support ends is the:
A. product life cycle
B. short run
C. target time
D. predatory price