COST ACCt Final Exam Review
39) In an investment responsibility center, the manager is only responsible for costs.
39) In an (Cost) responsibility center, the manager is only responsible for costs.
10) A mix variance is created whenever the actual mix of inputs is equal to the standard mix. COST ACCOUNTING ©H. LIN
10) A mix variance is created whenever the actual mix of inputs is (DIFFERENT FROM) the standard mix. COST ACCOUNTING ©H. LIN
11) A yield variance occurs when the actual output is the same as the standard output.
11) A yield variance occurs when the actual output is (NOT) the same as the standard output.
13) A responsibility center is a part of a business whose workers are accountable for specified activities.
13) A responsibility center is a part of a business whose (MANAGERS) are accountable for specified activities.
16) Margin is the ratio of sales to operating income. COST ACCOUNTING ©H. LIN
16) Margin is the ratio of (OPERATING INCOME to SALES). COST ACCOUNTING ©H. LIN
18) Goal congruence means that the goals of managers are aligned with the goals of the division.
18) Goal congruence means that the goals of managers are aligned with the goals of the (FIRM).
21) One disadvantage of ROI in evaluating performance is that it encourages managers to slack off.
21) One advantage of ROI in evaluating performance is that it (does not)encourages managers to slack off.
22) CPV analysis is a short-run decision-making tool because some production costs are fixed.
22) Cvp analysis is a short-run decision-making tool because some production costs are fixed.
23) Firms encourage goal congruence by constructing management early retirement programs.
23) Firms discourage goal congruence by constructing management early retirement programs.
24) The minimum transfer price is the absolute maximum price that can be accepted.
24) The minimum transfer price is the absolute (minimum) price that can be accepted.
25) A transfer price is the price charged by one division of a company to another company.
25) A transfer price is the price charged by one division of a company to another (division).
27) The break-even point is the point where total fixed costs equal sales revenues.
27) The break-even point is the point where total fixed costs equal (Contribution Margin).
29) Units to earn target profit equal to total fixed costs plus target profit divided by the contribution margin ratio.
29) (Sales) to earn target profit equal to total fixed costs plus target profit divided by the contribution margin (per unit)
3) The standard cost sheet shows costs needed to make many units of output.
3) The standard cost sheet shows costs needed to make (ONE UNIT) of output.
31) The transfer price is cost to the selling division and revenue to the buying division.
31) The transfer price is (Revenue) to the selling division and (cost) to the buying division.
32) Increased sales of high contribution margin products increase the break-even point.
32) Increased sales of high contribution margin products Decrease the break-even point.
33) The cost-volume-profit graph portrays the relationship between profits and sales volume. COST ACCOUNTING ©H. LIN
33) The cost-volume-profit graph portrays the relationship between (costs) and sales volume. COST ACCOUNTING ©H. LIN
35)When only one binding constraint exists, the product with the smallest contribution margin will be focused on.
35)When only one binding constraint exists, the product with the (largest) contribution margin will be focused on.
37)Standard costing is used in process industries because it is more difficult to utilize.
37)Standard costing is used in Mix yield because it is more difficult to utilize.
38) Unfavorable variances occur whenever actual prices or usage are less than standard prices or usage, and the opposite for a favorable variance.
38) (favorable) variances occur whenever actual prices or usage are less than standard prices or usage, and the opposite for a (unfavorable) variance.
6) Price standards specify amounts and quantity standards specify prices.
6) Price standards specify (PRICES) and quantity standards specify(AMOUNTS.)
9) The operating leverage shows how far the company's actual sales or units are from the break-even point.
9) The MARGIN OF SAFETY shows how far the company's actual sales or units are from the break-even point.
12) Responsibility accounting is a system that measures the results of each responsibility center and compares those results with some expected or budgeted outcome.
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14) Decentralization is the practice of delegating decision-making authority to the lower levels of management.
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15) Return on investment refers to earnings before interest and income taxes.
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17) Economic value added is after-tax operating income minus the total annual cost of capital.
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19) The direct materials usage variance is the sum of the actual quantities and the standard quantities of units.
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2) Standard costs are the amount that should be spent to produce a product or service.
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20) Decentralization stimulates competition among the divisions of a firm.
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26) Cost-volume-profit analysis focuses on the break-even point and the impact of changes in fixed costs and price. COST ACCOUNTING ©H. LIN
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28) The break-even point is the point where total costs equal sales revenues.
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30) Cognitive limitations mean it is difficult for central managers to be fully knowledgeable about all products and markets.
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34)Firms face limited resources and limited demand for their products called constraints.
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36)Developing standards for input prices and quantities allows for a more detailed understanding of flexible budget variances.
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4) The unit quantity standards can be used to compute the total amount of inputs allowed for the actual output.
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40) In a CVP graph, the intersection of the total costs line and the total sales revenue line is the break-even point in units.
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5) The direct materials price variance is the difference between actual and standard pricing. COST ACCOUNTING ©H. LIN COST ACCOUNTING ©H. LIN
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8) The variable overhead efficiency variance measures the change in variable overhead consumption due to efficient or inefficient use of the activity driver used to assign overhead costs to products.
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The total budget variances are categorized into price variances and usage variance.
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7) All variance accounts are closed out at the end of the year.
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