Cost accounting

) Which of the following statements is true of absorption costing? A) Absorption costing allocates fixed manufacturing overhead to actual units produced during the period. B) Absorption costing carries over nonmanufacturing costs to the future periods. C) Absorption costing shows the same level of profit as variable costing irrespective of the level of inventories. D) Absorption costing allocates total manufacturing cost using the budgeted level of production for a particular year.

Absorption costing allocates fixed manufacturing overhead to actual units produced during the period.

The flexible budget contains ________. A) budgeted amounts for actual output B) budgeted amounts for planned output C) actual costs for actual output D) actual costs for planned output

A- budgeted amounts of actual output

Which of the following elements are used in calculating revenue in a flexible budget? A) budgeted selling price and actual quantity of output B) actual selling price and budgeted quantity of output C) budgeted selling price and budgeted quantity of output D) actual selling price and actual quantity of output

A- budgeted selling price and actual quantity of output

Which of the following is true of flexible budget? A) It calculates total variable cost by multiplying actual units by budgeted variable cost per unit. B) It calculates total fixed cost by multiplying actual units by budgeted fixed cost per unit. C) It calculates revenues by multiplying budgeted units by actual selling price per unit. D) It calculates contribution margin by multiplying budgeted units by actual contribution margin per unit.

A- it calculates total variable cost by multiplying actual units by budgeted variable cost per unit

An unfavorable flexible-budget variance for variable costs may be the result of ________. A) using more input quantities than were budgeted B) paying lower prices for inputs than were budgeted C) selling output at a higher selling price than budgeted D) selling less quantity compared to the budgeted

A-using more input quantities than were budgeted

the cost to be predicted is referred to as the ___

B) dependent variable

Which of the following costs is inventoried when using variable costing? A) rent on factory building B) electricity consumed in manufacturing process C) sales commission paid on each sale D) advertising costs incurred for the product

B) electricity consumed in manufacturing process

)If manufacturing machines are breaking down more than expected, this will contribute to a(n) ________. A.favorable direct manufacturing labor efficiency variance B.unfavorable direct manufacturing labor price variance C.favorable direct manufacturing labor price variance D.unfavorable direct manufacturing labor efficiency variance

D) unfavorable direct manufacturing labor efficiency variance

1)Which of the following is typically constructed first? A = Production budget B = Direct materials costs budget C = Budgeted income statement D = Sales (Revenues) budget

D-Sales (Revenues) budget

Which of the following statements shows a difference between simple regression and multiple regression? A) Simple regression uses more than one dependent and independent variables, whereas multiple regression uses only one dependent and independent variable. B) Simple regression uses only the independent variables, whereas multiple regression uses only dependent variables. C) Simple regression uses only one dependent and one independent variable, whereas multiple regression uses one dependent and more than one independent variable. D) Simple regression uses only one dependent variable and more than one independent variables, whereas multiple regression uses more than one dependent variable and only one independent variable.

Simple regression uses only one dependent and one independent variable, whereas multiple regression uses one dependent and more than one independent variable.

5)Which of the following items will be same for a flexible budget and a master budget? A) total variable cost B) total fixed costs C) total contribution margin D) total revenues

B- total fixed costs

A favorable efficiency variance for direct manufacturing labor indicates that ________. A) a lower wage rate than planned was paid for direct labor B) a higher wage rate than planned was paid for direct labor C) less direct manufacturing labor-hours were used during production than planned for actual output D) more direct manufacturing labor-hours were used during production than planned for actual output

C) less direct manufacturing labor-hours were used during production than planned for actual output

What is the key difference between a static budget and a flexible budget?

a static budget is based on the level of output at the beginning of the period; a flexible budget is based on the actual output level in the budget period

Total finished units to be produced is based on the___

budgeted sales unit

Budgeted production equals_______

budgeted unit sales + targeted ending finished goods inventory - beginning finished goods inventory

Sensitivity analysis helps managers evaluate risks ____

by showing the effects of changes to the original data or an underlying assumption

Which cost estimation method may use time-and-motion studies to analyze the relationship between inputs and outputs in physical terms? A) the accrual accounting method B) the high-low method C) the industrial engineering method D) the cash accounting method

c) the industrial engineering method

Which of the following is true of absorption costing? A) It enables a manager to decrease margins and operating income by producing more beginning inventory. B) It enables a manager to increase margins and operating income by producing more beginning inventory. C) It enables a manager to decrease margins and operating income by producing more ending inventory. D) It enables a manager to increase margins and operating income by producing more ending inventory.

d) in enables a manger to increase margins and operating income by producing more ending inventory

When using the high-low method, the numerator of the equation that determines the slope is the ________. A) difference between the positive and negative values of dependent and independent variables B) difference between the fixed cost and variable cost associated with the cost driver C) difference between the high and low observations of the cost driver D) difference between the costs associated with highest and lowest observations of the cost driver

difference between the cost associated with the highest and lowest observations of the cost driver

best labor for formula (AQ-BQ)BP

efficiency variance

true or false all other things being equal, the longer the time horizon the more likely a cost will be fixed

false

True of false: it can be inferred that when there is a high correlation btwn two variables, one is the cause of the other

false~ It cannot be inferred that a high correlation between two variables indicates that one is the cause of the other. A high correlation simply indicates that the variables move together

The only difference between variable and absorption costing is the expensing of ________.

fixed manufacturing costs

A flexible budget ___

is developed at the end of the period

In the estimation of a cost function using quantitative analysis, the independent variable ________. A) is the cost to be predicted B) is the product of fixed costs and slope coefficient C) is the factor used to predict the dependent variable D) is the product of total costs and slope coefficient

is the factor used to predict the dependent variable

Goodness-of-fit measures how well the predicted values in a cost estimating equation ________.

match the actual cost observations

regression analysis____

measures the average amount of change in the dependent variable associated with a unit change in one or more independent variables

If the unit level of inventory increases during an accounting period, then ________. A) less operating income will be reported under absorption costing than variable costing B) more operating income will be reported under absorption costing than variable costing C) operating income will be the same under absorption costing and variable costing D) the exact effect on operating income cannot be determined

more operating income will be reported under absorption costing than variable costing

the best label for the formula (AP-BP)AQ

price variance

The flexible- budget variance for direct cost inputs can be further subdivided into a____

price variance and efficiency variance

The slope of the line of regression is the ________.

rate at which the dependent variable varies

Which of the following costs will be treated as period costs under absorption costing? A) raw materials used in the production B) sales commission paid on sale of product C) depreciation on factory equipment D) rent for factory building

sales commission paid on sale of product

One possible means of determining the difference between operating incomes for absorption costing and variable costing is by ________. A) subtracting sales of the previous period from sales of this period B) subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory C) multiplying the number of units produced by the budgeted fixed manufacturing cost rate D) adding fixed manufacturing costs to the production-volume variance

subtracting fixed manufacturing overhead in beginning inventory from fixed manufacturing overhead in ending inventory

) Many companies have switched from absorption costing to variable costing for internal reporting ________.

to reduce the undesirable incentive to build up inventories

true or false For any actual level of output, the efficiency variance is the difference between actual quantity of input used and the budgeted quantity of input allowed to produce actual output, multiplied by the budgeted price.

true

true or false The flexible-budget variance is the total of price variance and efficiency variance.

true

true or false The price variance is the difference between the actual price and the budgeted price of the input, multiplied by the actual quantity of input.

true

a favorable price variance for direct manufacturing labor might indicate that____

under skilled employees are being hired

) ________ is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs and all fixed manufacturing costs are excluded. A) Variable costing B) Mixed costing C) Absorption costing D) Standard costing

variable costing

Which of the following can be a reason for a favorable price variance for direct materials? A) a decrease in the price of materials due to an oversupply of materials B) an unexpected increase in the price of materials C) less amount of material used during production than planned for actual output D) workers taking less time to produce the products

A) a decrease in the price of materials due to an oversupply of materials

Bob has prepared the following flexible budget for . F = favorable variance, U = unfavorable variance. Flexible Variances Budget Price Efficiency Material A $40,000 $1,000F $3,000U Material B 60,000 500U 1,500F Direct manufacturing labor 80,000 500U 2,500F The most likely explanation of the above variances for Material A is that ________. A) a lower price than expected was paid for Material A B) higher-quality raw materials were used than were planned C) the company used a higher-priced supplier D) Material A used during September was $2,000 less than expected Answer: A

A) a lower price than expected was paid for material A

Why might managers find a flexible-budget analysis more informative than a static-budget analysis? A. The flexible budget is the hypothetical budget that is prepared at the start of the budget period. Managers use this budget as a goal for the period. B.A flexible budget is based on the level of output planned at the start of the budget period. It is developed around a single planned output level. C. A flexible-budget analysis enables a manager to distinguish how much of the difference between an actual result and a budgeted amount is due to (a) the difference between actual and budgeted output levels, and (b) the difference between actual and budgeted selling prices, variable costs, and fixed costs. D. None of the above.

C) a flexible-budget analysis enables a manager to distinguish how much of the difference between an actual result and a budgeted amount is due to (a) the difference between actual and budgeted output levels, and (b) the difference between actual and budgeted selling prices, variable costs, and fixed costs. D. Non

Select some possible reasons for an unfavorable direct manufacturing labor efficiency variance. A. Poor maintenance of machines resulting in a high proportion of non-value-added labor. B. Hiring and use of underskilled workers. C. Inefficient scheduling of work so that the workforce was not optimally occupied. D.All of the above.

D) all of the above

What is the key difference between a static budget and a flexible budget? A.A static budget is based on the level of output at the beginning of the period; a flexible budget is based on the actual output level in the budget period. B.A static budget is based on the level of output at the beginning of the period; a flexible budget is based on the actual unit prices in the budget period. C.A flexible budget is based on the level of output at the beginning of the period; a static budget is based on the actual output level in the budget period. D.None of the above.

a) a static budget is based on the level of output at the beginning of the period and a flexible budget is based on the actual output level in the budget period

________ is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs.

absorption costing

The gross-margin format is used for ________.

absorption costing income statement

a price variance reflects the difference between__

an actual input price and a budgeted input price

An efficiency variance reflects the difference between__

an actual input quantity and a budgeted input quantity

All individual cost items included in the dependent variable should have ________. A) a different cost driver B) an independent relationship with the independent variable C) an economically plausible relationship with the cost driver D) a heterogeneous cost pool

an economically plausible relationship with the cost driver