Cost Accounting Exam 1

A resource sacrificed to bring benefit in the current period, leaving no remaining future benefit is a(n) A. Expense B. Expenditure C. Revenue D. Cost

A

The relationship between a company's revenues, costs, volume of sales, and consequently profit, is called... A. cost-volume-profit (CVP) analysis. B. sensitivity analysis. C. margin of safety analysis. D. data analysis.

A

Which of the following costs does not impact decision-making for a business? A. Sunk Cost B. Variable Cost C. Product Cost D. Opportunity Cost

A

A mixed cost... A. changes inversely with changes in volume. B. includes both a variable cost and a fixed cost component. C. can be fixed one period and then, change to variable in a subsequent period. D. is omitted from CVP analysis since it does not fit either a fixed or variable category.

B

An increase in production levels within a relevant range most likely would result in... A. Decreasing the total fixed cost. B. Increasing the total cost. C. Increasing the variable cost per unit. D. Decreasing the variable cost per unit.

B

Bulldozer 30% of total sales Unit contribution margin of $40 Crane 50% of total sales Unit contribution margin of $45 Dump truck 20% of total sales Unit contribution margin of $50 Based on this information, what is the weighted-average contribution margin per unit (WACM)? A. $47.50 B. $44.50 C. $43.00 D. $47.50

B

Fred's break-even point for his "Fred's Fantastic" (FF) sport drink is 19000 bottles per year. Fred thinks the market for his FF drink is closer to 15000 bottles per year. Therefore, Fred would like to reduce his break-even point. Fred should A. increase his variable costs. B. decrease his variable costs. C. increase his fixed costs. D. decrease his selling price.

B

January. 3800. $11320 April. 3100. $9745 High-low method: (High cost - Low cost) / (High activity - Low activity) A. $2.42 B. $2.25 C. $2.47 D. $2.60

B

The fixed portion of the cost equation is called the... A. t statistic. B. Intercept coefficient. C. p value. D. standard deviation.

B

The margin of safety is equal to the amount that current or budgeted sales levels exceed which one of the following? A. Fixed costs B. Break-even sales C. Net income D. Operating profit

B

The primary difference in reporting between cost accounting and financial accounting is that... A. cost accounting reports are externally focused whereas financial accounting reports are internally focused. B. cost accounting reports support internal management decision-making whereas financial accounting reports present financial statement information to external users and decision-makers who do not work for the company. C. cost accounting reports are subject to GAAP and/or IFRS whereas financial accounting reports are not. D. cost accounting reports cannot be arranged or presented in any reasonable way and cannot be modified based on manager's feedback whereas financial accounting reports can.

B

To break even is to generate enough in sales revenue to cover... A. fixed and variable costs with a small profit left over. B. fixed and variable costs with no profit. C. variable costs only. D. fixed costs only.

B

Which of the following costs reported in the financial statements would uniquely identify the business entity as a manufacturer? A. Cost of Goods Sold B. Work-in-process inventory C. Rent Expense D. Merchandise Inventory

B

Which of the following is considered to be a risk of the high-low method? A. Requires judgment B. Outliers C. The relevant range D. Requires software to handle all the data points

B

Conversion costs are equal to... A. direct materials + direct labor + manufacturing overhead. B. direct materials + direct labor. C. direct labor + manufacturing overhead. D. direct materials + manufacturing overhead.

C

Given the following CVP Graph, what does the point labeled "Break even" indicate for this company? A. Net income B. Net Loss C. Break-even point D. Total Revenues = Total variable costs

C

Pharoah Retailers reports the following information at the end of the current year: Sales Revenue. $451000 Cost of Goods Sold. 217400 Selling Expenses. 56200 General and Administrative Expenses 47500 Merchandise Inventory 95800 Cash. 125700 Accounts Receivable. 22200 Supplies. 4600 What is Pharoah's net income at year-end? A. $147900 B. $177400 C. $129900 D. $233600

C

Product costs consist of... A. direct materials and direct labor only. B. direct materials, direct labor, and general and administrative expenses. C. direct materials, direct labor, and manufacturing overhead. D. direct materials, direct labor, and selling expenses.

C

Total fixed costs are $24000. The selling price per unit is $10, while variable costs per unit are $6. Break even in units is... A. 1500. B. 4000. C. 6000. D. 8000.

C

When working with multiple products and a sales mix, information required to determine the overall break-even point includes which of the following? A. Target operating profit. B. Target net income. C. Weighted-average contribution margin. D. Selling and administrative expenses.

C

Which of the following costs would decrease if production levels were increased within the relevant range? A. Variable cost per unit. B. Total variable costs. C. Fixed costs per unit. D. Total fixed costs.

C

A cost driver is a(n)... A. rate used to assign costs. B. system that tracks prior costs. C. group of accumulated costs. D. activity that causes a particular cost.

D

Contribution margin is defined as revenue less A. all costs. B. fixed costs. C. cost of goods sold. D. variable costs.

D

Oriole Corp. had the following financial information at the end of its first month of operations: Revenues. $91800 Payroll and related expenses. $27540 Rent expense 17300 Utilities expense 3000 Advertising expense 2100 Total Operating Expenses 49940 Profit. $41860 In performing vertical analysis, the payroll and related expenses would be expressed as A. 55% B. 100% C. 70% D. 30%

D

Prime costs are defined as... A. direct materials + manufacturing overhead. B. direct materials + direct labor + manufacturing overhead. C. direct labor + manufacturing overhead. D. direct materials + direct labor.

D

The regression method ... A. uses the same methodology as the high-low method. B. uses only two actual data points to estimate a cost line. C. can estimate a cost line but cannot separate total costs into variable and fixed costs. D. uses every point in a data set to create a straight-line equation to estimate future costs.

D

Visualizing data on a scatter-plot... A. presents a plot of the expected data points. B. requires the selection of the highest and lowest data points. C. results in a single cost equation line. D. allows the user to see actual data points.

D

Which of the following is NOT correct concerning the account analysis method? A. It requires insight of the nature of the costs. B. It is scalable. C. It requires that mixed costs be separated into their variable and fixed components. D. It uses estimated costs to predict future costs.

D

Which of the following statements about cost accounting is correct? A. Cost Accounting is very narrow in scope. B. Cost Accounting cannot be tied to all functional areas of a company. C. Cost Accounting has an external focus. D. Cost accounting helps owners and managers make decisions about their companies.

D

Which of the following statements regarding break-even analysis is accurate? A. Break-even analysis is often used in identifying areas where costs can be reduced or eliminated to help increase profit. B. Break-even analysis will help a company to determine profit at various levels of sales and costs. C. Once break even in units is determined, the break-even dollars can be calculated by multiplying the break-even units by the variable costs per unit. D. Break-even analysis will help determine the sales volume point after which a company will begin to earn a profit.

D