Cost Acct Practice Exam

In a traditional cost management system, cost behavior is assumed to be driven only by

Unit based cost drivers.

The most precise of the three methods of cost assignment is direct tracing since it relies on observable causal relationships.

True

A number of cost behavior patterns do not follow a linear pattern, instead, they follow a nonlinear cost curve called the learning curve.

True

Companies operating in job-order industries produce a variety of products or jobs that are quite different from each other.

True

Activity-based responsibility accounting assigns responsibility to processes and uses only nonfinancial measures of performance.

False

Activity-based management attempts to

- Identify and eliminate all unnecessary activities. - Increase the efficiency of necessary activities. - Add new activities that increase value.

If applied overhead is lesser than actual overhead, it is called overapplied overhead

False

Mannitou Company made the following predictions for 2018: Factory overhead costs $300,000 Direct labor hours 50,000 hours Machine hours 100,000 hours Job A2 (which was started and completed in June) used 3,000 direct labor hours, 2,000 machine hours, and $57,000 of prime costs. If factory overhead is applied based on machine hours, the cost of Job A2 for the Mannitou Company is

300,000/100,000 = $3 57,000+2,000(3)= 63,000

Zercox Corporation uses a predetermined rate to apply overhead. At the beginning of the year, Zercox estimated its overhead costs at $380,000, direct labor hours at 55,000, and machine hours at 25,000. Actual overhead costs incurred were $350,000, actual direct labor hours were 56,000, and actual machine hours were 26,000. What is Zercox's predetermined overhead rate per machine hour? (Round the answer to two decimal places.)

380,000/25,000 = $15.20

17. The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5: Direct materials placed into production $4,000 Direct labor hours worked 50 hours Direct labor hour rate per hour $15 Machine hours worked 100 hours Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units. What is the materials cost per unit for Job XY5?

4,000/50= 80

The following information is provided by Zinger Corporation for the year: Actual direct labor hours worked 75,000 Budgeted overhead $450,000 Budgeted direct labor hours 50,000 Actual overhead costs incurred $550,000 If normal costing is used, the amount of overhead applied for the year is:

450,000/50,000 = $9 9*75000 = $675,000

The Allen Company has the following information for the Assembly Department for the month of October: Materials purchased $45,000 Materials used $49,000 Direct labor $30,000 Actual manufacturing overhead $56,000 Cost of goods completed and transferred to the Finishing Department $125,000 Overhead rate is 200 percent of direct labor costs. Allen Company uses a process costing system for the Assembly Department. What is the total amount that would be debited to Work in Process-Assembly Department for October?

49,000+30,000+30,000(200%)= 139,000

Fixed cost per unit is $7 when 25,000 units are produced and $5 when 35,000 units are produced. What is the total fixed cost when nothing is produced?

7*25,000 = $175,000

A time-and-motion study revealed that it should take 3 hours to produce a product that currently takes 7 hours to produce. Labor is $9 per hour. The non-value added costs are

7-3=4 4*9= 36

The Nautical Corporation manufactures custom-made wood wall units. The following data pertains to Job X4A: Direct materials placed into production $9,000 Direct labor hours worked 300 hours Direct labor rate per hour $15 Machine hours worked 100 hours Factory overhead rate is $22.50 per machine hour. Job X4A consists of 500 units. One-half of Job X4A was sold for $10,000. What is the total amount of costs assigned to Job X4A?

9,000+300(15)+100(22.50)= 15,750

In a job-order costing system, direct labor costs assigned to a job are different than the costs assigned to work-in-process inventory.

False

The percentage of variability in the dependent variable explained by an independent variable (i.e. measure of activity output) is called the coefficient of correlation.

False

When the volume of activity increases within the relevant range, the fixed cost per unit

Decreases

The production level the firm expects to attain for the coming year is called:

Expected activity level

Cost management information systems provide information:

For preparing the planning and controlling measures of an organization

High quality cost management systems should have an organization-wide perspective. Which of the following would NOT be a benefit of a cost management system?

Increases speed by ignoring non-financial information

Which of the following statements is true about traceability?

It is the ability to assign a cost directly to a cost object in an economically feasible way by means of a causal relationship.

Which of the following is true of a production report prepared under a process-costing system?

It provides information about the physical units processed in a department.

Inseparability means that production and consumption are inseparable for services.

True

The activity-based management model has two dimensions: a cost dimension and a process dimension.

True

_____________ is concerned with determining what activities should be performed and assessing how well they are performed.

Operational control

Cost accumulation refers to the:

Recognition and recording of costs.

Which of the following decreases the non-value added time of producing a product and in turn increases the quality of the product?

Redesigning products

Which of the following is true of the process dimension of an activity-based management (ABM) model?

The process dimension provides the ability to engage in and measure continuous improvement.

The focus of Lean Manufacturing is to eliminate waste, which is anything that does not add value to the end user (customer).

True