COST ACCT quiz 3 conceptual

Chronologically, the last part of the master budget to be prepared would be the a. pro forma financial statements. b. cash budget. c. capital budget d. production budget

A

A purchases budget is a. not affected by the firm's policy of granting credit to customers. b. the same thing as a production budget. c. needed only if a firm does not pay for its merchandise in the same period as it is purchased. d. affected by a firm's inventory policy only if the firm purchases on credit.

A

Both the budgeted quantity of material to be purchased and the budgeted quantity of material to be consumed can be found in the a. material purchases budget. b. production budget. c. pro forma income statement. d. cash budget.

A

Consumption ratios are useful in determining: A.the existence of product-line diversity. B.overhead that is incurred at the unit level. C.if overhead-producing activities are being utilized effectively. D.if overhead costs are being applied to products. E.if overhead-producing activities are being utilized efficientl

A

Grossman Enterprises is converting to an activity-based costing system and needs to depict thevarious activities in its manufacturing process along with the activities' relationships. Which of the following is a possible tool that the company can use to accomplish this task?A.Storyboards. B.Activity relationship charts (ARCs). C.Decision trees. D.Simulation games. E.Process organizers

A

If a company has a policy of maintaining an inventory of finished goods at a specified percentage of the next month's budgeted sales, budgeted production for January will exceed budgeted sales for January when budgeted a. February sales exceed budgeted January sales. b. January sales exceed budgeted December sales. c. January sales exceed budgeted February sales. d. December sales exceed budgeted January sales.

A

The detailed plan for the acquisition and replacement of major portions of property, plant, and equipment is known as the a. capital budget. b. purchases budget. c. commitments budget. d. treasury budget.

A

Which of the following is a basic element of effective budgetary control? a. cost behavior patterns b. cost-volume-profit analysis c. standard costing d. all of the above

A

Which of the following statements about activity-based costing (ABC) is false? A.ABC cannot be used by service businesses. B.In comparison with traditional costing systems, ABC tends to use more cost pools and morecost drivers. C.In comparison with traditional-costing systems, ABC results in less cost "averaging" of various diversified activities. D.In comparison with traditional-costing systems, ABC results in more costs being classified asdirect costs. E.ABC tends to reduce cost distortion among product lines

A

Jackson manufactures products X and Y, applying overhead on the basis of labor hours. X, alow-volume product, requires a variety of complex manufacturing procedures. Y, on the other hand, is both a high-volume product and relatively simplistic in nature. What would an activity- based costing system likely disclose about products X and Y as a result of Jackson's currentaccounting procedures? X ; Y A.Undercosted;Undercosted B.Undercosted;Overcosted C.Overcosted;Undercosted D.Overcosted;Overcosted E.Costed correctly;Costed correctly

B

Measuring the firm's performance against established objectives is part of which of the following functions? a. Planning b. Controlling c. Organizing d. Staffing

B

Moon Bay Manufacturing uses machine hours to apply manufacturing overhead to products.This method of costing would likely be acceptable if the company has: A.a large proportion of unit-level activities. B.a large proportion of unit-level activities and fairly identical consumption ratios among product lines. C.a large proportion of unit-level activities and widely varying consumption ratios among product lines. D.a large proportion of nonunit-level activities. E.a large proportion of nonunit-level activities and fairly identical consumption ratios among product lines

B

The master budget a. reflects the determination of an organization's cost of capital. b. serves as a managerial tool for the organization. c. includes only an organization's pro forma financial statements. d. utilizes only information from the financial accounting system.

B

Which of the following is the proper sequence of events in an activity-based costing system? A.Identification of cost drivers, identification of cost pools, calculation of cost application rates,assignment of cost to products. B.Identification of cost pools, identification of cost drivers, calculation of cost application rates,assignment of cost to products. C.Assignment of cost to products, identification of cost pools, identification of cost drivers,calculation of cost application rates. D.Calculation of cost application rates, identification of cost drivers, identification of cost pools, assignment of cost to products E.Some other sequence of the four activities listed above.

B

In an activity-based costing system, materials receiving would typically be classified as a: A.unit-level activity. B.batch-level activity. C.product-sustaining activity. D.facility-level activity. E.period-level activity.

B.batch-level activity.

A company that maintains a raw material inventory, which is based on the following month's production needs, will purchase less material than it uses in a month where a. sales exceed production. b. production exceeds sales. c. planned production exceeds the next month's planned production. d. planned production is less than the next month's planned production.

C

Activity-based costing systems: A.use a single, volume-based cost driver. B.assign overhead to products based on the products' relative usage of direct labor. C.often reveal products that were under- or overcosted by traditional costing systems. D.typically use fewer cost drivers than more traditional costing systems. E.have a tendency to distort product costs.

C

Foster, Inc., an appliance manufacturer, is developing a new line of ovens that uses controlled-laser technology. The research and testing costs associated with the new ovens is said to arisefrom a: A.unit-level activity. B.batch-level activity. C.product-sustaining activity. D.facility-level activity. E.competitive-level activity

C

Many traditional costing systems: A.trace manufacturing overhead to individual activities and require the development of numerous activity-costing rates. B.write off manufacturing overhead as an expense of the current period. C.combine widely varying elements of overhead into a single cost pool. D.use a host of different cost drivers (e.g., number of production setups, inspection hours,orders processed) to improve the accuracy of product costing. E.produce results far superior to those achieved with activity-based costing.

C

The amount of raw material purchased in a period may be different than the amount of material used that period because a. the number of units sold may be different from the number of units produced. b. finished goods inventory may fluctuate during the period. c. the raw material inventory may increase/decrease during the period. d. companies often pay for material in the period after it is purchased.

C

The budgeted amount of selling and administrative expense for a period can be found in the a. sales budget. b. cash budget. c. pro forma income statement. d. pro forma balance sheet.

C

The division of activities into unit-level, batch-level, product-sustaining level, and facility-levelcategories is commonly known as a cost: A.object. B.application method. C.hierarchy. D.estimation method. E.classification scheme that is useful in traditional, volume-based systems

C

The primary reason that managers impose a minimum cash balance in the cash budget is a. because management needs discretionary cash for unforeseen business opportunities. b. managers lack discipline to control their spending. c. that it protects the organization from the uncertainty of the budgeting process. d. that it makes the financial statements look more appealing to creditors.

C

Which of the following is least likely to be classified as a facility-level activity in an activity- based costing system?A.Plant maintenance. B.Property taxes. C.Machine processing cost. D.Plant depreciation. E.Plant management salaries.

C

Which of the following represents a proper sequencing in which the budgets below are prepared? a. Direct Material Purchases, Cash, Sales b. Production, Sales, Income Statement c. Sales, Balance Sheet, Direct Labor d. Sales, Production, Manufacturing Overhead

D

A disadvantage of participatory budgets is that a. there is a high degree of acceptance of the goals and objectives by operating management. b. they are usually more realistic. c. they lead to better morale and higher motivation. d. they usually require more time to prepare.

D

Consider the following statements regarding traditional costing systems: I.Overhead costs are applied to products on the basis of volume-related measures. II.All manufacturing costs are easily traceable to the goods produced. III.Traditional costing systems tend to distort unit manufacturing costs when numerous goods aremade that have widely varying production requirements.Which of the above statements is (are) true? A.I only. B.II only. C.III only. D.I and III. E.II and III

D

Depreciation on the production equipment would appear in which of the following budgets? a. cash budget b. production budget c. selling and administrative expense budget d. manufacturing overhead budget

D

The budgeted cost of products to be sold in a future period would be found in the a. production budget. b. sales budget. c. purchases budget. d. pro forma income statement.

D

The material purchases budget tells a manager all of the following except the a. quantity of material to be purchased each period. b. quantity of material to be consumed each period. c. cost of material to be purchased each period. d. cash payment for material each period.

D

Vanguard combines all manufacturing overhead into a single cost pool and allocates thisoverhead to products by using machine hours. Activity-based costing would likely show thatwith Vanguard's current procedures, A.all of the company's products are undercosted. B.the company's high-volume products are undercosted. C.all of the company's products are overcosted. D.the company's high-volume products are overcosted. E.the company's low-volume products are overcosted

D

Which of the following equations can be used to budget purchases? (BI = beginning inventory, EI = ending inventory desired, CGS = budgeted cost of goods sold, P = budgeted purchases) a. P = CGS + BI - EI b. P = CGS + BI c. P = CGS + EI + BI d. P = CGS + EI - BI

D

Which of the following is not an "operating" budget? a. sales budget b. production budget c. purchases budget d. capital budget

D

Which of the following is not true about an imposed budget? a. It reduces the budgeting process time frame. b. It uses the knowledge of top management as it relates to resource availability. c. It enhances coordination. d. It increases the feeling of teamwork

D

A hospital administrator is in the process of implementing an activity-based-costing system. Which of the following tasks would not be part of this process? A.Identification of cost pools. B.Calculation of cost application rates. C.Assignment of cost to services provided. D.Identification of cost drivers. E.None of the above, as all these tasks would be part of the proces

E

Of the following organizations, activity-based costing cannot be used by: A.manufacturers. B.financial-services firms. C.book publishers. D.hotels. E.none of the above, as all are able to use this costing system.

E

Successful adoptions of activity-based costing typically occur when companies rely heavily on: A.finance personnel. B.accounting personnel. C.manufacturing personnel. D.office personnel. E.multidisciplinary project teams.

E

Under a traditional costing system, which of the following costs would likely be classified asindirect with respect to the various products manufactured? A.Plant maintenance. B.Factory supplies. C.Utilities. D.Machinery depreciation. E.All of the above would be considered indirect costs.

E

Which of the following generally fails to signal the need for a new product-costing system? A.Line managers do not believe reported product costs. B.Complex products have high reported profitability despite the lack of premium prices. C.Overhead rates are high and increasing over time. D.Line managers suggest that seemingly profitable products be dropped. E.Product-line profit margins are easy to explain

E

Which of the following is not a broad, cost classification category typically used in activity-basedcosting? A.Unit-level. B.Batch-level. C.Product-sustaining level. D.Facility-level. E.Management-level

E