ACG 2071 Test 2- Concepts/ Definitions Only

Process Costing

A costing method used when essentially homogeneous products are produced on a continuous basis

Job Costing

A system for assigning costs to products or services that differ in the amount of materials, labor, and overhead required. Typically used by manufacturers that produce unique, or custom-ordered products in small batches; also used by professional service firms.

Which of the following is most likely to be a cost driver for a packaging and shipping activity? Group of answer choices Estimated product costs Hours of testing Number of setups Number of orders Number of components

Number of orders

ABC Co.,is analyzing whether to expand operations by adding a new product line. Which of the following choices correctly identifies the costs that should be considered in this decision? Group of answer choices Opportunity and sunk costs No costs noted Sunk cost only Opportunity cost only

Opportunity cost only

Consider the following statements regarding traditional costing systems. Which of the statements is the most accurate? Group of answer choices All manufacturing costs are easily traceable to the goods produced Traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements Overhead costs are applied to products on the basis of volume-related measures All manufacturing costs are easily traceable to the goods produced and traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements Overhead costs are applied to products on the basis of volume-related measures and traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements

Overhead costs are applied to products on the basis of volume-related measures and traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements

Which of the following cost drivers would best be associated with the activity of a physician time in a medical clinic? Group of answer choices Number of new patient visits Number of continuing patient visits Physician minutes with a patient Number of items on the clinic's bill

Physician minutes with a patient

ABC Production manufactures products X and Y and has been applying overhead on the basis of direct labor hours. Product X is a high-volume product and relatively simplistic in nature. Product Y is a low-volume product that requires a variety of complex manufacturing procedures. What would an activity-based costing system likely disclose about products X and Y? Group of answer choices Products X and Y were both undercosted Products X and Y were both overcosted Product X was overcosted and product

Product X was overcosted and product Y was undercosted

Process Costing

The cost accounting system used by pet food manufacturers.

A cost not relevant to deciding whether to purchase a new machine is: Group of answer choices The cost of the new machine The cost of the old machine Lower maintenance costs for the new machine Additional training required for operating the new machine

The cost of the old machine

Which of the following product situations is better suited to job order costing than to process costing? Group of answer choices Each product batch is exactly the same as the prior batch The costs are easily traced to a specific product. The value of work in process is based on assigning standard costs. Costs are accumulated by department.

The costs are easily traced to a specific product.

Which of the following is a reason a company would implement activity-based costing? Group of answer choices The additional data obtained through traditional allocation are not worth the cost. The cost of record keeping is high. They want to improve the data on which decisions are made. A company only has one cost driver

They want to improve the data on which decisions are made.

Predetermine Overhead Rate

computes the overhead applied to each job.

Activity-based costing systems: Group of answer choices limit the number of cost pools use a single predetermined overhead rate based on machine hours instead of on direct labor always result in an increase of at least one product's selling price frequently increase the overhead allocation to at least one product while decreasing the overhead allocation to at least one other product

frequently increase the overhead allocation to at least one product while decreasing the overhead allocation to at least one other product

Manufacturing overhead: Group of answer choices includes selling costs is easily traced to jobs is a pool of indirect production costs that must somehow be attached to each unit manufactured includes direct materials, indirect materials, indirect labor, and factory depreciation should not be assigned to individual jobs because it bears no obvious relationship to them

is a pool of indirect production costs that must somehow be attached to each unit manufactured

Activity-based costing systems: Group of answer choices assign overhead to products based on the products' relative usage of labor hours use a single column-based cost driver have a tendency to distort product costs often reveal products that were under- or over-costed by traditional costing systems typically have fewer cost drivers than more traditional costing systems

often reveal products that were under- or over-costed by traditional costing systems

Factors in a decision problem that cannot be expressed in numerical terms are: Group of answer choices predictive in nature uncertain in nature quantitative in nature sensitive in nature qualitative in nature

qualitative in nature

Which of the following is not a qualitative decision that should be considered in an outsourcing decision? Group of answer choices company reputation relevant costs product quality employee morale

relevant costs

The cost of inventory owned by a company is considered a: Group of answer choices decision cost opportunity cost economic cost sunk cost relevant cost

sunk cost

Which of the following types of companies would most likely use process costing? Group of answer choices textile manufacturers aircraft manufacturers custom-machining firms textbook publishers

textile manufacturers

Job Order Costing

the cost accounting system used by law firms.

Which of the following costs are relevant to a decision making situation? Group of answer choices the salary of a supervisor who will be transferred elsewhere in the organization in a department closure decision the cost of existing inventory in a keep vs dispose decision the cost of special electrical wiring in an equipment acquisition decision the cost of special electrical wiring in an equipment acquisition decision and the salary of a supervisor who will be transferred elsewhere in the organization in a department closure decision

the cost of special electrical wiring in an equipment acquisition decision

over-applied overhead

the result when the actual overhead is less than the amount assigned to each specific job.

underapplied overhead

the result when the actual overhead is more than the amount assigned to each specific job.