Final Exam ACC 203
True or false: Controlling involves developing goals and preparing various budgets to achieve those goals.
False
True or false: The best reason to implement an ABC system is to obtain more accurate information about the cost of products and services.
False
True or false: The labor rate variance measures the productivity of direct labor.
False
True or false: When computing unit costs, the direct materials and direct labor costs are the same, regardless of whether ABC or a volume-based costing system is used.
True
A method that attempts to assign overhead costs based on what is required to produce products is ______ costing.
activity-based
When evaluating a make-or-buy decision, managers should consider ______.
all variable production costs qualitative factors opportunity costs
Applied manufacturing overhead costs are credited to the Manufacturing Overhead account________
as the costs are applied to jobs
The final step in activity-based costing is _________.
assigning indirect costs to products or services
How total costs changes as some level of activity changes is called cost _________
behavior
Activity-based costing systems typically include ______ cost drivers.
both volume- and non-volume-based
Managers must prioritize how products are produced when faced with a(n) __________ resource
constrained
Managers put plans into action as part of _________.
implementing
Authority to make decisions about how and where to invest the company's assets to drive long-term profitability manager rests with the manager of a(n) __________
investment
Authority to make decisions about how and where to invest the company's assets to drive long-term profitability manager rests with the manager of a(n) __________ center
investment
Ideally an allocation base should ______.
explain or influence the amount of overhead incurred
A direct labor time ticket includes the _________.
job numbers of jobs worked on amount of time spent on each job
The difference between the standard and the actual direct labor hourly rates is reflected in the _________ _________ variance
labor rate
The best fitting line minimizes the sum of the squared errors when using_______
least-square regression
Actual manufacturing overhead consists of all _____.
manufacturing costs other than direct labor and direct materials
to calculate manufacturing overhead cost per unit using ABC, divide the total ____________.
manufacturing overhead cost by the number of units produced
Labor costs __________.
may be direct or indirect are recorded in basically the same way as material costs
An allocation base is a(n) ______.
measure of activity used to assign overhead costs to products and services
Budgeting is an important part of the _________ and ________ cycle
planning and control
ndirect costs can be assigned to products or services using _________.
the activity rate method the activity proportion method
In the equation Y = a + bX, a denotes the ________
total fixed cost intercept
Direct costs are ______ to products, and overhead costs are ______.
traced; applied
If the actual cost is greater than budgeted cost, the variance is labeled as _____________
unfavorable
Contribution margin ratio is ______.
unit contribution margin ÷ unit sales price
When preparing a CVP graph, the slope of the total cost line represents ______.
variable cost per unit
The process of comparing actual and budgeted results is ______.
variance analysis
The process of comparing actual and budgeted results is called_________ ________
variance analysis
The high-low method may provide a reasonable estimate of fixed and variable costs as long as the high and low data points fall Blank______ the relevant range.
within
What types of activities are carried out regardless of which products are produced, how many batches are run, or how many units are produced?
Facility-level
A company's total expected overhead for the year is $500,000. Two activity cost pools have been identified: Customer Service with a total cost of $200,000 and a total activity of 25,000 customer service calls; and Product Development with a total cost of $300,000 and total activity of 20,000 development hours. The activity rates are _____.
$8 per customer call and $15 per development hour
Webster, LLC sells its product for $20 per unit. Variable costs are $11 per unit and total fixed costs are $35,000. The company sells 8,000 units per year. Webster's contribution margin ratio is ___________%
45
Which of the following is NOT a method used for basic CVP analysis?
Break-even analysis
Which tool can be used to easily calculate the change in profit resulting from a change in sales price, sales volume, variable costs, or fixed costs?
CVP analysis
When a job is completed, its costs are transferred into ______.
Finished Goods
Which of the following is not a method used to estimate the fixed and variable portions of mixed costs?
Relevant range analysis
Which of the following are assumptions of cost volume profit analysis?
Production volume is equal to sales volume. In multi-product companies, the sales mix is constant. All costs can be classified as either fixed or variable.
When materials are purchased they are first recorded in the ______ account.
Raw materials inventory
Which of the following business segments would not be considered a cost center?
Retail outlet
Which of the following statements are true?
The flexible budget can be used as a benchmark for evaluating performance. Both the master budget and the flexible budget are based on standard costs. The master budget is a static budget.
Which of the following statements are true?
The variance formulas only allow one factor to change at a time. Companies generally try to hold specific managers responsible for specific variances. Variances always compare actual results to budgeted or standard results.
True or False. The variable overhead rate variance may not explain all the differences between actual spending and standard variable overhead.
True
Which type of cost changes in total, in direct proportion to changes in activity level?
Variable
Which of the following statements are true?
When materials are purchased they are recorded in the Raw Materials Inventory account. Raw Materials Inventory represents the cost of materials not yet used in production.
Revenue center managers are evaluated primarily on their ______.
ability to meet sales goals
The first step in assigning manufacturing overhead is to determine the ________ _________ or cost driver
allocation base
The direct materials price variance is the difference between the actual price of materials ______.
and the standard price for materials with the difference multiplied by the actual quantity of materials
Standard cost systems ______.
are based on what managers think costs should be help maintain consistency and quality help managers budget and control costs
Standard cost systems _________.
are based on what managers think costs should be help managers budget and control costs help maintain consistency and quality
When deciding whether to sell a product as is or continue to process it, costs incurred to get the product to its current condition ______ relevant to the decision.
are not
Responsibilities of a profit center manager may include ______.
controlling division costs contract negotiations involvement in strategic initiatives related to product success
The formula to compute activity proportion is _________.
cost driver for product ÷ cost driver for all products
A group of similar activities that have been combined together is an activity ______.
cost pool
The first step in assigning manufacturing overhead costs using a predetermined overhead rate is to ______.
determine the cost driver
Categories of manufacturing costs include ______.
direct materials, direct labor, manufacturing overhead
The cost of jobs that have been completed but not yet sold are contained in _______ ______ inventory
finished goods
Costs that remain constant in total and vary per unit are called ________ costs
fixed
A budget that takes into account how costs are affected by changes in level of activity is a(n) ________ budget
flexible
The actual cost is compared to what the cost should have been when calculating a(n) ___________ variance
price
The high-low method _________.
provides a reasonable estimate as long as the data points are within the relevant range only uses two data points calculates the line based on the most extreme activity data points
Materials requisition forms are used to _____.
record the cost of raw materials in the accounting system control the flow of materials from inventory into production
The level of activity over which cost behavior assumptions are true is known as the _________ _________
relevant range
An area of business that a manager has control over and is accountable for is called a(n) ___________ center
responsibility
To answer preliminary questions such as whether the linearity assumption is valid, accountants use a(n) ____________
scattergraph
A(n) _________income statement is broken down by product line, region, or other area of a business.
segmented
Sales revenue minus all costs that are directly attributable to a particular product line or region of a business is called the __________ ____________
segmented margin
Deciding what to do with a product that is salable or could be enhanced is a ________decision.
sell-or-process-further
A contribution margin income statement Blank______.
separates costs into their fixed and variable components can assist with management decision making
Unfavorable labor rate variances may occur as a result of _________
skilled workers being assigned to jobs requiring little skill overtime premiums being charged to the direct labor account
A one-time order that is not considered part of the company's normal ongoing business is called a ________ order.
special
Costs are recorded based on what managers think they should be, not based on actual costs in a (n) _______________ cost system
standard
The activity rate is computed by dividing the Blank______ by the Blank______.
total activity cost; total cost driver
