Cost Accounting Final Exam
Which of the following would be considered a principal in the principal-agent relationship?
An employer hiring an employee.
Which of the following activities is most likely to be classified as value-added for a manufacturing company?
Assembling.
Which of the following would be least likely to be used as an allocation base in a company that applies a single plantwide rate?
Direct material costs.
First stage cost objects do not include:
Direct materials
Which of the following methods provides no data for service departments to monitor each other's costs?
Direct method.
Which of the following documents is used as the basis for posting to the direct materials section of the job cost sheet?
Materials requisition.
Which of the following costs is not related to a batch-related activity?
Compliance costs.
Of the following process costing steps, which must be done last?
Compute the costs per equivalent unit of production.
Activity analysis is an important approach to operations control and the successful implementation of an activity-based costing (ABC) system. Which of the following procedures is not part of activity analysis?
Compute the predetermined rate per activity by dividing the total cost pool by the total cost drivers.
What are the transfers-out from the Finished Goods Inventory called?
Cost of Goods Sold.
____________ is the delegation of decision-making authority to lower management levels within the organization.
Decentralization
Which of the following is not a benefit of decentralization?
In a decentralized organization some tasks or services may be duplicated unnecessarily.
Which of the following is an example of a prevention cost?
Machine inspection.
Which of the following items would be classified as a batch-level cost in an activity-based cost management (ABM) system?
Machinery set-up costs.
Which of the following accounts is used to accumulate the actual manufacturing overhead costs incurred during a period?
Manufacturing Overhead Control.
Which of the following would be a reasonable basis for assigning the materials handling costs to the units produced in an activity-based costing (ABC) system?
Number of components per completed unit
Which of the following would not be a batch-related activity?
Performing 100% inspection.
Barter Company's cost management and product costing procedures follow activity-based costing (ABC) principles. Activities have been identified and classified as being either value-added or nonvalue-added for each product. Which of the following activities, used in Barter's production process, is nonvalue-added? (CPA adapted)
Raw materials storage activity.
Which of the following activities would be classified as a batch-level activity?
Setting up equipment.
Activity-based costing (ABC) is a costing technique that uses a two stage allocation process. Which of the following statements best describes these two stages?
The costs are assigned to activities, and then to the products based upon their use of the activities
Traditional product costing systems (e.g., job and process costing) are designed primarily:
To accumulate cost information for financial reporting.
What is the purpose of the management control system?
To align more closely the interests of the manager and the interests of the organization.
Which of the following is not a reason to justify the allocation of support services?
To trace costs to the activity that created the costs.
In a process costing system, the application of factory overhead usually would be recorded as an increase in: (CPA adapted)
Work-in-process inventory control.
In a process costing system, manufacturing overhead applied is usually recorded as a debit to:
Work-in-process.
The classification of cost drivers into general levels of activity, volume, batch, product, and so on is known as:
a cost hierarchy.
When a department or product line is dropped, the common fixed costs which had been allocated to that department:
are allocated to the remaining departments or product lines.
Allocation of factory service department costs to the production departments is necessary to:
calculate cost per unit for purposes of external financial reporting.
What is the primary managerial responsibility in an organization?
decision making.
A continuous (rolling) budget:
drops the current month or quarter and adds a future month or quarter as the current month or quarter is completed.
Service department costs are:
eventually applied by the user departments to the units produced.
The major objectives of any budget system are to: (CIA adapted)
foster the planning of operations, provide a framework for performance evaluation, and promote communication and coordination among organization segments.
The asset turnover is a measure (ratio) of an investment center's ability to:
generate sales.
A firm earning a profit can increase its return on investment by: (CMA adapted)
increasing sales revenues and operating expenses by the same percentage.
A master budget:
presents the plan for only one level of activity and does not adjust to changes in the level of activity.
After-tax income divided by sales is called the:
profit margin ratio.
Return on investment (ROI) can be decomposed into the asset turnover and the:
profit margin ratio.
A division earning a profit will increase its return on investment (ROI) if it increases operating expenses and:
sales by the same percentage.
An equivalent unit of conversion costs is equal to the amount of conversion costs required to:
start and complete a unit.
The balance in the Work-in-Process account equals:
the balances on the job cost sheets of uncompleted jobs.
Which of the following characteristics applies to process costing, but does not apply to job order costing?
the use of equivalent units of production.
Equivalent units for a process costing system, using the weighted-average method, would be equal to:
units completed during the period plus equivalent units in the ending work-in-process inventory.
The unused resource capacity is the difference between the resources supplied and the resources:
used.