Exam Ch 1-3
A cost that does not change as output changes is a variable cost, and one that changes is a fixed cost.
False
The cost management information system is primarily concerned with producing outputs for external users.
False
The high-low method preselects the two points that are used to compute the parameters F and X in the expression Y = F + VX.
False
The level of activity performance where the amount of activity capacity needed corresponds to the level of efficiency required is called the activity capacity.
False
The service sector of the U.S. economy has decreased in importance as traditional industries have declined in importance.
False
The treasurer of a company is responsible for all taxation activities, including dealing with the IRS.
False
Variable costs are defined as costs that, in total, are constant regardless of change in an activity driver.
False
Total costs may be computed with which of the following formulas?
Fixed costs + (Variable costs per unit × Unit volume)
Which of the following statements is TRUE about the relevant range?
Linear estimates of an economist's curvilinear cost function is only valid within the relevant range.
Which of the following costs is NOT a product cost?
rent on an administrative office building
Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that is parallel to the horizontal axis?
rent on exhibit space at a convention
According to the rules and conventions of the Financial Accounting Standards Board (FASB), only production costs should be used in calculating product costs for
reporting inventories in external financial reporting.
The scatterplot method of cost estimation
requires the use of judgment
With regard to products, perishability can be defined as
services that cannot be stored.
The internal auditor performs a
staff function
Which of the following would NOT be included in the conversion cost of an automobile?
steel for the body of the automobile
An example of a nonproduction cost is
the treasurer's salary
The sum of the total additions to work in process during a period is
total manufacturing costs added.
The cost management information system is primarily concerned with producing outputs for internal users using inputs and processes needed to satisfy management objectives.
true
The income statement prepared for external parties is frequently referred to as absorption-costing income, or full-costing income.
true
The most precise of the three methods of cost assignment is direct tracing since it relies on observable causal relationships.
true
The value chain is the set of activities required to design, develop, produce, market, deliver and provide post-sales service for the products and services sold to customers.
true
Work in process consists of all partially completed units found in production at a given point in time.
true
Which of the following is an example of a loss?
write-off of an obsolete product
Which of the following is the officer responsible for money management and serves chiefly as the custodian of the organization's funds?
Treasurer
An accounting information system collects, records, summarizes, analyzes, and manages data to transform inputs into information that is provided to users.
True
Business ethics is learning what is right or wrong in the work environment and choosing what is right.
True
Changes in the way business is conducted worldwide have broadened the focus of cost management accounting systems.
True
Preparing reports for division managers is an activity associated with the cost management information system.
True
The Certified Internal Auditor must pass a comprehensive examination designed to ensure technical competence and have two years' work experience.
True
The Institute of Management Accountants has established ethical standards for management accountants.
True
The basis of the learning curve is that as we perform an action over and over, we improve, and each additional performance takes less time than the preceding ones.
True
The industrial engineering method is used to determine which activities, and in what amounts, are necessary to complete a process.
True
The role of cost and management accountants is one of support and teamwork and assistance of those who are responsible for achieving a company's basic objectives.
True
Three of the major certifications available to management accountants are a Certificate in Management Accounting, a Certificate in Public Accounting, and a Certificate in Internal Auditing.
True
When utilizing managerial judgment to determine cost behavior, some managers may ignore mixed costs.
True
Whenever least squares is used to fit an equation involving two or more independent variables, the method is called multiple regression.
True
A descriptive data analytic type such as an analysis of sales by customer would answer which of the following questions?
What is happening?
Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that starts at the origin and reaches a maximum value beyond which the line is parallel to the horizontal axis?
a consultant paid $100 per hour with a maximum fee of $2,000
Competitive advantage is established by having
a customer orientation providing greater customer value for less cost than competitors.
The coefficient of determination is
a measure of the percent variation in the dependent variable that is explained by an independent variable.
Direct costs
are those costs that can be easily and accurately traced to a cost object.
In a company that supplies muffins to bakeries, which of the following would be considered a transforming process?
baking
Which of the following is an example of a committed fixed expense?
depreciation on a factory building
A company has purchased some steel to use in the production of steel railings. If this steel has NOT been put into production, it would be classified as
direct materials inventory
The most likely method to assign the cost of an assembly-line supervisor when the assembly line is the cost object is the
direct tracing method
The costs incurred for the acquisition of short-run activity capacity, usually as the result of yearly planning are called
discretionary fixed expenses
A traditional cost accounting system assumes that all costs can be classified as fixed with respect to changes in the units or volume produced.
false
Cost is the cash or cash equivalent value sacrificed for goods and services that are expected to bring a current or future loss to the company.
false
Rent of $10,000 paid per month for renting a building is an example of a(n)
fixed cost
Engaging in or supporting an activity that would discredit the profession would relate to which of the following parts of the IMA code of ethics?
integrity
Manufacturing environment automation is associated with increases in
productive capacity
The overall objective of accounting information systems is to
provide information to users.
What is the difference between a correlation equal to −1 and a correlation equal to +1?
A correlation equal to −1 means two alternatives are moving in opposite directions, whereas a correlation of +1 means they are moving in the same direction.
What is a disadvantage of assigning costs evenly over all cost objects?
Costs may be distorted by consumption patterns of other cost objects.
Which of the following items would NOT be classified as part of factory overhead of a firm that makes sailboats?
canvas used in sail
When a management accountant attends training seminars on new FASB rules, which of the following parts of the IMA code of ethics is being observed?
competence
In a company, engineers have redesigned production processes lowering production costs, shortening production cycle time, reducing waste, and improving quality. Which of the following types of managerial activity applies to this situation?
continuous improvement
Analyzing cost overruns to determine their cause is an example of
control
Inspecting units produced to determine if they meet specifications is an example of
control
Investigating production variances and adjusting the production process to take corrective action is an example of
control
Which of the following positions would most likely be a staff manager?
controller
Which of the following is a cost management subsystem designed to assign costs to individual products and services and other objects, as specified by management?
cost accounting information system
The type of management that broadens the focus of accounting because it is concerned with factors that drive costs, such as cycle time and process productivity, is called
cost management
Which of the following advances in information technology includes the analysis of large data sets and data visualization?
data analytics
A cost that expires without producing any revenue benefit is known as a(n)
loss
Which of the following is NOT part of the financial accounting information system?
making a managerial assessment such as determining the future cash flows of a proposed flexible manufacturing system
The primary objective of the cost management information system is to provide
management with information useful for planning and control of operations.
Which of the following will be included in traditional product costs?
manufacturing costs
An equipment lease that specifies a payment of $8,000 per month plus $7 per machine hour used is an example of a
mixed cost
Drivers that explain changes in costs as factors other than changes in units produced are called
non-unit-based cost drivers
Which of the following is NOT likely to be found in an activity-based management system?
only unit-based drivers
A cost management subsystem designed to provide accurate and timely feedback concerning the performance of managers and others relative to their planning and control activities is called the
operational control information system
Which of the following is a cost management subsystem designed to provide accurate and timely feedback concerning the performance of managers and others relative to their planning and control of activities?
operational control information system
