A207 Exam 1

Question 1

Elements of Cost Allocation

Answer 1

1. Cost Object
2. Cost Driver
3. Denominator Volume
4. Cost Pool

Question 2

What is the controllability of Relevant Costs

Answer 2

Always controllable

Question 3

How do we measure Controllable Costs and Benefits

Answer 3

In relation to the status quo

Question 4

How do we measure Traceability

Answer 4

Depends on the unit of analysis

Question 5

Regression Analysis

Answer 5

Makes a number of assumptions about the data and uses all of the data available to estimate fixed and variable costs; used to aggregate factors

Question 6

What do we look for in a P-Value

Answer 6

A smaller p-value is better

Question 7

Intercept Value

Answer 7

Our estimate of fixed costs/activities

Question 8

What do we look for in R-squared

Answer 8

The larger the r-suqared the better

Question 9

Contribution Margin Equation

Answer 9

Revenue - Variable Costs

Question 10

Where do we place Manufacturing Overhead

Answer 10

Included in Cost of Goods Sold

Question 11

Financial Accounting

Answer 11

Focuses on the entire organization, past performance, has specified standards and statements are issued with fixed periodicity

Question 12

Relevant Costs and Benefits

Answer 12

Costs and benefits that differ across decision options

Question 13

Variability

Answer 13

Deals with how activities influence costs and benefits

Question 14

Traceability

Answer 14

The degree to which we can directly relate a cost or benefit to a specific option

Question 15

Opportunity Cost

Answer 15

The next best option

Question 16

Variable Cost

Answer 16

Proportional to the volume of activity

Question 17

Fixed Cost

Answer 17

Does not change as the volume of activity changes

Question 18

Mixed Cost

Answer 18

Contains both fixed and variable elements

Question 19

Inventoriable Cost

Answer 19

= DM + DL + VOH + FOH

Question 20

Product Margin

Answer 20

= Revenues - Variable Costs - Traceable Fixed Costs

Question 21

Batch-Level Cost

Answer 21

A cost associated with a batch of items; not directly traceable to an individual item within the batch (the cost to set up a machine to run a batch of 5,000 items is a batch-level cost)

Question 22

Product-Level Cost

Answer 22

Activities that support an entire product line but not necessarily each individual unit (engineering changes made in the assembly line, product design changes, and warehousing and storage costs for each product line)

Question 23

Unit-Level Cost

Answer 23

Occur every time a service is performed or a product is made (costs of direct materials, direct labor, and machine maintenance)

Question 24

Cost Margin Ratio

Answer 24

= (Price - Unit Variable Cost)/ Price

Question 25

Facility-Level Cost

Answer 25

Necessary for development and production to take place (building depreciation, property taxes, plant security, insurance, accounting, outside landscape and maintenance, and plant management’s and support staff’s salaries)

Question 26

Overhead Costs

Answer 26

Indirect and not traceable to products

Question 27

Contribution Margin

Answer 27

Reports variable and fixed costs as separate line items; can be greater than, less than, or equal to the gross margin

Question 28

What is a major advantage of regression?

Answer 28

It uses all available data to estimate the cost equation

Question 29

When does relevant give us the value of a decision option?

Answer 29

Always

Question 30

Are all relevant costs and benefit controllable?

Answer 30

Yes

Question 31

Can a cost or benefit be controllable if it doe not change across feasible options? Is it relevant?

Answer 31

Yes; No

Question 32

When gross margin is less than contribution margin what could be the explanation?

Answer 32

The firm spent more on fixed manufacturing overhead than it did on variable selling expense

Question 33

Which company did we discuss Corporate Social Responsibility?

Answer 33

Whirlpool

Question 34

Do firms ensure goal congruence by minimizing opportunity costs?

Answer 34

No

Question 35

Who has more focused goals: organizations or individuals

Answer 35

Organizations

Question 36

Which movie did Warner Bros claim they lost 160 million?

Answer 36

Harry Potter and the Order of the Phoenix

Question 37

Which needs to be allocated: variable or fixed overhead?

Answer 37

Both

Question 38

High-Low Method was used to predict…

Answer 38

Amazon