BEC MCQ 2.1

Question 1

Absorption cost

Answer 1

are not relevant when management must decide on accepting or rejecting one time only special orders where there is sufficient idle capacity . Absorption costing methods represent generally accepted accounting principles and are, therefore, for the benefit of external users.

Question 2

The costs which are suitable for making management decide on one time special orders

Answer 2

Direct costs, variable costs, incremental costs

Question 3

The Relevance of a particular cost to a decision not determined by

Answer 3

Riskness of the decision, number of decision variables, accuracy of the cost

Question 4

The difference between variable costing and full absorption costing lies in the

Answer 4

treatment of fixed costs. full absorption costs treats this as product costs while variable costs treat this as period costs
Under absorption costing all product costs and no period expenses are put into product cost

Question 5

Contribution margin

Answer 5

Net sales revenue less variable costs

Question 6

Operating income

Answer 6

CM-Fixed Costs

Question 7

When considering alternatives

Answer 7

such as discontinuation of product line management should consider relevant costs.

Question 8

Brekeven in units

Answer 8

Fixed costs/contribution margin

Question 9

Margin of safety

Answer 9

Cuurent sales and breakeven sales

Question 10

Break even analysis assumes

Answer 10

that all variable costs and revenues are constant per unit basis and are linear over a relevant range. fixed cost in total are constant

Question 11

to maximize profit at full capacity

Answer 11

CM margin must be maximised

Question 12

minimum acceptable selling price

Answer 12

should include only the incremental costs associated with the order….33000 + 7750=$40750.

Question 13

Contribution margin

Answer 13

does not change with volume

Question 14

Learning curve

Answer 14

releated to the efficiency with which productive resources typically labour are employed and it suggests that productivity will increase over time.If the product have long production runs learning curve analysis is the best method for estimating the cost of competitive bid .The basic premise of the learning curve is that operating efficiency and/or production increases in repetiti\oe tasks as experience is gained. The rate of impro-.m.eent, measured by the learning cur.e, has a regular pattern that can be stated as follo’NS: As cumulati-.e. quantities double, a-..erage cost per unit decreases by a specified percent of the pre-ious cost.

Question 15

multiple regression analysis

Answer 15

Is an expansion of simple regression analysis

Question 16

Relevant range

Answer 16

range over which cost relationships are valid

Question 17

Regression analysis

Answer 17

Regression analysis is a statistical method that fits a line to the data by the method of least squres.It can estimate the dependent cost varaiable based on independent variable. it is the most accurate way to find fixed and variable costs. It estimates the dependent variables.
Objective and constraint function are used in linear programming not regression analysis.
An independent variable is assumed not estimated in regression analysis and is based on activity rather costs
Coeffficient of determinationisa statistivcal messure used to evaluate regression analysis. Coefficient of variation r squred in a multiple regression equation is the percentage of variation in the dependent variable explained by the variation in independent variable

Question 18

The engineering method

Answer 18

uses time and motion study to classify costs. It can be only used where there is observable relationships between inputs and outputs.

Question 19

Account analysis method

Answer 19

is merely review of methods by someone knowledgeable of the activities of the firm. It is only good as the person making judgements

Question 20

High low method

Answer 20

It only considers high and low point not all points like regression analysis

Question 21

which costing would be least likely to encourage managers to reduce inventory

Answer 21

absorption costing because it can absorb some of managers job and increase profits

Question 22

variable costing

Answer 22

variable costing places only variable cost into products and all fixed overheads is charged to COGS. Variable costing capitalize all fixed cost are expensed.

Question 23

throughput costing

Answer 23

is an inventory costing method that places only variable direct material as inventoriable cost

Question 24

Trend analysis

Answer 24

Projection of future trends based on past

Question 25

Monte carlo simulation

Answer 25

Monte Carlo simulation is a computerized mathematical technique that allows people to account for risk in quantitative analysis and decision making. The technique is used by professionals in such widely disparate fields as finance, project management, energy, manufacturing, engineering, research and development, insurance, oil & gas, transportation, and the environment.

Question 26

Dynamic programming

Answer 26

is breaking of big problems to smaller future problems

Question 27

Expected value analysis

Answer 27

it is the anticipated value of a given investment. In statistics and probability analysis, the EV is calculated by multiplying each of the possible outcomes by the likelihood each outcome will occur, and summing all of those values.

Question 28

Continous propablity simulation

Answer 28

Continuous probability simulation is a procedure that studies a problem by creating a model of the process and then, through trial and error solutions, attempts to impro..e the problem solution.

Question 29

Units to be produced to achieve after tax profit

Answer 29

total fixed cost+ target after cost profit /contribution margin per unit

Question 30

Cost volume profit

Answer 30

Selliing prices are to be unchanged
All costs can be divided into fixed and variable elements . Only total variable cost are diretly proportional to volume over the relevant range
Volume is the only relevant factor affecting cost

Question 31

Delphi forecasting

Answer 31

rely mostly on judgement

Question 32

Opportunity costs

Answer 32

Opportunity costs are costs that would have been saved or the profit that would have been earned if another decision alternative had been selected. Implicit costs are opportunity costs. Opportunity cost is zero. Opportunity cost are not recorded in accounting records. Opportunity cost is a potential benefit lost by selecting a particular course. Opportunity cost do not represent cash outlays.

Question 33

Accounting profit

Answer 33

is the total revenue minus total explicit costs

Question 34

Explicit costs

Answer 34

Are documented out of profits cost

Question 35

selling price

Answer 35

costs/ratio of costs to sales

Question 36

Assuming available capacity

Answer 36

the minimum cost per unit of a special order is equal to the variable cost per unit.

Question 37

An increase in production level within the relevant range

Answer 37

will increase the total cost

Question 38

Break even point in dollars

Answer 38

Total fixed costs/contribution margin ratio