Chapter 1 - Accounting

Question 1

What are the functions of management accounting?

Answer 1

1.Allocate costs between cost of goods sold and inventories for internal and external profit reporting.
2.provide relevant information to help managers make better decisions
3.provide information for planning, control, performance measurement and continuous improvement.

Question 2

1. Which one of the following costs would not be classified as a production overhead cost in
   a food processing company?
   A) The cost of renting the factory building
   B) The salary of the factory manager
   C) De depreciation of equipment located in the materials store
   D) The cost of ingredients

Answer 2

A)

Question 3

2. Cost assignment
   A) includes tracing indirect costs and allocating direct costs
   B) includes tracing variable costs and allocating fixed costs
   C) includes tracing fixed costs and allocating variable costs
   D) includes tracing direct costs and allocating indirect costs

Answer 3

D

Question 4

3. Cost accounting is mainly concerned with
   A) making a financial plan for implementing management decisions
   B) cost accumulation for inventory valuation to meet the requirements of external reporting
   and internal profit measurement
   C) the provision of information to parties that are external to the organization
   D) the provision of information to people within the organization to aid decision-making and
   improve the efficiency and effectiveness of existing operations

Answer 4

C)

Question 5

4. Wescream produces two types of ice cream: vanilla and chocolate. Separate production
   lines are used for each type of ice cream. What is the correct classification for the wages
   paid to temporary workers who are hired on some busy days in summer when demand for
   ice cream is high (paid on hourly basis). The cost object is the total amount of ice cream
   produced.
   A) Direct and variable
   B) Direct and fixed
   C) Indirect and variable
   D) Indirect and fixed

Answer 5

A)

Question 6

5. Within the relevant range, fixed costs depend on:
   A) the amount of resources used
   B) the amount of resources acquired
   C) the volume of production
   D) the volume of sales

Answer 6

B)

Question 7

6. If actual output is lower than budgeted output, which of the following costs would you
   expect to be lower than the original budget?
   A) total variable costs
   B) total fixed costs
   C) variable costs per unit
   D) fixed costs per unit

Answer 7

A)

Question 8

7. A semi-variable cost would be
   A) a fixed amount when output was zero and would not increase in direct proportion to
   output
   B) zero when output is zero and would increase in direct proportion to output
   C) more than zero if no products were made and would then increase in direct proportion to
   output
   D) zero if output is zero and would change erratically as output increased

Answer 8

C)

Question 9

8. Classifying a cost as either direct or indirect depends on:
   A) whether the cost can be easily identified with the cost object
   B) the behavior of the cost in response to volume changes
   C) whether an expenditure is avoidable or not in the future
   D) whether the cost is expensed in the period in which it is incurred

Answer 9

A)

Question 10

Wescream produces two types of ice cream: vanilla and chocolate. Separate production
lines are used for each type of ice cream. What is the correct classification for the wages
paid to temporary workers who are hired in summer when demand for ice cream is high
(paid on hourly basis). The cost object is the total amount of ice cream produced.
A) Direct and variable
B) Direct and fixed
C) Indirect and variable
D) Indirect and fixed

Answer 10

A

Question 11

Within the relevant range, fixed costs depend on:
A) the amount of resources used
B) the amount of resources acquired
C) the volume of production
D) the volume of sales

Answer 11

B

Question 12

A company has over-absorbed fixed production overheads for the period by €6,000. The fixed production overhead absorption rate was €8 per unit and is based on the normal level of activity of 5,000 units. Actual production was 4,500 units. What was the actual fixed production overheads incurred for the period?

A)€30,000
B)€36,000
C)€40,000
D)€42,000

Answer 12

A

Question 13

Absorption costing refers to the process of

A)absorbing direct costs of production into products
B)absorbing the overhead costs of departments into products
C)absorbing service department costs into production department costs
D)absorbing the direct costs of production and service departments into products

Answer 13

B

Question 14

___________ is a unit-costing method that mergers prior-period work and costs with current-period work and costs

A)FIFO-costing method
B)Transferred-in costing
C)Weighted average method
D)Operating costing

Answer 14

C