Cost Accounting Exam 2

Question 1

The death spiral can occur even in forms with increasing demand.

Answer 1

True

Question 2

Predetermined overhead rates are not used in first stage cost allocations but are used in second stage cost allocations.

Answer 2

False

Question 3

The basic difference between the department cost allocation method and activity-based costing is the number of stages involved in allocating costs to products.

Answer 3

False

Question 4

What account is not used in ABC?

Answer 4

Allocations incurred

Question 5

In an ABC costing system, what should be used to assign departmental manufacturing overhead cots to products produced in varying lot sizes?

Answer 5

Multiple cause and effect relationships.

Question 6

In analyzing company operations, the controller of the Carson Corporation found a $250,000 favorable flexible budget revenue variance. The variance was calculated by comparing the actual results with the flexible budget. This variance can be wholly explained by

Answer 6

Changes in unit selling price.

Question 7

A basic assumption of ABC is that

Answer 7

Products or services require the performance of activities and activities consume resources.

Question 8

Which of the following best describes the objective of joint cost allocations?

Answer 8

Inventory valuation.

Question 9

Service department costs are

Answer 9

Eventually applied by the user departments to the units produced.

Question 10

If the selling division has excess capacity, the transfer price should be set at its

Answer 10

Differential outlay costs.

Question 11

In the US, more companies use cost-based transfer prices than market baed transfer prices.

Answer 11

True

Question 12

A transfer price is the value assigned to the transfer of goods or services between divisions within the same organization.

Answer 12

True

Question 13

Which of the following is not an appropriate use of transfer pricing?

Answer 13

Establishing standards

Question 14

A transfer made at cost does not motivate the selling division to transfer its goods or services internally.

Answer 14

True

Question 15

An internal transfer between two divisions is in the best economic interst of the entire org when

Answer 15

The variable costs plus the opportunity cost of the selling division is less than the external price for the buying division.

Question 16

In essence, the terms “master budget” and “Operating budget”meant the same thing and can be used interchangeably.

Answer 16

False

Question 17

Variances are the difference between actual results and budgeted results.

Answer 17

True

Question 18

In general, and holding all other things constant, an unfavorable variances decreases operating profit.

Answer 18

True

Question 19

An operating budget would not include

Answer 19

A cash budget

Question 20

A variance can be best described as

Answer 20

Differences between planned results and actual results.

Question 21

The most fundamental variance analysis compares

Answer 21

Budgeted operating income with actual operating income.

Question 22

The slope of the flexible budget line is the

Answer 22

Variable cost per unit

Question 23

The intercept of the flexible budget line is total

Answer 23

Fixed costs

Question 24

In general, a price variance is calcuated as

Answer 24

APxAQ-SPxAQ

Question 25

When the actual amount of a raw material used in production is greater than the standard amount allowed for the actual output, the journal entry would include

Answer 25

A debit to WIP and debit to Materials Quantity Variance

Question 26

Standard costs should be based on

Answer 26

Reasonably attainable levels of efficiency

Question 27

In a standard cost system, overhead is applied to production on a basis of

Answer 27

The standard hours allowed to complete the output of the period.

Question 28

In the general model, an efficiency variance is calculated as

Answer 28

SPxAQ-SPxSQ

Question 29

The only variances that should be investigated are those for which the expected benefits of correction exceed the costs of investigating and correcting

Answer 29

True

Question 30

Some variances are the result of accounting errors and omissions, including timing differences.

Answer 30

True

Question 31

The primary objective of benchmarking is to evaluate performance of an activity relative to the performance by other companies.

Answer 31

True

Question 32

Manufacturing cycle time is the total time involved in processing, moving, storing and inspecting a good or service

Answer 32

True

Question 33

Which of the following is not one of the four areas of strategic action on a balanced scorecard

Answer 33

Customer satisfaction measurement.

Question 34

Empoyees empowered with real decision making authority are more likely to be more responive to customer concerns.

Answer 34

True

Question 35

A balanced scorecard is basically a balance sheet prepared using non-financial measures

Answer 35

False

Question 36

Which of the following best describes the customer performance area of the balanced scorecard?

Answer 36

Indicates how a customer oriented strategy adds financial value.

Question 37

Which of the following performance measures would be used to evalue the personnel dept

Answer 37

Length of time to fill vacant positions

Question 38

A business model attempts to minimize problems associated with

Answer 38

Goal congruence

Question 39

Employee invovlment is impt in an effective performance measurement system because it

Answer 39

Increases the employee’s commitment to the org and its objectives.