Exam 1 Flashcards
True or False?
There is a trend toward an increasing proportion of knowledge workers with college degress working in large organizations.
True
True or False?
Whereas process costing is more appropriate for custom products, job order costing is more better designed to account for the cost of non-customized (commodity) products
False
True or False?
Cost allocation is a more accurate method for assigning overhead cost than cost tracing.
False
True or False?
Compared to companies with a lower proportion of non-unit level costs, companies with a high proportion of non-unit level costs are more likely to benefit from adopting activity-based costing.
True
True or False?
When there is a strong correlation or high R-squared, it means that we can be confident that the cost driver (X) is an important cause of overhead cost (Y).
False
Which of the following is not an ethical duty of management accountants as stated by the IMA?
A. Mitigate conflicts of interest
B. Communicate information fairly and objectively
C. Disclose all relevant information to people inside and outside the organization
D. Perform professional duties in accordance with relevant law, regulations, and technical standards
C
What is the largest and most critical cost for most organizations to manage?
A. Direct material cost
B. Direct labor cost
C. Overhead cost
D. Selling cost
E. Administrative cost
C
Acme Manufacturing Company’s controller is classifying costs for the most recent financial statement period. Which of the following should be exculded from the calculation of gross margin?
A. Wages of factory workers
B. Materials used in assembling the product
C. Maintenance of machinery used to produce products
D. Research and development involved in developing new products
E. Manufacturing overhead costs
D
Tacos Jalisco makes a fresh batch of guacamole every day. Guacamole is sold as separate item on the menu. A change in the recipe used to make guacamole (for the foreseeable future) would be classified as a
A. Unit-level cost
B. Batch-level cost
C. Product-level cost
D. Facility-level cost
C
A primary objective of activity-based costing is to
A. Divide up total overhead costs into smaller groups so that like costs are grouped together
B. Help companies better comply with the GAAP
C. Make accounting less time consuming for accountants
D. Better identify unit-level cost drivers
E. Cost direct labor and direct material more accurately
A
Express Co. offers trucking delivery servies. The truck is loaded once or twice each day and then deliveries are made to many locations. What is the best unit-based cost driver for the cost of gasoline to operate Express Co. trucks?
A. The cost of gasoline per gallon
B. The number of miles driven
C. The number of hours spent stopped in rush hour traffic
D. The number of loads
E. The type of delivery truck used to make deliveries
B
Which of the following statements is likely to be true? A company with multiple different products and high overhead costs changes from a normal costing system with a single plant-wide predetermined overhead rate to an activity based costing system. The company is likely to find that the normal costing system:
A. Over-costs inexpensive products, while it under-costs expensive products
B. Over-costs expensive products, while it under-costs inexpensive products
C. Under-costs high volume products, while it over-costs low volume products
D. Over-costs high volume products, while it under-costs low volume products
E. Costs products accurately regardless of product expense or volume
D
Given that a company takes an average of two days to produce its only product, monthly purchase order processing is an example of a:
A. unit-level activity
B. batch-level activity
C. product-level activity
D. facility-sustaining activity
B
Which one of the following statements is true concerning the high-low method?
A. It can be useful for estimating future variable and fixed costs outside the relevant range
B. It can be useful for estimating future variable and fixed costs inside the relevant range
C. It can be useful for measuring the accuracy of cost estimates inside the relevant range
D. It can be useful for measuring the R squared or coefficient of determination
E. It can be useful for estimating a learning curve.
B
Which of the following statements is true about separating mixed costs into variable versus fixed components?
A. Variable versus fixed costs are normally identified in a company’s cost accounting system
B. Separating variable versus fixed costs is not important for cost estimation because bottom line profitability of a company depends on only total costs
C. Separating variable versus fixed costs is not important because all costs tend to be stable over time. So, last month’s costs can be used to accurately estimate the next month’s costs
D. Accountants can normally use the account analysis method to accurately estimate variable versus fixed costs.
E. Accountants usually have to estimate variable versus fixed costs because identifying what is variable or fixed depends on the question that is being asked.
E
