Intro to MAS, Cost Concepts Flashcards
The following costs are “expired”. Choose the exception.
a. Factory machinery depreciation
b. Salaries of accounting department
c. Salesmens’ commission
d. Cost of sales
a.
Expired costs are those which are charged off to expense immediately. Factory machinery depreciation is not an expired cost because such cost is attributable to an asset item. In this case, it is attributable to inventories. Remember that cost of inventories that are manufactured includes factory overhead, in which factory machinery depreciation is a part of.
An activity that causes resources to be consumed.
a. Standard costing
b. Value-added activity
c. Cost driver
d. None of the choices
c.
A cost driver is something that causes resources to be consumed. For example, if a company decides to produce more goods to sell to the market, then it incurs more costs along the way. The number of units produced is the cost driver.
A product, product line, or a business subject for which cost is computed is called:
a. Cost driver
b. Cost object
c. Cost pool
d. Cost accounting
b.
Grouping of individual cost items, or an account in which a variety of similar costs are accumulated is called:
a. Cost variance
b. Cost driver
c. Cost activity
d. Cost pool
d.
An activity that adds costs to the product or service, but does not make such product or service more valuable to the customer is called:
a. Activity-based costing
b. Standard costing
c. Non-value adding activity
d. Non-value deducting activity
c.
Inventoriable costs (choose the correct answer):
a. Are treated as assets after the products are sold
b. Are charged to expense when products become part of finished goods inventory
c. Are composed only of direct labor and direct materials
d. Are treated as assets before the products are sold
d.
The following are product costs. Choose the exception:
a. Fringe benefits paid to factory workers
b. Wages paid to workers for rework on defective products
c. Wages paid to truck loaders who load finished goods onto the delivery trucks
d. None of the choices
c.
Product costs are:
a. Inventoriable costs
b. Expensed when incurred
c. Recognized as assets when the goods are sold
d. Vary directly with changes in cost driver
a.
An indirect material used in production is chargeable to:
a. Prime costs
b. Conversion costs
c. Direct materials
d. Not chargeable, but ignored
b.
Indirect material is an example of factory overhead.
Which of the following fixed costs may be considered as a direct cost?
a. Rental cost of finished goods warehouse (cost object: Accounting Department)
b. Salary of sales manager (cost object: Sales Department)
c. Salary of controller (cost object: unit of a product)
d. None of the choices
b.
Relevant costs are:
a. Variable costs
b. Fixed costs
c. Costs incurred within relevant range of production
d. Anticipated future costs that will differ among various alternatives
d.
Differential costs are:
a. Variable costs
b. Fixed costs
c. Differences in costs between any 2 alternative courses of action
d. Costs that differ under alternatives
c.
Income or benefit given up when one alternative is selected over another
a. Opportunity cost
b. Relevant cost
c. Differential cost
d. Variable cost
a.
Refer to the function of providing professional consulting services in order to improve the client’s use of its resources to achieve their objectives.
a. Management advisory services
b. Internal auditing
c. Financial advisory services
d. Financial accounting
a.
Who does strategic planning?
a. Rank-and-file employees
b. Board of directors
c. Department managers
d. None of the choices
b.
Strategic planning, aka overall planning, is more concerned with corporate results and is more on long-term objectives.
