Practice Exam Questions Flashcards
Which of the following Statements is true of ABC?
A. in ABC, DLH is always the best allocation base to allocate all manufacturing indirect costs
B. ABC is more suited to companies with high product diversity than companies with single product lines
C. ABC broadly averages or spreads the cost of resources uniformly to cost objects such as products or services
D. The main advantage of ABC over traditional costing is the accurate distribution of all direct costs to the products.
Correct: B
When calculating inventory for the balance sheet using variable costing as opposed to absorption costing, the inventory values will generally be
A. doubled
B. greater
C. equal
D. less
Correct: D
Which method of allocating support department costs is the most accurate but also complex?
A. Reciprocal method
B. Direct method
C. Step Method
D. Average Method
Correct: A
All of the following statements about joint products are true except:
A. All joint products can be sold at the split-off point
B. A product that is processed further should be sold for a higher price
C. Management must make a decision to split-off to process further or sell the product
D. There is no economic value attached to some products at the split-off point
Correct: A
Once a company classifies an unintended output of the join process as a by-product, waste, or scrap
A. The company will continue that classification until it no longer produces the product
B. The company will evaluate the classifications yearly
C. The classifications will remain fluid and can change as the usefulness of the products change
D. The classifications will change based on the profitability of the product
Correct: C
In the computation of the cost per equivalent unit, the weighted-average method of process costing considers all the costs
A) entering work in process from the units in the beginning inventory plus the costs for the work completed during the current accounting period
B) that have entered work in process from the units started or transferred in during the current accounting period
C) that have entered work in process during the current accounting period from the units started or transferred in minus the costs associated with ending inventory
D) that have entered work in process during the current accounting period from the units started or transferred in plus the costs associated with ending inventory
Correct: A
Assuming the beginning work in process is zero, the equivalent units of production computed using FIFO versus weighted average will have the following relationship:
A) FIFO equivalent units will be greater than weighted-average equivalent units.
B) Weighted-average equivalent units are always greater than FIFO equivalent units.
C) Weighted-average equivalent units will be equal to FIFO equivalent units.
D) There is no specific relationship between equivalent units computed under the two methods.
Correct: C
Which of the following would NOT change the return on investment (ROI)?
A) Increase total invested assets.
B) Increase operating income and total invested assets by the same amount.
C) Decrease sales and expenses by the same dollar amount.
D) Decrease sales and expenses by the same percentage.
Correct: C because operating income does NOT change
Activity-Costing
is more suited to companies with high product diversity than companies with a single product line
In general, if inventory increases during an accounting period,
Variable costing will report less operating income than absorption costing
Support department costs are applied to product costs as
Overhead
If a project has a payback period that is greater than the useful life,
the entire initial investment will not be recovered
A distinct feature of the FIFO process-costing method is that the
Work done on the beginning inventory before the current period is kept separate from the work done during the current period in the calculation of equivalent units
