cost accounting questions

7/26/2019 Cost Accounting Questions

1/52

Unit 1 Quiz1. A managerial accountant who communicates information objectively is exercising

which of the following standards?a. objectivityb. integrityc. competence

d. condentiality2. A managerial accountant who prepares clear reports and recommendations after

analyzing relevant facts is exercising which of the following standards?a. objectivityb. integrityc. competenced. condentiality

. !ost accounting standardsa. are legal standards set by the "nstitute of #anagement Accountants for use

in all manufacturing and professional businesses.b. are set by the !ost Accounting $tandards %oard and are legally binding on

all manufacturers& but not service organizations.c. do not exist except for those legal pronouncements for companies

bidding or pricing cost-related contracts with the government.d. are developed by the !ost Accounting $tandards %oard& issued by the

"nstitute of #anagement Accountants& and are legally binding on !#As.'. (hich of the following ).$. legislation relates to bribes being o*ered to foreign

o+cials?a. ,ac-eteer "nuenced and !orrupt /rganizations Actb. 0oreign "llegal Activities Actc. Foreign orrupt !ractices "ctd. 0ederal %ribery and !orrupt ractices Act

. 3he "nstitute of #anagement Accountants4 !ode of 5thicsa. is a legally enforceable contract with all management accountants.b. should be viewed as a goal for professional behavior.c. is a legally enforceable contract with all !As.d. provides ways to measure departures from ethical behavior.

6. 3he 0oreign !orrupt ractices Act is directed ata. U.#. corporations operating overseas.b. foreign businesses operating in the ).$.c. all businesses dealing with ).$. consumers.d. all ). $. businesses with operations in foreign countries.

7. 3he ethical standards established for management accountants are in the areas ofa. competence& licensing& reporting& and education.b. budgeting& cost allocation& product costing& and insider trading.c. competence$ con%dentiality$ integrity$ and credibility.d. disclosure& communication& decision ma-ing& and planning.

8. (hich ethical standard is violated by an accountant who accepts a gift from aclient

a. !redibilityb. !ondentialityc. !ompetenced. &ntegrity


2/52

9. (hich ethical standard has been violated if an accountant fails to prepare nancialstatements according to industry standards?

a. ompetenceb. !ondentialityc. "ntegrityd. !redibility

1:. (hich ethical standard is violated when an accountant uses information from

a nancial statement he is preparing to advise a relative of a stoc- purchase?a. !ompetenceb. on%dentialityc. "ntegrityd. !redibility

Unit ' !ractice Questions1. $elect the incorrect statement concerning cost objects. ;oints < 1=

a. (hen the cost object is the roduction >epartment& the cost of a productionsupervisor4s salary would be a direct cost.

b. A direct cost must be conveniently and economically traceable to the costobject.

c. (hen the cost object is a 3undra truc-& the cost of the truc-4s engine is adirect cost.

d. (hen the cost object is the )oyota !rinceton &ndiana manufacturingplant the cost of overhead is an indirect cost.

2. (hich of the following statements is correct concerning xed costs? ;oints < 1=a. (ithin the relevant range& total xed costs always increase when volume

increases.b. " step cost may be %xed or variable.c. 3he xed costs per unit will remain constant provided volume remains within

the relevant range.d. (ithin the relevant range& total xed costs always decrease when volume

increases.. A utility bill that includes a at charge for basic service plus a stated rate for each

-ilowatt hour of usage beyond a specied level is an example of a ;oints < 1=a. mixed cost.b. step cost.c. variable cost.d. independent cost.

'. uestion '.'. "n relation to the dollar amount of 3undra truc- sales& which of thefollowing classications is appropriate for the truc- tires used in production and forthe salaries of production supervisors?3ruc- 3ires @ roduction $upervisor $alaries ;oints < 1=

a. *ariable costFixed costb. 0ixed costariable costc. ariable cost#ixed costd. #ixed cost 0ixed cost

. 3he estimated unit cost for a company planning to produce and sell at a level of12&::: units per month is as follows

b. 0irms such as retailers that engage in only low or moderate degrees ofconversion ordinarily have only a single inventory account.

c. 3he production process occurs in three stages< raw material& wor- in process&and nished goods.

d. At the point of sale& product costs ow from an inventory account to !ost ofCoods $old expense.

9. (hich of the following would not be classied as direct material for a 3undra truc-?;oints < 1=

a. !ost of the batteryb. ost of the glue used to secure the carpet in the cab of the

trucc. !ost of freight paid on the truc- windshieldd. !ost of the fuel tan-

1:. (hich of the following would be classied as direct labor for the productionof a 3undra truc-? ;oints < 1=

a. (ages paid to assembly line ;production= wor-ersb. %onuses paid to production wor-ers for exceeding production goalsc. roduction wor-ers4 $ocial $ecurity taxesd. "ll of the above

11. (hich of the following costs would not be classied as overhead for theproduction of 3undra truc-s? ;oints < 1=

a. $alary of plant managerb. "ndirect labor costsc. #alary of )oyota hief 2xecutive 34cerd. >epreciation of production machinery


4/52

12. All of the following are reasons why overhead costs are allocated to costobjects exceptirect labor :&:::Actual factory overhead 17&::

(hat was the total cost of direct material used for Eanuary? ;oints < 1=a. +15$5b. B18&9::c. B17&9::d. B6&::

1'. % !ompany had the following inventories at the beginning and end ofEanuaryirect material 1'&::: 12'&:::3he following additional manufacturing data were available for the month of

Eanuaryirect material used B189&:::>irect labor ::&:::Actual factory overhead 17&:::

(hat was % !ompany4s cost of goods manufactured for Eanuary? ;oints < 1=a. B672&:::b. B66:&:::c. B68&:::d. +678$

1. ! !ompany had the following inventories at the beginning and end ofEanuaryirect material 1'&::: 12'&:::Assuming the !ost of Coods #anufactured for Eanuary was B66:&:::& what was !!ompany4s cost of goods sold for Eanuary? ;oints < 1=

a. B676&:::b. +668$


5/52

c. B666&:::d. B62&:::

16. All of the following are reasons for using predetermined overhead rates inproduct costing exceptecember ': &16:)sing the high@low method& estimate the amount of maintenance cost per hour.;oints < 1=

a. B2&781b. B7:c. +;.,d. B:.1

2. L !ompany uses simple regression to separate its selling costs ;y= into xedand variable components based on units sold ;x=. A computer software programgenerated the following regression analysis resultsecember 1& the unit cost under

absorption costing isa. B2.:.b. B.::.c. B.:.d. +7.,.

1'. (hat is the net income under variable costing?a. +,$b. B8:&:::c. B9:&:::d. B12:&:::


10/52

1. (hat is the net income under absorption costing?a. B:&:::b. +8$c. B9:&:::d. B12:&:::

Unit A !ractice Questions1. Activity@based management ;A%#= focuses on improving customer value and

enhancing protability. (hich of the following is an impact of implementing A%# tocontrol production processes? ;oints < 1=

a. #ore e*ective performance evaluationb. #ore accurate cost determination and controlc. #ore e+cient production processesd. "ll of the above

2. $elect the incorrect statement from the following. ;oints < 1=a. An activity is any repetitive action that is performed in fulllment of a

business function.b. Kon@value@added activities increase the time spent on a product but do not

increase its worth.c. )he objective of activity-based management is to eliminate all non-

value-added activities.d. Activity analysis attempts to classify activities as value added or non@value@

added.. All of the following are non@value@added time except< ;oints < 1=

a. inspection time.b. move time.c. processing time.d. wait time.

'. (hich of the following correctly computes manufacturing cycle e+ciency?a. 3otal !ycle 3ime @ 3otal alue@Added 3ime.b. 3otal !ycle 3ime O 3otal alue@Added 3ime.c. 3otal alue@Added 3ime G 3otal Kon@alue@Added 3ime.d. )otal *alue-"dded )ime B )otal ycle )ime.

. 3he need to rewor- products because of a poorly designed training program is anexample of a non@value@added activity caused by ;oints < 1=

a. systemic factors.b. physical factors.c. human factors.d. Kone of the above.

6. All of the following are examples of batch@level costs except< ;oints < 1=a. costs of engineering change orders.b. purchase order costs.c. inspection costs.d. movement costs.

7. $elect the incorrect matching of cost and cost level. ;oints < 1=a. )nit level < >irect materialb. Facility level C 2:uipment maintenancec. roduct level < roduct developmentd. %atch level < $etup costs


11/52

8. (hich costing system assigns costs within multiple cost pools to products usingmultiple drivers? ;oints < 1=

a. "ctivity-based costingb. ariable costingc. 3raditional costingd. Kone of the above

9. 5 !orporation& which ma-es electronic components for KA$A4s space shuttle& usesactivity@based costing. /ne of its activities is described belowecember 1 wor- in process inventory& what is the carrying value of thecompany4s wor- in process inventory at >ecember 1? ;oints < 1=

a. B7&:::b. B1::&:::c. B22&:::d. +A$

12. (hich of the following costing systems does not involve computing costvariances? ;oints < 1=

a. "ctual costing systemb. Kormal costing systemc. $tandard costing systemd. All of the above systems involve computing cost variances

1. $elect the incorrect statement concerning standard costs and job ordercosting. ;oints < 1=

a. A standard cost system determines product cost by using predeterminednorms in the inventory accounts for prices andOor Iuantities of costcomponents.


17/52

b. $tandards can be used in a job order cost system only if a company typicallyengages in jobs that produce fairly similar products.

c. Under 0""!$ standard cost job order systems may not substitute foractual or normal costing systems.

d. $tandard cost variances can be computed for actual@to@standard di*erencesregardless of whether standards have been established for both Iuantitiesand prices or for prices or rates only.

1'. (hich of the following statements is true concerning job order costing and

management decision ma-ing? ;oints < 1=a. Eob order costing assists managers in their planning& controlling& decision

ma-ing and performance evaluations functions.b. Eob order costing allows managers to trace costs associated with specic

current jobs to better estimate costs of future jobs.c. Eob order costing provides a means by which managers can better control

the costs associated with their operations.d. "ll of the above are true statements.

1. $elect the incorrect statement regarding the accounting for product losses.;oints < 1=

a. Kormal losses that are anticipated on all jobs are estimated and included in

the development of the predetermined /J rate.b. ?ormal losses that are associated with a particular job are charged

to a loss account in the period they are incurred.c. Abnormal losses are charged to a loss account in the period they are

incurred.d. 3he di*erence between normal and abnormal loss is one of degree and

therefore must be determined by management.16. (hich of the following would least li-ely use a process costing system?

;oints < 1=a. #anufacturer of custom furnitureb. #anufacturer of soft drin-sc. #anufacturer of gasolined. #anufacturer of paper

17. (hich of the following is not a basic objective of process costing? ;oints < 1=a. !ompute an average cost per unit since units are homogeneousb. Allocate production costs between whole units and partial unitsc. $eparate production costs into xed and variable componentsd. >etermine the amount of production costs that should be transferred to the

next department18. $elect the incorrect statement regarding eIuivalent units of production

;5)=. ;oints < 1=a. 3wo units :Q complete are eIuivalent to one unit 1::Q complete.b. 5xcept in very rare instances& only one 5) calculation is needed per

department.c. 5) eIuals the number of whole units of output that could have been

produced during a period from the actual e*ort expended.d. 3he objective of 5) calculations is to eliminate the costing problemcaused

by partially completed units.19. 3he steps in process costing are listed below#& B'68&:::M !onversion B7'&:6:=

B1&:'2&:6:)sing the weighted average method& the eIuivalent units for direct materials forApril are#& B'68&:::M !onversion B7'&:6:=

B1&:'2&:6:)sing the 0"0/ method& the eIuivalent units for direct materials for Eune areirect labor hours of 6&7were actually wor-ed during the month. ariance analysis would show< ;oints < 1=

a. a favorable direct labor e+ciency variance of B1&27.b. an unfavorable direct labor e+ciency variance of B1&27.c. an unfavorable direct labor rate variance of +1$';,.d. none of the above.

6. 3he total xed overhead variance is the< ;oints < 1=a. measure of the lost prots from the lac- of sales volume.b. amount of the underapplied or overapplied %xed overhead

costs.c. potential cost reduction that can be achieved from better cost control.d. measure of production ine+ciency.

7. ariable overhead is applied on the basis of standard direct labor hours. "f thedirect labor e+ciency variance is favorable& the variable overhead e+ciencyvariance will be< ;oints < 1=

a. unfavorable.b. favorable.c. zero.d. the same amount as the labor e+ciency variance.

8. S !ompany4s product has a labor standard of 2 hours per unit. 0or 2:11& itestimates its production will be 2::&::: units ;'::&::: >DJs=. "t budgets totaloverhead at B9::&:::& which results in a xed overhead rate of B1.: per hour.Actual data for the year include< Actual production& 198&::: units ;'':&::: >DJs=&Actual variable overhead& B2&:::& Actual xed overhead& B7&::: 3he variableoverhead e+ciency variance for the year is< ;oints < 1=

a. B66&::: unfavorable.b. B&2: favorable.


24/52

c. B&::: favorable.d. +AA$ unfavorable.

9. $tandard cost systems should be used for all of the following reasons excepturing #ay& the following items were budgetedirect Dabor G 0actory /verheadd. @eginning (&! = Eaw aterials Used = Direct 9abor = Factory

3verhead - 2nding (&!1. A continuous budget< ;oints < 1=

a. presents a statement of expectations for a period but does not present a rmcommitment.

b. drops the current month or :uarter and adds a future month or afuture :uarter as the current month or :uarter is completed.

c. presents the plan for only one level of activity and does not adjust tochanges in the level of activity.

d. presents the plan for a range of activity so that the plan can be adjusted forchanges in activity.

1'. All of the following are benets of budgeting except< ;oints < 1=a. budgeting provides assurance that the company will achieve its

objectives.b. budgeting facilitates the coordination of activities.c. budgeting reIuires managers to plan ahead.d. budgeting provides specic benchmar-s for evaluating performance.

1. (hich of the following items should be included in a company4s budgetmanual? ;oints < 1=

a. $ample budgetary formsb. !alendar of scheduled budgetary activitiesc. /riginal& revised& and approved budgets


32/52

d. "ll of the above should be included.

Unit 6 Quiz1. (hen actual performance varies from the budgeted performance& managers will be

more li-ely to revise future budgets if the variances were ;oints < 1=a. controllable rather than uncontrollable.b. uncontrollable rather than controllable.

c. favorable rather than unfavorable.d. small.

2. 3he amount of raw material purchased in a period may be di*erent than theamount of material used that period because ;oints < 1=

a. the number of units sold may be di*erent from the number of unitsproduced.

b. nished goods inventory may uctuate during the period.c. the raw material inventory may increaseBdecrease during the

period.d. companies often pay for material in the period after it is purchased.

. A company that maintains a raw material inventory& which is based on thefollowing month4s production needs& will purchase less material than it uses in amonth where ;oints < 1=

a. sales exceed production.b. production exceeds sales.c. planned production exceeds the next month/s planned

production.d. planned production is less than the next month4s planned production.

'. "f a company has a policy of maintaining an inventory of nished goods at aspecied percentage of the next month4s budgeted sales& budgeted production forEanuary will exceed budgeted sales for Eanuary when budgeted ;oints < 1=

a. February sales exceed budgeted anuary sales.b. Eanuary sales exceed budgeted >ecember sales.c. Eanuary sales exceed budgeted 0ebruary sales.d. >ecember sales exceed budgeted Eanuary sales.

. #atthews !ompany has a policy of maintaining an inventory of nished goodseIual to : percent of the following month4s sales. 0or the forthcoming month of#arch& #atthews has budgeted the beginning inventory at :&::: units and theending inventory at &::: units. 3his suggests that ;oints < 1=

a. 0ebruary sales are budgeted at 1:&::: units less than #arch sales.b. arch sales are budgeted at 1$ units less than "pril sales.c. 0ebruary sales are budgeted at &::: units less than #arch sales.d. #arch sales are budgeted at &::: units less than April sales.

6. 0or the month of Kovember& (hetzel !orporation. predicts total cash collections tobe B1 million. Also for Kovember& (hetzel !orporation. estimates that itsbeginning cash balance will be B:&::: and that it will borrow cash in the amountof B7:&:::. "f (hetzel !orporation. estimates an ending cash balance of B:&:::for Kovember& what must its projected cash disbursements be? ;oints < 1=

a. +1$5$b. B1&12:&:::c. B1&:7:&:::d. B1&:2:&:::


33/52

7. 0or the month of #arch& ,obertson !orporation. predicts total cash collections tobe B1. million. Also for #arch& ,obertson !orporation. estimates that its beginningcash balance will be B6:&::: and that it will borrow cash in the amount of B8:&:::."f ,obertson !orporation. estimates an ending cash balance of B':&::: for #arch&what must its projected cash disbursements be?

a. B1&2:&:::b. B1&8:&:::c. +1$6$

d. B1&6':&:::8. $ullivan !ompany is preparing its #anufacturing /verhead budget for the second

Iuarter of the year. %udgeted variable factory overhead is B.:: per unitproducedM budgeted xed factory overhead is B7&::: per month& with B16&::: ofthis amount being factory depreciation."f the budgeted cash disbursements for factory overhead for Eune are B8:&:::&then the budgeted production for Eune must be< ;oints < 1=

a. 7&':: unitsb. 6&2:: unitsc. 6&:: unitsd. ;$ units

9. #ercy #edical !enter has provided you with the following budget information forApriler to avoid a +7. per unit decrease in pro%t on

the 1$ units.d. Accept the o*er since the o*er price exceeds the unit xed cost.

1. $elect the correct denition of segment margin from the following< ;oints points.d. /utput may be sold at the split@o* point or processed further and then sold.

17. "n joint product costing and analysis& which one of the following costs isrelevant when deciding the point at which a product should be sold in order tomaximize prots? ;oints < 1=

a. urchase costs of the materials reIuired for the joint productsb. #eparable costs after the split-o> pointc. Eoint costs to the split@o* pointd. $ales salaries for the period when the units were produced

18. %efore committing resources to a joint process& management must rstdecide whether total expected revenue from selling the joint output 4bas-et4 ofproducts is li-ely to exceed the.c. net realizable value at split@o*.d. sales value at split@o*.

21. D$ !ompany manufactures two products& roduct D and roduct $ in a jointprocess. 3he joint ;common= costs incurred are B'2:&::: for a standard productionrun that generates 18:&::: units of D and 12:&::: units of $. roduct D sells forB2.': per unit while roduct $ sells for B.9: per unit. Assuming both products aresold at the split@o* point& the amount of joint cost of each production run allocated

to roduct D on a net realizable value ;K,= basis is< ;oints < 1=a. B22&:::.b. B218&'::.c. +'1$6.d. B168&:::.

22. roducts A and % are manufactured in a joint process. 3he joint ;common=costs incurred are B22&::: for a standard production run that generates 1:8&:::gallons of roduct A which sells for B2.': per gallon and 72&::: gallons of roduct% which sells for B.9: per gallon. "f no additional costs are incurred after the split@o* point& the amount of joint cost of each production run allocated to roduct % ona physical measure basis is< ;oints < 1=

a. +1$8.b. B1':&:::.c. B11&2::.d. B28:&8::.

2. roducts L and S are manufactured in a joint process. 3he joint ;common=costs incurred are B'2:&::: for a standard production run that generates 18:&:::gallons of roduct L which sells for B2.': per gallon and 12:&::: gallons of roductS which sells for B.9: per gallon. "f additional processing costs beyond the split@o*point are B1.': per gallon for roduct L and B:.9: per gallon for roduct S& theamount of joint cost allocated to roduct S on a net realizable value basis isivision is producing and selling atcapacity. (hat is the minimum selling price that the division would consider on aHspecial orderH of 1&::: chips on which no variable period costs would be incurred?;oints < 1=

a. B1::b. B72c. B81


41/52

d. +576. 3he $outhern >igital& "nc. produces a high@Iuality computer chip. )nit production

costs ;based on capacity production of 1::&::: units per year= followirect material B:>irect labor 2:/verhead ;2:Q variable= 1:/ther informationivision is presently operating at alevel of 8:&::: chips per year. Accepting a Hspecial orderH on 2&::: chips at B88will ;oints < 1=

a. increase total corporate prots by B'&:::.b. increase total corporate pro%ts by +'$.c. decrease total corporate prots by B1'&:::.d. decrease total corporate prots by B2'&:::.

8. (hich of the following statements is true regarding by@products or scrap? ;oints isposal!ost P$plit@/*

0urtherrocessing

0inal $alesrice


42/52

A 1&8:: B7.:: B'.: B1.: B8.::! 2&6:: 1:.:: 6.:: .: 12.2"f A and ! are processed further& no disposal costs will be incurred or such costswill be borne by the buyer.

11. )sing sales value at split@o*& what amount of joint processing cost isallocated to roduct A ;round to the nearest dollar=? ;oints < 1=

a. B2&98

b. B&682c. B'&::d. +6$6'

12. )sing sales value at split@o*& what amount of joint processing cost isallocated to roduct ! ;round to the nearest dollar=?

a. +'$;18b. B'&::c. B6&:62d. B6&282

1. )sing net realizable value at split@o*& what amount of joint processing cost isallocated to roduct ! ;round to the nearest dollar=?

a. B2&718b. B'&::c. B6&:62d. +6$'8'

1'. )sing approximated net realizable value at split@o*& what amount of jointprocessing cost is allocated to roduct A ;round to the nearest dollar=? ;oints < 1=

a. B2&718b. B2&9'c. +A$17d. B'&::

1. )sing approximated net realizable value at split@o*& what amount of jointprocessing cost is allocated to roduct ! ;round to the nearest dollar=? ;oints < 1=

a. B'&::b. +,$586c. B6&:62d. B6&282

Unit 8 !ractice Questions1. $elect the incorrect statement concerning the historical relationship between cost

accounting systems and nancial accounting systems. ;oints < 1=

a. 3he two systems often compete.b. 0inancial accounting systems have been the dominant system.c. For %nancial reporting re:uirements$ cost information must be

highly segmented.d. "nformation provided by the nancial reporting system is often of little value

for cost management purposes.2. A structure of interrelated elements that collects& organizes& and communicates

data to managers so they can plan& control& ma-e decisions& and evaluateperformance is a< ;oints < 1=

a. cost management system ;!#$=.b. enterprise resource planning ;5,= system.


43/52

c. management control system ;#!$=.d. management information system GH.

. (hich of the following is not a primary component of a management controlsystem? ;oints < 1=

a. Assessorb. @lac boxc. 5*ectord. $ensor

'. (hich of the following is not an organizational role of a cost management system?;oints < 1=

a. Jelp manage core competenciesb. Din- plans and strategies to actual organizational performancec. Jelp identify tactics to fend o* organizational threatsd. &dentify the organization/s mission

. (hich of the following is not a primary goal of a cost management system?;oints < 1=

a. Assess productOservice life@cycle performanceb. >evelop accurate product costsc. &dentify the company/s least pro%table customers

d. #easure performance6. 3he productOservice costs generated by the !#$ are used for which of the following

purposes? ;oints < 1=a. repare nancial statementsb. !reate a basis for performance measurementsc. 5stablish prices for cost@plus contractsd. "ll of the above

7. 3he relative composition of an organization4s xed and variable costs and& thus&how costs change relative to changes in production or sales volume is referred toas its< ;oints < 1=

a. cost behavior.b. cost horizon.c. cost pattern.d. cost structure.

8. 3he underlying set of assumptions about the entity and the goals& processes&practices& and values that its member share is referred to as its< ;oints < 1=

a. mission.b. strategic plan.c. organizational culture.d. organizational structure.

9. 3he strategy of identifying and exploiting temporary opportunities for advantage is-nown as a ;oints < 1=

a. confrontational strategy.b. cost leadership strategy.c. di*erentiation strategy.d. systematic strategy.

1:. !ore competencies which are the operational dimensions that are -ey to thecompany4s survival include< ;oints < 1=

a. Iuality.b. customer service.c. cost control.d. all of the above.


44/52

11. $elect the incorrect statement from the following. ;oints < 1=a. Jigh-tech companies can/t pursue a cost leadership strategy due to

the high costs of technology.b. #anagement of high technology costs reIuires beating competitors to the

mar-et with new products.c. /ften& getting products to mar-et Iuic-ly and protably reIuires a

compromise between product innovation and superior product design.d. 3he faster a product gets to mar-et& the fewer competitive products will

exist.12. !ost control ;!ost Deadership=& product replacement ;roduct >i*erentiation=

and >istribution channel development ;!onfrontation= are activities for whichproduct life cycle? ;oints < 1=

a. %uildb. Jarvestc. Joldd. Crow

1. $toc- options are an example of a< ;oints < 1=a. cash incentive plan.b. short@term performance incentive.

c. long-term performance incentive.d. none of the above.

1'. $elect the item that incorrectly details the shift in control emphasis in futurecompetitive environments? ;oints < 1=

a. !erformance easurementC From concentrating on multiple types ofcritical success measures to concentrating on %nancial results

b. !ost $tandards< from using expected standards to using ideal standardsc. %udgeting< 0rom developing annual budgets to developing rolling budgetsd. roduct /*erings< 0rom developing a limited number of product styles to

engaging in mass customization to entice a wide variety of customers1. (hich of the following is not an objective of enterprise resource planning

systems? ;oints < 1=a. #anage and coordinate a myriad of organizational activitiesb. #aintain the company4s various legacy information systemsc. "mprove operational e+cienciesd. )ae advantage of cost savings from shared service centers

16. 5very company has upstream suppliers and downstream customers. 3heserelationships may be referred to as a ;oints < 1=

a. total Iuality management system.b. -anban system.c. value chain.d. just@in@time networ-.

17. (hich of the following items is not included in annual inventory carryingcosts? ;oints < 1=

a. "nventory storage costb. &nventory purchase costc. "nsurance on inventoryd. roperty taxes on inventory

18. 3he approach to producing inventory in which production is conducted inanticipation of customer orders is referred to as a ;oints < 1=

a. just in time system.b. push system.


45/52

c. value chain.d. pull system.

19. 3he primary objective of a pull system of production is to minimize< ;oints ect selected performance measurement and

reward criteria.c. much the outcome will reduce the organization4s cost of capital.d. easily the decision impacts can be Iuantied in the organization4s cost

management system.6. 3arget costing ;oints < 1=

a. can be applied to services if they are su4ciently uniform.b. can be applied to services only if they are automated.c. can be applied to services that are performed in a manufacturing

environment.d. cannot be applied to services.

7. (hich of the following statements is false concerning electronic data interchange?;oints < 1=

a. 5lectronic data interchange ;5>"= is essential in a pull system.b. /ne of the benets realized by 5>" organizations is a faster processing

of transactions.c. 2lectronic data interchange is essential in a push system.d. 5lectronic data interchange refers to computer@to@computer exchange of

information.8. (hen E"3 is implemented& which of the following changes in the accounting system

would not be expected? ;oints < 1=a. fewer cost allocationsb. elimination of standard costsc. combining labor and overhead into one product cost categoryd. combing raw material and materials in wor-@in@process into one product

cost category


48/52

9. "n which life@cycle stage are product Iuality improvements and stable selling pricesli-ely to occur? ;oints < 1=

a. introductionb. growthc. maturityd. decline

1:. 0rom a cost management view& research and development cost represents;oints < 1=

a. a life-cycle investmentb. a period expense.c. an unearned revenue.d. a ris- reserve.

11. "n a E"3 manufacturing environment& product costing information is leastimportant for use in ;oints < 1=

a. wor in process inventory valuation.b. pricing decisions.c. product protability analysis.d. ma-e@or@buy decisions.

12. (ith E"3 manufacturing& which of the following costs would be considered a

direct product cost? ;oints < 1=a. insurance on the plantb. utilities used for manufacturingc. janitors4 salariesd. salary of the plant supervisor

1. 3he E"3 environment has caused a reassessment of product costingtechniIues. (hich of the following statements is true with respect to thisreassessment? ;oints < 1=

a. )raditional cost allocations based on direct labor are being:uestioned and criticized.

b. 3he federal government& through the $5!& is responsible for thereassessment.

c. 3he reassessment is caused by the replacement of machine hours with laborhours.

d. Kone of the above is true.1'. (hen a rm adopts the just@in@time method of management& ;oints < 1=

a. employees are retrained on di*erent eIuipment& but the plant layoutgenerally remains unchanged.

b. new machinery and eIuipment must be purchased from franchised E"3dealers.

c. machinery and e:uipment are moved into small autonomousproduction lines called islands or cells.

d. new& more e+cient machinery and eIuipment are purchased and installed inthe original plant layout.

1. (hich of the following describes the e*ect on direct labor whenmanagement adopts the E"3 philosophy? ;oints < 1=

a. 5ach direct labor person performs a single tas-& thereby allowing that personto reach his or her theoretical potential.

b. %ecause each person runs a single machine in a E"3 environment& there aremore employees classied as direct labor.

c. 3he environment becomes more labor@intensive.


49/52

d. achine operators are expected to run several di>erent types ofmachines$ help set up for production runs$ and identify and repairmachinery needing maintenance.

Unit 5 !ractice Questions1. (hich of the following is not a major business trend promoting the increased use o

business process reengineering? ;oints < 1=

a. &ncreasing use of the corporate form of business organizationb. Advancement of technologyc. ursuit of increased Iualityd. "ncrease in price competition caused by globalization

2. %usiness process reengineering changes the way rms execute processes by

cost accounting questions

Documents