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Test Bank for Cost Accounting: A Managerial Emphasis, 14E, Horngren, Datar and Rajan

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Test Bank for Cost Accounting: A Managerial Emphasis, 14e, Horngren, Datar and Rajan. Note : this is not a text book. Description: ISBN-13: 978-0132109178 ISBN-10: 0132109174.

 

Description

Chapter 1: The Accountant’s Role in the Organization
1) Management accounting:
A) focuses on estimating future revenues, costs, and other measures to forecast activities and their results
B) provides information about the company as a whole
C) reports information that has occurred in the past that is verifiable and reliable
D) provides information that is generally available only on a quarterly or annual basis

2) Managers use management accounting information to ________ strategy.
A) choose
B) communicate
C) implement
D) All of these answers are correct.

3) Financial accounting:
A) focuses on the future and includes activities such as preparing next year’s operating budget
B) must comply with GAAP (generally accepted accounting principles)
C) reports include detailed information on the various operating segments of the business such as product lines or departments
D) is prepared for the use of department heads and other employees

4) The person most likely to use ONLY financial accounting information is a:
A) factory shift supervisor
B) vice president of operations
C) current shareholder
D) department manager

5) Which of the following people is LEAST likely to use management accounting information?
A) the controller
B) a shareholder evaluating a stock investment
C) the treasurer
D) an assembly department supervisor

6) Financial accounting provides the primary source of information for:
A) decision making in the finishing department
B) improving customer service
C) preparing the income statement for shareholders
D) planning next year’s operating budget

7) Which of the following descriptors refers to management accounting information?
A) It is verifiable and reliable.
B) It is driven by rules.
C) It is prepared for shareholders.
D) It provides reasonable and timely estimates.

8) Which of the following statements refers to management accounting information?
A) There are no regulations governing the reports.
B) The reports are generally delayed and historical.
C) The audience tends to be stockholders, creditors, and tax authorities.
D) It primarily measures and records business transactions.

9) Which of the following groups would be LEAST likely to receive detailed management accounting reports?
A) stockholders
B) sales representatives
C) production supervisors
D) managers

10) Management accounting information includes:
A) tabulated results of customer satisfaction surveys
B) the cost of producing a product
C) the percentage of units produced that are defective
D) All of these answers are correct.

Chapter 2: An Introduction to Cost Terms and Purposes
1) Cost objects include:
A) products
B) customers
C) departments
D) All of these answers are correct.

2) Actual costs are:
A) the costs incurred
B) budgeted costs
C) estimated costs
D) forecasted costs

3) The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is:
A) cost accumulation
B) cost assignment
C) cost tracing
D) conversion costing

4) In order to make decisions, managers need to know:
A) actual costs
B) budgeted costs
C) both costs
D) neither cost

5) The collection of accounting data in some organized way is:
A) cost accumulation
B) cost assignment
C) cost tracing
D) conversion costing

6) Budgeted costs are:
A) the costs incurred this year
B) the costs incurred last year
C) planned or forecasted costs
D) competitor’s costs

7) Cost assignment :
A) is always arbitrary
B) is includes tracing and allocating
C) is the same as cost accumulation
D) is finding the difference between budgeted and actual costs

8) A cost system determines the cost of a cost object by:
A) accumulating and then assigning costs
B) accumulating costs
C) assigning and then accumulating costs
D) assigning costs

9) Products, services, departments, and customers may be cost objects.
10) Costs are accounted for in two basic stages: assignment followed by accumulation.

Chapter 3: Cost-Volume-Profit Analysis
1) Cost-volume-profit analysis is used primarily by management:
A) as a planning tool
B) for control purposes
C) to prepare external financial statements
D) to attain accurate financial results

2) One of the first steps to take when using CVP analysis to help make decisions is:
A) finding out where the total costs line intersects with the total revenues line on a graph.
B) identifying which costs are variable and which costs are fixed.
C) calculation of the degree of operating leverage for the company.
D) estimating how many products will have to be sold to make a decent profit.

3) Cost-volume-profit analysis assumes all of the following EXCEPT:
A) all costs are variable or fixed
B) units manufactured equal units sold
C) total variable costs remain the same over the relevant range
D) total fixed costs remain the same over the relevant range

4) Which of the following items is NOT an assumption of CVP analysis?
A) Total costs can be divided into a fixed component and a component that is variable with respect to the level of output.
B) When graphed, total costs curve upward.
C) The unit-selling price is known and constant.
D) All revenues and costs can be added and compared without taking into account the time value of money.

5) Which of the following items is NOT an assumption of CVP analysis?
A) Costs may be separated into separate fixed and variable components.
B) Total revenues and total costs are linear in relation to output units.
C) Unit selling price, unit variable costs, and unit fixed costs are known and remain constant.
D) Proportion of different products will remain constant when multiple products are sold.

6) A revenue driver is defined as:
A) any factor that affects costs and revenues
B) any factor that affects revenues
C) only factors that can influence a change in selling price
D) only factors that can influence a change in demand

7) Operating income calculations use:
A) net income
B) income tax expense
C) cost of goods sold and operating costs
D) nonoperating revenues and nonoperating expenses

8) Which of the following statements about net income (NI) is true?
A) NI = operating income plus nonoperating revenue.
B) NI = operating income plus operating costs.
C) NI = operating income less income taxes.
D) NI = operating income less cost of goods sold.

9) Which of the following is true about the assumptions underlying basic CVP analysis?
A) Only selling price is known and constant.
B) Only selling price and variable cost per unit are known and constant.
C) Only selling price, variable cost per unit, and total fixed costs are known and constant.
D) Selling price, variable cost per unit, fixed cost per unit, and total fixed costs are known and constant.

10) The contribution income statement:
A) reports gross margin
B) is allowed for external reporting to shareholders
C) categorizes costs as either direct or indirect
D) can be used to predict future profits at different levels of activity

Chapter 4: Job Costing
1) Job costing information is used:
A) to develop strategies
B) to make pricing decisions
C) for external financial reporting
D) All of these answers are correct.

2) Product costing information is used by managers:
A) to make decisions and strategy
B) for planning and control
C) for cost management
D) All of these answers are correct.

3) A ________ is a grouping of individual indirect cost items.
A) cost allocation base
B) cost assignment
C) cost pool
D) job-costing system

4) Each indirect-cost pool of a manufacturing firm:
A) utilizes a separate cost-allocation rate
B) is a subset of total indirect costs
C) relates to one cost object
D) All of these answers are correct.

5) Direct costs
A) are anything for which a measurement of costs is desired.
B) are costs related to a particular cost object that can be traced to that cost object in an economically feasible (cost-effective) way
C) focus specifically on the costing needs of the CFO
D) provide all information for management decision needs

6) In a costing system:
A) cost tracing allocates indirect costs
B) cost allocation assigns direct costs
C) a cost-allocation base can be either financial or nonfinancial
D) a cost object should be a product and not a department or a geographic territory

7) Assigning direct costs to a cost object is called:
A) cost allocation
B) cost assignment
C) cost pooling
D) cost tracing

8) ________ is the process of distributing indirect costs to products.
A) Cost allocation
B) Job cost recording
C) Cost pooling
D) Cost tracing

9) A ________ links an indirect cost to a cost object.
A) cost-allocation base
B) cost pool
C) cost assignment
D) cost tracing

10) Which of the following includes both traced direct costs and allocated indirect costs?
A) cost tracing
B) cost pools
C) cost assignments
D) cost allocations

Chapter 5: Activity-Based Costing and Activity-Based Management

1) If products are different, then for costing purposes:
A) an ABC costing system will yield more accurate cost numbers
B) a simple costing system should be used
C) a single indirect-cost rate should be used
D) none of the above

2) Overcosting a particular product may result in:
A) loss of market share
B) pricing the product too low
C) operating efficiencies
D) understating total product costs

3) Undercosting of a product is most likely to result from:
A) misallocating direct labor costs
B) underpricing the product
C) overcosting another product
D) overstating total product costs

4) A company produces three products; if one product is overcosted then:
A) one product is undercosted
B) one or two products are undercosted
C) two products are undercosted
D) no products are undercosted

5) Misleading cost numbers are most likely the result of misallocating:
A) direct material costs
B) direct manufacturing labor costs
C) indirect costs
D) All of these answers are correct.

6) An accelerated need for refined cost systems is due to:
A) global monopolies
B) rising prices
C) intense competition
D) a shift toward increased direct costs

7) The use of a single indirect-cost rate is more likely to:
A) undercost high-volume simple products
B) undercost low-volume complex products
C) undercost lower-priced products
D) Both B and C are correct.

8) Uniformly assigning the costs of resources to cost objects when those resources are actually used in a nonuniform way is called:
A) overcosting
B) undercosting
C) peanut-butter costing
D) department costing

9) A top-selling product might actually result in losses for the company.

10) Companies that overcost products will most likely lose market share.

Chapter 6: Master Budget and Responsibility Accounting

1) A budget:
A) is the quantitative expression of a proposed plan of action by management
B) is an aid to coordinate what needs to be done
C) generally includes both financial and nonfinancial aspects of the plan
D) All of the above are correct.

2) A budget
A) is the quantitative expression of a proposed plan of action.
B) aids in coordinating what needs to be done.
C) includes both financial and nonfinancial aspects.
D) All of these answers are correct.

3) Budgeting is used to help companies:
A) plan to better satisfy customers
B) anticipate potential problems
C) focus on opportunities
D) All of these answers are correct.

4) A master budget:
A) includes only financial aspects of a plan and excludes nonfinancial aspects
B) is an aid to coordinating what needs to be done to implement a plan
C) includes broad expectations and visionary results
D) should not be altered after it has been agreed upon

5) Operating decisions primarily deal with:
A) the use of scarce resources
B) how to obtain funds to acquire resources
C) acquiring equipment and buildings
D) satisfying stockholders

6) Financing decisions primarily deal with:
A) the use of scarce resources
B) how to obtain funds to acquire resources
C) acquiring equipment and buildings
D) preparing financial statements for stockholders

7) Budgeting provides all of the following EXCEPT:
A) a means to communicate the organization’s short-term goals to its members
B) support for the management functions of planning and coordination
C) a means to anticipate problems
D) an ethical framework for decision making

8) If initial budgets prove UNACCEPTABLE, planners achieve the most benefit from:
A) planning again in light of feedback and current conditions
B) deciding not to budget this year
C) accepting an unbalanced budget
D) using last year’s budget

9) Operating budgets and financial budgets:
A) combined form the master budget
B) are prepared before the master budget
C) are prepared after the master budget
D) have nothing to do with the master budget

10) A good budgeting system forces managers to examine the business as they plan, so they can:
A) detect inaccurate historical records
B) set specific expectations against which actual results can be compared
C) complete the budgeting task on time
D) get promoted for doing a good job

Chapter 7: Flexible Budgets, Direct-Cost Variances, and Management Control
1) The master budget is:
A) a flexible budget
B) a static budget
C) developed at the end of the period
D) based on the actual level of output

2) A flexible budget:
A) is another name for management by exception
B) is developed at the end of the period
C) is based on the budgeted level of output
D) provides favorable operating results

3) Management by exception is the practice of concentrating on:
A) the master budget
B) areas not operating as anticipated
C) favorable variances
D) unfavorable variances

4) A variance is:
A) the gap between an actual result and a benchmark amount
B) the required number of inputs for one standard output
C) the difference between an actual result and a budgeted amount
D) the difference between a budgeted amount and a standard amount

5) An unfavorable variance indicates that:
A) actual costs are less than budgeted costs
B) actual revenues exceed budgeted revenues
C) the actual amount decreased operating income relative to the budgeted amount
D) All of these answers are correct.

6) A favorable variance indicates that:
A) budgeted costs are less than actual costs
B) actual revenues exceed budgeted revenues
C) the actual amount decreased operating income relative to the budgeted amount
D) All of these answers are correct.

7) What is the static-budget variance of revenues?
A) $20,000 favorable
B) $20,000 unfavorable
C) $2,000 favorable
D) $2,000 unfavorable

8) What is the static-budget variance of variable costs?
A) $1,200 favorable
B) $9,400 unfavorable
C) $20,000 favorable
D) $1,200 unfavorable

9) What is the static-budget variance of operating income?
A) $10,600 favorable
B) $10,600 unfavorable
C) $13,100 favorable
D) $13,100 unfavorable

10) What is the static-budget variance of revenues?
A) $60,000 favorable
B) $60,000 unfavorable
C) $6,000 favorable
D) $6,000 unfavorable

Chapter 8: Flexible Budgets, Overhead Cost Variances, and Management Control
1) Overhead costs have been increasing due to all of the following EXCEPT:
A) increased automation
B) more complexity in distribution processes
C) tracing more costs as direct costs with the help of technology
D) product proliferation

2) Effective planning of variable overhead costs means that a company performs those variable overhead costs that primarily add value for:
A) the current shareholders
B) the customer using the products or services
C) plant employees
D) major suppliers of component parts

3) Variable overhead costs include:
A) plant-leasing costs
B) the plant manager’s salary
C) depreciation on plant equipment
D) machine maintenance

4) Fixed overhead costs include:
A) the cost of sales commissions
B) property taxes paid on plant facilities
C) energy costs
D) indirect materials

5) Effective planning of fixed overhead costs includes all of the following EXCEPT:
A) planning day-to-day operational decisions
B) eliminating nonvalue-added costs
C) planning to be efficient
D) choosing the appropriate level of capacity

6) Effective planning of variable overhead includes all of the following EXCEPT:
A) choosing the appropriate level of capacity
B) eliminating nonvalue-adding costs
C) redesigning products to use fewer resources
D) redesigning the plant layout for more efficient processing

7) Choosing the appropriate level of capacity:
A) is a key strategic decision
B) may lead to loss of sales if overestimated
C) may lead to idle capacity if underestimated
D) All of these answers are correct.

8) The major challenge when planning fixed overhead is:
A) calculating total costs
B) calculating the cost-allocation rate
C) choosing the appropriate level of capacity
D) choosing the appropriate planning period

9) Overhead costs are a major part of costs for most companiesmore than 50% of all costs for some companies.

10) At the start of the budget period, management will have made most decisions regarding the level of fixed overhead costs to be incurred.

Chapter 9: Inventory Costing and Capacity Analysis

1) Which of the following cost(s) are inventoried when using variable costing?
A) direct manufacturing costs
B) variable marketing costs
C) fixed manufacturing costs
D) Both A and B are correct.

2) Which of the following cost(s) are inventoried when using absorption costing?
A) direct manufacturing costs
B) variable marketing costs
C) fixed manufacturing costs
D) Both A and C are correct.

3) ________ is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs and all fixed manufacturing costs are excluded.
A) Variable costing
B) Mixed costing
C) Absorption costing
D) Standard costing

4) Absorption costing is required for all of the following except:
A) generally accepted accounting principles
B) determining a competitive selling price
C) external reporting to shareholders
D) income tax reporting

5) Absorption costing:
A) expenses marketing costs as cost of goods sold
B) treats direct manufacturing costs as a period cost
C) includes fixed manufacturing overhead as an inventoriable cost
D) is required for internal reports to managers

6) Variable costing:
A) expenses administrative costs as cost of goods sold
B) treats direct manufacturing costs as a product cost
C) includes fixed manufacturing overhead as an inventoriable cost
D) is required for external reporting to shareholders

7) ________ method(s) expense(s) variable marketing costs in the period incurred.
A) Variable costing
B) Absorption costing
C) Throughput costing
D) All of these answers are correct.

8) ________ method(s) include(s) fixed manufacturing overhead costs as inventoriable costs.
A) Variable costing
B) Absorption costing
C) Throughput costing
D) All of these answers are correct.

9) ________ method(s) expense(s) direct material costs as cost of goods sold.
A) Variable costing
B) Absorption costing
C) Throughput costing
D) All of these answers are correct.

10) ________ method(s) is required for tax reporting purposes.
A) Variable costing
B) Absorption costing
C) Throughput costing
D) All of these answers are correct.

Chapter 10: Determining How Costs Behave

1) Which of the following statements related to assumptions about estimating linear cost functions is FALSE?
A) Variations in a single cost driver explain variations in total costs.
B) A cost object is anything for which a separate measurement of costs is desired.
C) A linear function approximates cost behavior within the relevant range of the cost driver.
D) A high correlation between two variables ensures that a cause-and-effect relationship exists.

2) A high correlation between two variables s and t indicates that:
A) s may cause t, or t may cause s
B) both may be affected by a third variable
C) the correlation may be due to random chance
D) All of these answers are correct.

3) Which of the following does NOT represent a cause-and-effect relationship?
A) Material costs increase as the number of units produced increases.
B) A company is charged 40 cents for each brochure printed and mailed.
C) Utility costs increase at the same time that insurance costs increase.
D) It makes sense that if a complex product has a large number of parts it will take longer to assemble than a simple product with fewer parts.

4) Bennet Company employs 30 individuals. Eighteen employees are paid $14 per hour and the rest are salaried employees paid $4,000 a month. How would total costs of personnel be classified?
A) variable
B) mixed
C) a variable cost within a relevant range
D) a fixed cost within a relevant range

5) McGuinness Company employs 8 individuals. They are all paid $14.50 per hour. How would total costs of personnel be classified?
A) variable
B) mixed
C) a variable cost within a relevant range
D) a fixed cost within a relevant range

6) For February, the cost components of a picture frame include $0.25 for the glass, $.65 for the wooden frame, and $0.80 for assembly. The assembly desk and tools cost $400. 1,000 frames are expected to be produced in the coming year. What cost function best represents these costs?
A) y = 1.70 + 400X
B) y = 400 +1.70X
C) y = 2.10 + 1,000X
D) y = .90 + 400X

7) The cost components of a heater include $35 for the compressor, $12 for the sheet molded compound frame, and $80 per unit for assembly. The factory machines and tools cost is $55,000. The company expects to produce 1,500 heaters in the coming year. What cost function best represents these costs?
A) y = 1,500 + 127X
B) y = 1,500 +55,000X
C) y = 55,000 + 1,500X
D) y = 55,000 +127X

8) A linear cost function can represent:
A) mixed cost behaviors
B) fixed cost behaviors
C) variable cost behaviors
D) All of these answers are correct.

9) The cost function y = 2,000 + 6X:
A) has a slope coefficient of 2,000
B) has an intercept of 6
C) is a straight line
D) represents a fixed cost

10) The cost function y = 150 + 10X:
A) has a slope coefficient of 150
B) has an intercept of 150
C) is a nonlinear
D) represents a fixed cost

AND MUCH MORE