Account

9 Questions  I  By Heathp123
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Account Management Quizzes & Trivia
Cost accounting

  
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Questions and Answers

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  • 1. 
    Life-cycle budgeting
    • A. 

      Is most useful to companies that manufacture small items such as household plastics

    • B. 

      Gives companies more insight into total costs

    • C. 

      Helps companies estimate revenues over a multiyear horizon

    • D. 

      Has little in common with target pricing


  • 2. 
    All of the following are true regarding target costing EXCEPT
    • A. 

      Input is requested from suppliers and distributors

    • B. 

      Customers input is essential to the target costing process

    • C. 

      A key goal is to minimize costs over the product's useful life

    • D. 

      Improvements are implemented in small incremental amounts


  • 3. 
    Special cost-allocation problems arise when:
    • A. 

      Support departments costs exceed budgetary estimates

    • B. 

      Practical capacity is used as the allocation base

    • C. 

      Support departments provide reciprocal services to other support departments

    • D. 

      There is more than one operating department


  • 4. 
    A negative consequence of recording byproducts in the accounting records when the sale occurs is that
    • A. 

      The revenue from the byproducts is usually fairly large, and the accounting records will be distorted

    • B. 

      Managers can time earnings by their decision when to sell byproducts

    • C. 

      Managers have an incentive to stockpile byproducts

    • D. 

      Both B and C are correct


  • 5. 
    Which statement is NOT true regarding the sales method of accounting for byproducts
    • A. 

      The method makes no journal entries until the byproduct is sold

    • B. 

      Revenues of the byproduct can be recorded as a reduction of cost of goods sold in the income statement

    • C. 

      This method is the preferred method because of the matching principle

    • D. 

      Revenues of the byproduct can be recorded in the income statement as revenue


  • 6. 
    In joint costing:
    • A. 

      Costs are assigned to individual products as assembly of the product occurs

    • B. 

      Costs are assigned to individual products as disassembly of the product occurs

    • C. 

      A single production process yields two or more products

    • D. 

      Both B and C are correct


  • 7. 
    Effective planning of fixed overhead costs includes all of the following EXCEPT:
    • A. 

      Planning to be efficient

    • B. 

      Choosing the appropriate level of capacity

    • C. 

      Planning day-to-day operational decisions

    • D. 

      Eliminating nonvalue-added costs


  • 8. 
    Effective planning of variable overhead costs includes all of the following EXCEPT:
    • A. 

      Redesigning the plant layouts for more efficient processing

    • B. 

      Redesigning products to use fewer resources

    • C. 

      Eliminating nonvalue-adding costs

    • D. 

      Choosing the apporiate level of capacity


  • 9. 
    Which of the following is NOT a characteristic of a management control system?
    • A. 

      It motivates individuals throughout the organization to act in concert

    • B. 

      It coordinates forecasting sales and cost-driver activities, budgeting, and measuring and evaluating performance

    • C. 

      It aids and coordinates the process of making decisions

    • D. 

      It encourages short-term profitability


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