Cost Accounting Quiz Questions

11 Questions | Total Attempts: 593

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Cost Accounting Quizzes & Trivia

Chapter 6-8, 17


Questions and Answers
  • 1. 
    W
    • A. 

      The variance is large in absolute or relative size.

    • B. 

      The variance is small relative to the amount of spending involved.

    • C. 

      The variance is small compared to the normal level of random fluctuation in the account.

    • D. 

      The variance is common in occurrence.

  • 2. 
    The production volume variance
    • A. 

      Only pertains to variable overhead costs.

    • B. 

      Equals the spending variance minus the efficiency variance.

    • C. 

      Pertains to both fixed and variable overhead costs.

    • D. 

      Only pertains to fixed overhead costs.

    • E. 

      Is not applicable in analysis of inventory costs.

  • 3. 
    T heoretical capacity is based on which of the following assumptions?
    • A. 

      That absorption costing is used

    • B. 

      Production will occur at peak efficiency all the time

    • C. 

      That variable costing is used

    • D. 

      Production will occur at peak capacity where feasible (e.g. except for maintenance and repairs)

  • 4. 
    Budgets are advantageous because they
    • A. 

      Compel planning that includes the implementation of plans, require organizing, and ensure controlling

    • B. 

      Compel planning that includes the implementation of plans, provide performance criteria, and promote goodwill.

    • C. 

      Ensure that the organization meets its goals.

    • D. 

      Provide performance criteria, promote goodwill, and save money.

    • E. 

      Compel planning that includes the implementation of plans, provide performance criteria, and promote communication and coordination within the organization.

  • 5. 
    A budget that is adjusted in accordance with changes in actual output is called 
    • A. 

      A static budget.

    • B. 

      A balanced budget.

    • C. 

      A flexible budget.

    • D. 

      A trial balance budget.

    • E. 

      A cost budget.

  • 6. 
    Kaizen budgeting, adapted from the Japanese, provides that 
    • A. 

      Continuous budgeting methods are employed.

    • B. 

      Activity costs are budgeted based on current practices, methods, and costs.

    • C. 

      Target pricing is key to budget preparation.

    • D. 

      A rolling budget is employed to keep a handle on management.

    • E. 

      Continuous improvements are incorporated into the budget.

  • 7. 
    The process in which a company's products or services are measured relative to the best possible levels of performance is known as 
    • A. 

      Standard measurement.

    • B. 

      Budgeting.

    • C. 

      Variance measurement.

    • D. 

      Measuring the performance gap.

    • E. 

      Benchmarking.

  • 8. 
    Some financial variances show increases in operating income relative to a budgeted or allocated amount, and others show decreases in operating income. Respectively, these variances are 
    • A. 

      Fixed, variable

    • B. 

      Budgeted, standard.

    • C. 

      Standard, budgeted.

    • D. 

      Unfavourable, favourable.

    • E. 

      Favourable, unfavourable.

  • 9. 
    • A. 

      Last year's sales plus beginning finished goods inventory plus targeted ending finished goods inventory.

    • B. 

      Budgeted sales less beginning finished goods inventory less targeted ending finished goods inventory.

    • C. 

      Budgeted sales plus beginning finished goods inventory plus targeted ending finished goods inventory.

    • D. 

      Budgeted sales less beginning finished goods inventory plus targeted ending finished goods inventory.

    • E. 

      Budgeted sales plus beginning finished goods inventory less targeted ending finished goods inventory.

  • 10. 
    Clare's Bears manufactures stuffed bears. The company updates it annual budget every month in order to force management to think about the forthcoming 12 months and not just the current budget.  This is an example of a 
    • A. 

      Moving budget.

    • B. 

      Target budget.

    • C. 

      Master budget.

    • D. 

      Rolling budget.

    • E. 

      Timing budget.

  • 11. 
    Activity-based budgeting is a strategy  
    • A. 

      That focuses on the cost of activities necessary to produce and sell products and services

    • B. 

      That requires budgeting each functional organizational unit.

    • C. 

      Does not require an understanding of value added activities.

    • D. 

      Used to determine production targets.

    • E. 

      That requires determining the budgetary slack for the activity being measured