Question 1

Which of the following tend to be non-differential in the short term since they cannot be changed, but are more likely to be differential in the long term?
A)Fixed costs.
B)Variable costs.
C)Mixed costs.
D)Semivariable costs.

Accepted Answer

Fixed costs tend to be non-differential in the short term since they cannot be easily changed, but they are more likely to be differential in the long term due to changes in business operations or strategy. By contrast, variable, mixed, and semivariable costs are more likely to be differential in the short term since they can be more easily adjusted in response to changes in production or sales volume.

Question 2

Structural cost drivers are to executional cost drivers as:
A)Long-term is to short-term.
B)Fixed is to variable.
C)Total is to partial.
D)Direct is to indirect.

Accepted Answer

Structural cost drivers are related to long-term considerations such as scale, scope, and complexity of operations, while executional cost drivers are concerned with short-term, operational efficiencies and effectiveness.

Question 3

How will unit (average) cost of manufacturing (materials, labor and overhead) usually change if the production level rises?
A)It will remain constant.
B)It will increase in direct proportion to the production increase.
C)It will increase, but inversely with the production increase.
D)It will decrease inversely and in direct proportion to the production increases.
E)It will decrease, but not in direct proportion to the production increase.

Accepted Answer

E

Question 4

Cost of goods manufactured is calculated to be:
A)$289,000.
B)$348,000.
C)$314,000.
D)$297,000.
E)$323,000.

Accepted Answer

The answer of Cost of goods manufactured is calculated to...

Question 5

Which one of the following would not be found in a merchandising company?
A)Beginning inventory.
B)Cost of goods sold.
C)Ending inventory.
D)Gross profit.
E)Work-in-process.

Accepted Answer

Work-in-process is typically found in a manufacturing company's inventory account, not in a merchandising company's inventory account. Merchandising companies purchase finished goods to sell to customers, while manufacturing companies produce and sell their own products.

Question 6

The cost of goods that were finished and transferred out of work-in-process during the current period is:
A)Cost of goods sold.
B)Cost of goods available for use.
C)Cost of goods manufactured.
D)Cost of goods available for sale.
E)Cost of goods purchased.

Accepted Answer

The cost of goods that were finished and transferred out of work-in-process during the current period is the cost of goods manufactured. This includes all direct materials, direct labor, and overhead costs that have been incurred in the manufacturing process. It does not include any selling or administrative expenses, which would be included in the cost of goods sold once the products are sold to customers.

Question 7

Theoretically, a decision maker would probably be willing to buy cost management information if:
A)It is accurate.
B)It is consistent with management objectives.
C)It is timely.
D)Its value is equal to or greater than its cost.

Accepted Answer

The answer of Theoretically, a decision maker would probably be...

Question 8

Variable costs within the relevant range for a firm are assumed:
A)Not to vary per unit.
B)Not to vary in total.
C)To be nonlinear.
D)To be curvilinear.
E)None of the above are correct.

Accepted Answer

Within the relevant range, variable costs are assumed to vary proportionally with the level of activity, so they do not vary in total but they do vary per unit. Therefore, choice A is the correct answer. Choices C, D, and E are incorrect as they do not accurately describe variable costs within the relevant range.

Question 9

Any product, service, or organizational unit to which costs are assigned for some management purpose is a (n):
A)Cost object.
B)Direct cost.
C)Indirect cost.
D)Cost driver.
E)Allocation base.

Accepted Answer

A cost object is any product, service, or organizational unit to which costs are assigned for some management purpose. It is used to determine the total cost of producing a particular product or service or running an organizational unit. Examples of cost objects include a batch of products, a specific service provided to a customer, or a department within a company.

Question 10

Direct labor used is calculated to be:
A)$306,000.
B)$26,000.
C)$110,000.
D)$84,000.
E)$111,000.

Accepted Answer

Direct labor used is the total amount of labor cost incurred during the period, which is equal to the total wages paid to workers who were directly involved in production. The information needed to calculate direct labor used is usually found in the company's payroll records. Based on the options given, the amount of direct labor used is $110,000.

Question 11

Strategic analysis uses which of the following to help a firm improve its competitive position through an analysis of product and production complexity?
A)Differential cost drivers.
B)Discretionary cost drivers.
C)Structural cost drivers.
D)Marginal cost drivers.

Accepted Answer

Strategic analysis uses structural cost drivers to help a firm improve its competitive position through an analysis of product and production complexity. Structural cost drivers are factors like economies of scale, scope, learning effects, and capacity utilization that determine the cost of production for a firm. By analyzing these drivers, a firm can identify areas where it can reduce costs and improve its competitive position in the market. Differential cost drivers refer to the cost differences between two alternatives or options, discretionary cost drivers are controllable costs that are not essential to the operation of a business, and marginal cost drivers refer to the cost of producing one additional unit of a product.

Question 12

All indirect manufacturing costs are commonly combined into a single cost pool called:
A)Activity cost pools.
B)Value streams.
C)Resources.
D)Overhead.
E)Other manufacturing costs.

Accepted Answer

Indirect manufacturing costs are incurred in the manufacturing process but cannot be directly traced to a specific product or cost center. Examples of indirect manufacturing costs include rent, utilities, insurance, and depreciation. These costs are typically combined into a single cost pool known as overhead. Allocating overhead to specific products or cost centers is done through a predetermined overhead rate or by using activity-based costing.

Question 13

The range of the cost driver in which the actual value of the cost driver is expected to fall is called the:
A)Actual cost range.
B)Driver range.
C)Activity range.
D)Expected cost range.
E)Relevant range.

Accepted Answer

The relevant range is the range in which the cost driver is expected to operate and is relevant for cost estimation and decision-making purposes. It is important to note that the behavior of costs may differ outside of the relevant range, therefore, it is necessary to determine the relevant range of the cost driver for accurate cost estimation and decision making.

Question 14

The additional cost incurred as the cost driver increases by one unit is:
A)Average cost.
B)Controllable cost.
C)Variable cost.
D)Unit cost.

Accepted Answer

The additional cost incurred as the cost driver increases by one unit is known as the variable cost. This cost varies with the level of output, which means for each additional unit of output produced, there is an associated increase in the variable cost. Therefore, the best choice for this question is option C.

Question 15

Which one of the following is not a type of cost driver?
A)Structural cost driver.
B)Executional cost driver.
C)Volume-Based cost driver.
D)Differential cost driver.
E)Activity-Based cost driver.

Accepted Answer

Structural, Executional, Volume-Based, and Activity-Based cost drivers are all types of cost drivers. Differential cost driver is not a type of cost driver. Differential costs are costs that differ between alternatives and are not a driving factor in determining total cost.

Question 16

Materials purchases are calculated to be:
A)$143,000.
B)$156,000.
C)$91,000.
D)$169,000.
E)$140,000.

Accepted Answer

The answer of Materials purchases are calculated to be:
A)$143,000.
B)$156,000.
C)$91,000.
D)$169,000.
E)$140,000....

Question 17

Factory overhead is calculated to be:
A)$306,000.
B)$26,000.
C)$110,000.
D)$84,000.
E)$111,000.

Accepted Answer

The answer of Factory overhead is calculated to be:
A)$306,000.
B)$26,000.
C)$110,000.
D)$84,000.
E)$111,000....

Question 18

Since indirect cost cannot be conveniently or economically traced directly to a cost pool or cost object, the management accountant will:
A)Assign them by means of cost allocation.
B)Assign them where needed.
C)Assign them randomly to even out these costs.
D)Not assign them at all.
E)None of the above.

Accepted Answer

Indirect costs are allocated to cost pools or cost objects through cost allocation. This method involves identifying a cost driver that has a causative relationship with the indirect cost, and then allocating the cost based on the usage or consumption of the cost driver. This allows for a reasonable distribution of indirect costs, even if they cannot be directly traced.

Question 19

Total manufacturing cost is calculated to be:
A)$306,000.
B)$26,000.
C)$110,000.
D)$331,000.
E)$111,000.

Accepted Answer

The answer of Total manufacturing cost is calculated to be:
A)$306,000.
B)$26,000.
C)$110,000.
D)$331,000.
E)$111,000....

Question 20

The change in total cost associated with each change in the quantity of the cost driver is:
A)Average cost.
B)Controllable cost.
C)Variable cost.
D)Unit cost.

Accepted Answer

The change in total cost associated with each change in the quantity of the cost driver is known as variable cost. Variable costs can be directly attributed to a specific cost driver, such as labor or materials, and vary as the level of production or sales changes. Average cost is the total cost divided by the quantity produced or sold. Controllable cost is a cost that can be influenced or managed by the decision-making of a manager or department, while unit cost is the cost incurred for a single unit of production or sale.

Quiz 3: Basic Cost Management Concepts

Which of the following tend to be non-differential in the short term since they cannot be changed, but are more likely to be differential in the long term?

Structural cost drivers are to executional cost drivers as:

How will unit (average) cost of manufacturing (materials, labor and overhead) usually change if the production level rises?

Cost of goods manufactured is calculated to be:

Which one of the following would not be found in a merchandising company?

The cost of goods that were finished and transferred out of work-in-process during the current period is:

Theoretically, a decision maker would probably be willing to buy cost management information if:

Variable costs within the relevant range for a firm are assumed:

Any product, service, or organizational unit to which costs are assigned for some management purpose is a (n) :

Direct labor used is calculated to be:

Strategic analysis uses which of the following to help a firm improve its competitive position through an analysis of product and production complexity?

All indirect manufacturing costs are commonly combined into a single cost pool called:

The range of the cost driver in which the actual value of the cost driver is expected to fall is called the:

The additional cost incurred as the cost driver increases by one unit is:

Which one of the following is not a type of cost driver?

Materials purchases are calculated to be:

Factory overhead is calculated to be:

Since indirect cost cannot be conveniently or economically traced directly to a cost pool or cost object, the management accountant will:

Total manufacturing cost is calculated to be:

The change in total cost associated with each change in the quantity of the cost driver is: