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?

Accepted Answer

Fixed costs, such as rent or mortgage payments, tend to be non-differential in the short term because they cannot be easily changed. However, they may become differential in the long term if a company decides to relocate to a different facility or change its long-term lease agreements. Variable costs, mixed costs, and semivariable costs can all be changed in the short term, so they are more likely to be differential in both the short and long term.

Question 2

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

Accepted Answer

The additional cost incurred as the cost driver increases by one unit is known as Incremental Cost or Variable Cost. This cost varies with the level of output or sales and is directly related to the cost driver. Therefore, option C is the appropriate choice. Option A (average cost) is the total cost divided by the number of units produced and does not represent the additional cost incurred by the cost driver. Option B (controllable cost) is a cost that a manager can influence or change, but it doesn't necessarily represent the additional cost per unit. Option D (unit cost) is the total cost divided by the total number of units produced, but it doesn't specifically represent the increase in cost as the cost driver increases by one unit.

Question 3

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

Accepted Answer

The change in total cost associated with each change in the quantity of the cost driver is known as the variable cost, which varies directly with the level of activity. Therefore, option C is the correct answer. The other options (A, B, and D) are not accurate in describing this concept.

Question 4

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

Accepted Answer

A decision maker would be willing to buy cost management information if its value is equal to or greater than its cost, as this ensures that the benefits of the information outweigh the expenses incurred to obtain it.

Question 5

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

Accepted Answer

The cost of goods that were finished and transferred out of work-in-process during the current period is known as the cost of goods manufactured. It includes direct materials, direct labor, and manufacturing overhead costs incurred during the production process.

Question 6

Assume the following information pertaining to Cub Company:$\begin{array}{lr}
\text { Prime costs } & \$ 195,000 \
\text { Conversion costs } & 221,000 \
\text { Direct materials used } & 85,000 \
\text { Beginning work in process } & 98,000 \
\text { Ending work in process } & 81,000
\end{array}$Total manufacturing cost is calculated to be:

Accepted Answer

The answer of Assume the following information pertaining to Cub...

Question 7

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

Accepted Answer

Indirect costs cannot be traced directly to a cost pool or cost object, so they must be assigned by means of cost allocation. Cost allocation involves using a reasonable and consistent method to assign indirect costs to the cost pools or cost objects that benefit from them. This allows for a more accurate determination of the true cost of producing a product or delivering a service. Therefore, assigning indirect costs by means of cost allocation is the best choice.

Question 8

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

Accepted Answer

Structural cost drivers are used in strategic analysis to analyze the complexity of a firm's product and production process. These include factors such as product range, volume of output, degree of vertical integration, and process technology. By analyzing these drivers, a firm can identify areas where it can improve its competitive position through cost reduction or differentiation. Differential, discretionary, and marginal cost drivers are not directly related to product and production complexity.

Question 9

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

Accepted Answer

Indirect manufacturing costs are also known as overhead costs, and they are grouped together in a cost pool called "overhead." This cost pool is then allocated or assigned to the products or services produced by the company based on some allocation method such as direct labor hours or machine hours.

Question 10

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

Accepted Answer

Work-in-process is a term used in manufacturing companies to refer to partially completed goods that are still in the production process. In a merchandising company, the goods are purchased in a finished state and then resold to customers, therefore, there is no work-in-process inventory. Beginning inventory, cost of goods sold, ending inventory, and gross profit are all terms used in merchandising companies.

Question 11

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

Accepted Answer

As production levels increase, fixed costs are spread over more units, reducing the average cost per unit. However, variable costs may not decrease proportionally, so the decrease in average cost is not always directly proportional to the increase in production.

Question 12

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

Accepted Answer

A cost object is any product, service or organizational unit to which costs are assigned for management purposes. This can include anything from individual products to entire divisions or even the entire organization. By determining the costs associated with each cost object, management can make informed decisions about pricing, resource allocation and other strategic choices.

Question 13

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

Accepted Answer

The relevant range is defined as the range of the cost driver over which the assumptions made about cost behavior are valid. It is the range of activity within which the company expects to operate during a given period of time. The relevant range is important because it affects the behavior of costs and the ability of management to control costs.

Question 14

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

Accepted Answer

Variable costs within the relevant range are assumed to vary per unit. This means that as the level of production increases, the total variable costs will also increase in proportion to the number of units produced. Therefore, B, C, D, and E are not correct.

Question 15

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

Accepted Answer

Structural, executional, volume-based, and activity-based cost drivers are all types of cost drivers that influence cost behavior. Differential cost driver is not a recognized type of cost driver.

Question 16

Assume the following information pertaining to Cub Company:$\begin{array}{lr}
\text { Prime costs } & \$ 195,000 \
\text { Conversion costs } & 221,000 \
\text { Direct materials used } & 85,000 \
\text { Beginning work in process } & 98,000 \
\text { Ending work in process } & 81,000
\end{array}$Direct labor used is calculated to be:

Accepted Answer

Direct labor is calculated by subtracting direct materials from prime costs: $195,000 - $85,000 = $110,000.

Question 17

Assume the following information pertaining to Cub Company:$\begin{array}{lr}
\text { Prime costs } & \$ 195,000 \
\text { Conversion costs } & 221,000 \
\text { Direct materials used } & 85,000 \
\text { Beginning work in process } & 98,000 \
\text { Ending work in process } & 81,000
\end{array}$Cost of goods manufactured is calculated to be:

Accepted Answer

The answer of Assume the following information pertaining to Cub...

Question 18

Assume the following information pertaining to Cub Company:$\begin{array}{lr}
\text { Prime costs } & \$ 195,000 \
\text { Conversion costs } & 221,000 \
\text { Direct materials used } & 85,000 \
\text { Beginning work in process } & 98,000 \
\text { Ending work in process } & 81,000
\end{array}$Factory overhead is calculated to be:

Accepted Answer

The answer of Assume the following information pertaining to Cub...

Question 19

Structural cost drivers are to executional cost drivers as:

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 20

Assume the following information pertaining to Moonbeam Company:$\begin{array}{lrr} 
& \text { Beginning } & \text { Ending } \
\text { Finished goods inventory } & \$ 130,000 & \$ 124,000 \
\text { Work in process inventory } & 85,000 & 104,000 \
\text { Direct materials } & 117,000 & 130,000
\end{array}$

$\text { Costs incurred during the period are as follows: }$
$\begin{array}{lr}
\text { Total manufacturing costs } & \$ 896,000 \
\text { Factory overhead } & 199,000 \
\text { Direct materials used } & 156,000
\end{array}$Materials purchases are calculated to be:

Accepted Answer

The answer of Assume the following information pertaining to Moonbeam...

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?

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

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

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

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

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

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:

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

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

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

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

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

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

Structural cost drivers are to executional cost drivers as: