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Cost Accounting Multiple Choice "Cross Functional Decision Making"

Please answer all twenty-six questions, providing detailed explanations for each answer.

1. Cross Functional Decision Making:

A) Brings together individuals from diverse functions and backgrounds in order to generate innovative solutions to problems.
B) Brings together individuals from different industries to benchmark solutions to similar problems.
C) Brings together individuals with different jobs in the same function to generate innovative solutions to problems.
D) Focuses on finding new opportunities, informed but not restricted to what has worked in the past.

Answer: _____

2. The delivery of products or services to customers is an example of which element in the value chain?

A) Supply
B) Design
C) Marketing
D) Distribution

Answer: _____

3. Which of the following is not a name for indirect resources?

A) Overhead costs
B) Burden
C) Direct costs
D) Common costs

Answer: _____

4. Under variable costing, operating income is measured by:

A) Gross margin minus operating expenses.
B) Throughput minus operating expenses.
C) Contribution margin minus indirect manufacturing and operating costs.
D) Sales minus variable costs.

Answer: _____

5. Which of the following companies would most likely use a job-order costing system?

A) A textbook manufacturer
B) A lumber company
C) A paint manufacturer
D) A sweater manufacturer

Answer: _____

6. In a job-order costing system, the entry to requisition $1,000 of factory supplies from Raw- Materials inventory would be recorded with a:

A) Debit to Work- in process- inventory and credit to Raw-Materials Inventory
B) Debit to Manufacturing Overhead and credit to Cash
C) Debit to Manufacturing Overhead and credit to Raw- Materials inventory
D) Debit to raw materials inventory and credit to Work- in-Process

Answer: _____

7. Setup labor costs required for setting up equipment for flexible production facilities for manufacturing would be an example of:

A) Unit-level activity
B) Batch-level activity
C) Product-level activity
D) Customer-level activity

Answer: _____

8. Which of the following is not a planning issue in Activity-Based-Management?

A) The intended scope of the project
B) The current customer base
C) Information gathering
D) Resistance to change

Answer: _____

9. Elton Industries desires a return on sales of 20%. Their current sales revenue is $10,000,000 and their current return on sales is 15%. Assuming sales remain the same, to achieve their desired target profit, they must reduce their costs by

A) $ 500,000
B) $1,500,000
C) $2,000,000
D) None of the above

Answer: _____

10. Which of the following statements describes a flowchart?

A) Shows trends in variation in product or service attributes over time by reflecting measures of important quality features taken at defined points in time.
B) Displays frequency distribution of an attribute's measures around an average attribute value.
C) Reflects cause and effect and sequential linkages among process activities.
D) Plots two measures that may be related to diagnose cause and effect outcomes and activities that may drive them.

Answer: _____

Use the following information for questions 11 and 12:

Harold Manufacturing Company has the following information available for its process-costing system for the month of May in the finishing department. The finishing department is the second of a multiple-department manufacturing plant. Materials are added at the end of the process in finishing.

Work-in-Process Units
Materials $ 0 Beginning inventory 100,000
Conversion $30,000 Transferred-in from prior department 200,000
Prior department $50,000 Ending inventory 50,000

Costs added this month
Materials $225,000
Conversion $510,000
Prior department $550,000

Beginning inventory is 30% complete as to conversion costs; ending inventory is 80% complete as to conversion costs.

11. The number of units transferred out of the finishing department is:

A) 250,000
B) 50,000
C) 300,000
D) 100,000

Answer: _____

12. The total cost of the units transferred out under weighted-average is:

A) $225,000
B) $1,190,500
C) $1,365,000
D) $174,500

Answer: _____

13. Which of the following is not a method of allocating joint costs?

A) Sales value at split-off
B) Net realizable value
C) By-product method
D) Physical-measures method

Answer: _____

14. Which of the following is not an appropriate justification for allocating support-service costs?

A) To influence department managers' behavior.
B) To minimize total internal accounting costs.
C) To facilitate the organization's budgeting for charges and revenues.
D) To comply with tax regulations.

Answer: _____

15. Which of the following is the first step in the process of allocating service costs?

A) Choose the appropriate cost-allocation base(s) and rate(s).
B) Determine whether the cost allocations achieve the desired results.
C) Select and use a cost-allocation method.
D) Identify the costs to be allocated to internal customers.

Answer: _____

16. In the cost formula TC = F + VX, which variable is considered to be the independent variable?

A) TC
B) F.
C) V.
D) X.

Answer: _____

17. Which of the following would most likely increase when the activity level increases, within the relevant range?

A) Total fixed costs.
B) Per unit fixed costs.
C) Total variable costs.
D) Per unit variable costs.

Answer: _____

18. Contribution margin is:

A) Sales revenue minus cost of goods sold.
B) Sales revenue minus all variable costs.
C) Sales revenue minus variable production costs.
D) Sales revenue minus all variable and fixed costs.

Answer: _____

19. Relevant costs exclude

A) Fixed costs
B) Costs that change from year to year
C) Costs that do not changes based upon the alternative choices
D) All of the above

Answer: _____

20. Which of the following are ethical problems in capital investment decisions?

A) Misstating information used for decision making.
B) Misstating results.
C) Investing in unethical projects.
D) All of the above.

Answer: _____

21. Whitfield Company produces and sells specialized portfolio cases. It expects to sell 18,000 cases next year at $75 each. There is a beginning inventory of 1,500 cases and the company wants to have an ending inventory equal to 20 percent of this year's sales. How many cases need to be produced?

A) 16,500
B) 18,000
C) 20,100
D) 23,100

Answer: _____

22. Which of the following is/are a signal that a variance should be investigated?

A) The size of the variance in relation to the standard, absolute or relative
B) A trend in a variance over time
C) The recurrence of a variance
D) All of the above are signals.

Answer: _____

23. Riyyad Co. produces its only product in a highly automated process, expected monthly production is 50,000 units. The required direct material costs $0.85 per unit. Manufacturing overhead costs are $75,000 per month and are allocated based on units of production.

What is the budgeted manufacturing overhead rate?

A) $1.00 per unit
B) $1.50 per unit
C) $0.85 per unit
D) $0.67 per unit

Answer: _____

24. A cost center is a subunit

A) In which managers are evaluated on their ability to generate revenues.
B) In which managers are evaluated on their ability to keep costs and expenses on budget.
C) In which managers are evaluated on their ability to generate profits.
D) Both A and B.

Answer: _____

25. Valdimir Inc. has two divisions, R and S. Division R sells a component to Division S. There is no external market for Division R's component. R's standard costs are as follows:

Direct material $5.00 per unit
Direct labor 8.00 per unit
Variable overhead 2.00 per unit (based on direct labor hours)
Fixed overhead 6.00 per unit (based on machine hours)

What is the transfer price per unit for the component based on standard variable cost?

A) $21
B) $19
C) $15
D) $13

Answer: _____

26. Which statement is true as output increases

A) Fixed unit costs increase
B) Variable unit costs increase
C) Fixed unit costs decrease
D) Variable unit costs decrease

Answer: _____

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1. Cross Functional Decision Making:

A) Brings together individuals from diverse functions and backgrounds in order to generate innovative solutions to problems.

2. The delivery of products or services to customers is an example of which element in the value chain?

D) Distribution

Answer: _____

3. Which of the following is not a name for indirect resources?

C) Direct costs

4. Under variable costing, operating income is measured by:

C) Contribution margin minus indirect manufacturing and operating costs.

5. Which of the following companies would most likely use a job-order costing system?

D) A sweater manufacturer

6. In a job-order costing system, the entry to requisition $1,000 of factory supplies from Raw- Materials inventory would be recorded with a:

A) Debit to Work- in process- inventory and credit to Raw-Materials Inventory

7. Setup labor costs required for setting up equipment for flexible production facilities for manufacturing would be an example of:

B) Batch-level activity

Answer: Set up is required after every batch is completed

8. Which of the following is not a planning issue in Activity-Based-Management?

B) The current customer base

9. Elton Industries desires a return on sales of 20%. Their current sales revenue is $10,000,000 and their current return on sales is 15%. Assuming sales remain the same, to achieve their desired target profit, they must reduce their costs by

A) $ 500,000
Answer: Current cost = 10000000*85%=8500000
Revised cost = 10000000*80%=8000000
Reduction in cost = 500000

10. Which of the following statements describes a flowchart?

C) ...

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