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FIFO process costing, undercosting, ABC systems

1. The last step in the FIFO process-costing method is _____.

a) assign total costs to units completed
b) computer output in terms of equivalent units
c) summarize total costs to account for
d) compute costs per equivalent unit

2. Undercosting a particular product may result in _____.

a) loss of market share
b) lower profits
c) operating inefficiencies
d) understanding total product costs

3. ABC systems _____.

a) highlight the different levels of activities
b) limit cost drivers to units of output
c) allocate costs based on the overall level of activity
d) generally undercost complex products

4. Companies use ABC system information to _____.

a) analyze costs
b) prepare budgets
c) evaluate performance
d) all of these answers are correct.

5. The primary reason to refine a costing system is _____.

a) to decrease product diversity
b) to increase indirect costs
c) to increase direct costs
d) all of the above

Solution Preview

1. The last step in the FIFO process-costing method is _____.

a) assign total costs to units completed
b) computer output in terms of equivalent units
c) summarize total costs to account for
d) compute costs per equivalent unit

This is where you take the costs per EU and assign it to units transferred out and ending inventory. Pick A.

2. Undercosting a particular product may result in _____.

a) loss of market share
b) lower profits
c) operating inefficiencies
d) ...

Solution Summary

A sentence or two helps you to understand the choices in these practice exam problems.

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