Correct Answers 0
Total Questions 100
Score 0 %
Course # 171023
Cost Management : Accounting and Control
based on the electronic .pdf file(s):

Cost Management : Accounting and Control
by: Dr. Jae K. Shim, Ph.D., 2009, 306 pages

20 CPE Credit Hours

A P E X C P E . C O M  . . . . .  1.877.317.9047  . . . . .  support@apexcpe.com

Chapter 1 - Introduction to Cost Management

1.    Cost management is not concerned with   2
Cost analysis.
Cost planning
Cost reporting
Cost control.
2.    Significant developments in cost management do not include   12
The Sarbanes-Oxley Act.
Theory of constraints.
Corporate balanced scorecard
Target costing.
3.    The Cost Accounting Standards Board (CASB) was established by   10
The financial accounting standards board (FASB).
The general accounting office (GAO).
The U.S. congress.
The Securities and Exchange Commission (SEC).
4.    _______________________ is not the function the treasury function is usually concerned with   10
Financial reporting.
Short-term financing.
Cash custody and banking.
Credit extension and collection of bad debts.
5.    The professional certification program most suited for one interested in a career in management accounting leads to which of the following designations?   14

Chapter 2 - Cost Classifications, Terminology, and Profit Concepts

6.    TQM seeks evolutionary changes in the processes while the practice called business process reengineering (BPR) seeks to make revolutionary changes. T F   13
7.    Managerial accounting is concerned with all but   3
Internal users of financial information
Future orientation
External users of financial information
Focuses on parts as well as the whole business
8.    Management performs all but   5
Decision making
9.    The Certified Management Accountants (CMA) does not require examination of:   15
Economics, finance and management
Managerial reporting, analysis ,behavioral issues
Decision analysis and information systems
10.    Manufacturing costs are those costs associated with the human resource activities of the company.   19
11.    The difference between variable costs and fixed costs is   25
Unit variable costs fluctuate, and unit fixed costs remain constant.
Unit variable costs are fixed over the relevant range, and unit fixed costs are variable.
Total variable costs are variable over the relevant range and fixed in the long term, while fixed costs never change.
Unit variable costs change in varying increments, while unit fixed costs change in equal increments.
12.    Depreciation based on the straight-line method is classified as what type of cost?   24
13.    The wages of the factory janitorial staff should be classified as   19
Factory overhead cost.
Direct labor cost.
Period cost.
Prime cost.

Chapter 3 - Cost Accounting Systems — Job Order Costing

14.    All costs related to the manufacturing function in a company are   20
Prime costs.
Direct costs.
Product costs.
Conversion costs.
15.    Period costs   20
Are always expensed in the same period in which they are incurred.
Vary from one period to the next.
Remain unchanged over a given period of time.
Are associated with the periodic inventory method.
16.    In a traditional manufacturing operation, direct costs normally include   21
Machine repairs in an automobile factory.
Electricity in an electronics plant.
Wood in a furniture factory.
Commissions paid to sales personnel.

Chapter 4 - Activity-Based Costing

17.    For product costing purposes, the cost of production overtime caused by equipment failure that represents idle time plus the overtime premium should be classified as a(n   22
Indirect cost.
Direct cost.
Controllable cost.
Discretionary cost.
18.    Which one of the following is least likely to be an objective of a cost accounting system?   36
Product costing and inventory valuation.
Departmental efficiency.
Sales commission determination.
Income determination.
19.    There are several alternative denominator measures for applying overhead. Which is not commonly used?   45
Direct labor hours.
Direct labor costs.
Machine hours
Sales value of product produced.

Chapter 5 - Cost?Volume?Profit Analysis

20.    Manufacturing costs can be classified into all but   19
Direct material costs
Direct labor costs
Factory overhead
Operating costs
21.    . The contribution approach to income determination may not be useful for:   34
Break-even and cost-volume-profit analysis
Assigning common fixed costs
Evaluating performance of a division and management
Short-term and non-routine decisions
22.    The traditional income statement classifies costs by   35
Managerial function
Timing of charges against sales revenue
23.    Companies characterized by the production of heterogeneous products will most likely use which of the following methods for the purpose of averaging costs and providing management with unit cost data?   36
Process costing.
Job-order costing.
Direct costing.
Absorption costing.
24.    Companies characterized by the production of basically homogeneous products will most likely use which of the following methods for the purpose of averaging costs and providing management with unit cost data?   36
Process costing.
Job-order costing.
Variable costing.
Absorption costing.
25.    A basic approach to cost accumulation is   36
Job order costing
Segmented costing
Accrued costing
Precision costing
26.    Process costing includes all except   36
By department
Cost of production
By jobs
Processing industries

Chapter 6 - Analysis of Cost Behavior

27.    Job cost records do not include:   37
Job cost sheet
Materials requisition form
Production and inventory report
Work ticket
28.    A cost accumulation system is a product costing system   36
29.    Unit costs may be misleading for:   53
Decision making
Inventory evaluation
Income determination
30.    Factory overhead costs include all except   57
Quality control

Chapter 7 - Budgeting for Profit Planning

31.    Cost drivers for non-manufacturing costs include all except   66
Number of beds in a hospital
Machine hours
Flight hours
Number of rooms occupied in a hotel
32.    The three elements of production cost are direct materials, direct labor, and factory overhead.   55
33.    When products consume overhead activities in different proportions, a firm has product diversity   61

Chapter 8 - Responsibility Accounting, Standard Costs, and Variances

34.    _________________ is not an activity drive level.   76
Batch level
Normal level
Product level
Facility level.
35.    ____________________ is not included in the value chain of business functions:   76
Research and development
Financial reporting
36.    The dollar amount of revenues needed to attain a desired income is calculated by dividing the contribution margin ratio into   84
Fixed cost.
Desired income.
Desired income plus fixed costs.
Desired income less fixed costs.
37.    The basic break even and CVP models assumes   95
The selling price per unit is unchanged throughout the entire relevant range of activity.
Inventories change significantly from period to period.
The variable cost per unit is nonlinear.
Total costs are unchanged.
38.    The most likely strategy to reduce the breakeven point would be to   83
Increase both the fixed costs and the contribution margin.
Decrease both the fixed costs and the contribution margin.
Decrease the fixed costs and increase the contribution margin.
Increase the fixed costs and decrease the contribution margin.
39.    Basic break-even and CVP models are subject to limiting assumptions such as:   95
The selling price per unit is nonlinear
All costs are classified as variable and fixed costs
There is uncertain sales mix
Inventories change significantly from period to period.
40.    Linda International's sales are 8,000 racing bicycles and 12,000 5-speed bicycles, respectively. If the selling price and variable costs are $570 and $200 for a racer and $180 and $90 for a 5-speed, respectively, what is the weighted-average contribution margin?   90
41.    When used in cost-volume-profit analysis, sensitivity (what-if) analysis   88
Determines the most profitable mix of products to be sold.
Allows the decision maker to introduce probabilities in the evaluation of decision alternatives.
Is done through various possible scenarios and computes the impact on profit of various predictions of future events.
Is limited because in cost-volume-profit analysis, costs are not separated into fixed and variable components.
42.    The difference between sales and total variable costs is   80
Gross operating profit.
Net profit.
The breakeven point.
The contribution margin.
43.    Cost-volume-profit (CVP) analysis allows management to determine the relative profitability of a product by   79
Highlighting potential bottlenecks in the production process.
Keeping fixed costs to an absolute minimum.
Determining the contribution margin per unit and the projected profits at various levels of production.
Assigning costs to a product in a manner that maximizes the contribution margin.

Chapter 9 - Control of Profit Centers

44.    An undertaking of cost behavior is helpful for all except   96
Break-even and cost-volume profit analysis
To make long term commitments
Appraisal divisional performance
Flexible budgeting
45.    Variable cost categories do not include   97
Direct materials
Direct labor
Sales commissions
46.    Which one of the following categories of cost is most likely not considered a component of fixed factory overhead?   98
Property taxes.
Supervisory salaries.

Chapter 10 - Performance Measurement, Balanced Scorecard, and Transfer Pricing

47.    The following cost functions were developed for manufacturing overhead costs.Electricity: $50 + $10 per direct labor hour; Maintenance: $100 + $15 per direct labor hour; Supervisors’ Salaries: $5,000 per month; Indirect materials:$8 per direct labor hour; If July production is expected to be 1,000 units requiring 1,500 direct labor hours, estimated manufacturing overhead costs would be:   100
48.    One popular method for estimating the cost-volume formula is   103
Progressive analysis
Differential analysis
Regression analysis
Total analysis
49.    Major steps in preparing the budget do not include   111
Formulate present value
Prepare a sales forecast
Estimate manufacturing costs and operating expenses
Determine cash flow and other financial effects
50.    Use the following for information: Projected sales for Tony, Inc. for next year and beginning and ending inventory data are as follows.Sales:20,000 units; Beginning inventory: 1,000 units; Desired ending inventory: 5,000 units. According to the production budget, how many units should be produced?   116
51.    Computer-based models are used for   129
Financial planning and budgeting
Management development
Relocation development
Compliance diversity
52.    In a standard cost system, the materials price variance is obtained by multiplying the   142
Actual price by the difference between actual quantity purchased and standard quantity used.
Actual quantity purchased by the difference between actual price and standard price.
Standard price by the difference between standard quantity purchased and standard quantity used.
Standard quantity purchased by the difference between actual price and standard price.
53.    An unfavorable price variance occurs because of   141
Price increases for raw materials.
Price decreases for raw materials.
Less-than-anticipated levels of waste in the manufacturing process.
More-than-anticipated levels of waste in the manufacturing process.
54.    Under a standard cost system, the materials price variances are usually the responsibility of the   142
Production manager.
Cost accounting manager.
Sales manager.
Purchasing manager.

Chapter 11 - Nonroutine Decisions and Life-Cycle and Target Costing

55.    How is labor rate variance computed?   145
The difference between standard and actual rates, times standard hours.
The difference between standard and actual hours, times actual rate.
The difference between standard and actual rates, times actual hours.
The difference between standard and actual hours, times the difference between standard and actual rates.
56.    If a manufacturing company uses responsibility accounting, which one of the following items is least likely to appear in performance report for a manager of an assembly line?   144
Supervisory salaries.
Repairs and maintenance.
Depreciation on equipment
57.    Responsibility centers can be all except   136
Cost center
Queuing center
Profit center
Investment center
58.    Performance reports based on analysis of variances do not address:   138
If it is favorable or unfavorable
If it is significant
If the standard is tight
If it is controllable
59.    Variance analysis for factory overhead does not consist of   155
Two-way analysis
Three-way analysis
One-way analysis
Four-way analysis
60.    Non-financial performance task measures do not include   156
Rate of product recall
Delivery success rate
Number of customer complaints
61.    New performance measures tend to be nonfinancial and more subjective than standard costs.   156
62.    The sales quantity variance equals   163
Actual units x (budgeted weighted-average CM for planned mix - budgeted weighted-average CM for actual mix).
(Actual sales at budget mix - budget sales at budget mix) x budget CM (or gross profit / unit).
(Actual market share percentage - budgeted market share percentage) x actual market size in units x budgeted weighted-average CM
Answer d (blank if True False question)
63.    The sales mix variance equals   163
(Actual sales at budget mix - actual sales at actual mix) x budget CM (or gross profit / unit)
(Actual units - master budget units) x budgeted weighted-average UCM for the planned mix.
Budgeted market share percentage x (actual market size in units - budgeted market size in units) x budgeted weighted-average UCM.
(Actual market share percentage - budgeted market share percentage) x actual market size in units x budgeted weighted-average UCM.
64.    Rate of Return on Investment (ROI) can be enhanced by the following actions   173
Increase sales
Improve margin, turnover, or margin and turnover together
Increase assets
Decrease the cost of capital

Chapter 12 - Capital Budgeting

65.    Improving Economic Value Added (EVA) can be achieved by:   177
Use more capital
Increase the cost of capital
Invest capital in high-performing projects
Enhance ROI
66.    The Du Pont formula combines the income statement and balance sheet into a static measure of performance.   171
67.    Residual income is a performance evaluation that is used in conjunction with, or instead of, return on investment (ROI). In many cases, residual income is preferred to ROI because.   176
Residual income is a measure over time, while ROI represents the results for one period.
Residual income concentrates on maximizing absolute dollars of income rather than a percentage return as with ROI.
The imputed interest rate used in calculating residual income is more easily derived than the target rate that is compared to the calculated ROI.
Average investment is employed with residual income while year-end investment is employed with ROI.
68.    The primary difference between centralization and decentralization is   170
Separate offices for all managers.
Geographical separation of divisional headquarters and central headquarters.
The extent of freedom of decision making by many levels of management.
The relative size of the firm.

Chapter 13 - Capital Budgeting and Income Taxes

69.    Considerations needed to determine which type of transfer policy to use includes all except:   183
Goal congruence
Limited economy
Performance evaluation
70.    A binding constraint can   198
Limit a company's profitability
Limit advertising
Limit accounting functions
Limit benefits
71.    Common mistakes you make in decision making are to include   189
Unitized fixed costs
Expected future costs
Total costs
Relevant cost

Chapter 14 - Process Costing, Cost Allocation, and Joint Product Costing

72.    Buying services, products, or components of products from outside vendors instead of producing them is called outsourcing.   194
73.    Future value is best described as   208
The sum of receipts discounted to time zero.
The sum of payments discounted to time zero.
The value of a payment or receipts at a future time adjusted for any compounding effect.
A discounted amount of the future sum..
74.    The discount rate (or cost of capital) ordinarily used in present value calculations is the   211
Federal Reserve rate.
Treasury bill rate.
Minimum rate of return set by the firm.
Prime rate.
75.    The technique that recognizes the time value of money by discounting the after-tax cash flows for a project over its life to time period zero using the company’s minimum rate of return is the   218
Net present value method.
Capital rationing method.
Payback method.
Accounting rate of return method.
76.    The technique that reflects the time value of money and is calculated by dividing the present value of the future net after-tax cash inflows that have been discounted at the desired cost of capital by the initial cash outlay for the investment is the   219
Net present value method
Capital rationing method.
Accounting rate of return method.
Profitability index method.
77.    A characteristic of the payback method (before taxes) is that it   214
Neglects total project profitability.
Answer b
Uses the estimated expected life of the asset in the denominator of the calculator.
Uses the hurdle rate in the calculation
78.    An annuity is a series of payments of a fixed amount for   210
A specified number of periods
For one-time period
For an indeterminable period
For an unspecified number of periods
79.    The present worth of future sums of money is   212
Future value
Present value
Past value
Compounded value
80.    A method of evaluating investment projects does not include   213
Payback period
External index
Internal rate of return (IRR)
Net present value (NPV)
81.    The present value of a series of mixed payments is the sum of the present value of each individual payment.   212
82.    __________________ is not a project’s cash flow   231
Initial investment
Depreciation deduction
Differential flows over the projects life
Terminal cash flow

Chapter 15 - Total Quality Management and Quality Costs

83.    Which of the following is not a depreciation method used for financial reporting purposes?   236
Straight line method
Sum-of-the-year's digits
Double-declining balance
84.    MACRS rule stands for   239
Modeling appreciation credit reduction system
Modified accelerated cost recovery system
Managed actual concept receivables system
Medium average collection report system
85.    A realistic depreciation method for an automobile can be based on   236
86.    Income taxes make a difference in many capital budgeting decisions.   227
87.    MACRS abandons the concept of useful life and accelerates depreciation deductions.   239
88.    A corporation manufactures two brands of barbed wire fencing for sale to wholesalers and large ranchers. Which of the following would be the best type of costing system for such a company to use?   244
EOQ system.
Job-order system.
Process system.
Retail inventory system.
89.    In the computation of manufacturing cost per equivalent unit, the weighted-average method of process costing considers   252
Current costs only.
Current costs plus cost of beginning work-in-process inventory.
Current costs plus cost of ending work-in-process inventory.
Current costs minus cost of beginning work-in-process inventory.
90.    Allocation of support department costs to the production departments is necessary to   266
Control costs.
Determine overhead rates.
Maximize efficiency.
Measure use of plant capacity.

Chapter 16 - Inventory Management and Just-in-Time

91.    The step-down method of support department cost allocation often begins with allocation of the costs of the support department that   263
Provides the greatest percentage of its support to the production departments.
Provides the greatest percentage of its support to other support departments.
Provides the greatest total output of support.
Has the highest total costs among the support departments.
92.    A major component of total quality management (TQM) is   270
Communication restrictions due to downward flow.
Employee involvement.
Achieving quotas.
Intensive inspections
93.    Total quality management (TQM) in a manufacturing environment is best exemplified by   268
Identifying and reworking production defects before sale.
Designing the product to minimize defects.
Performing inspections to isolate defects as early as possible.
Making machine adjustments periodically to reduce defects.
94.    One of the main reasons that implementation of a total quality management program works well through the use of teams is   270
Teams are more efficient and help an organization reduce its staffing.
Employee motivation is always higher for team members than for the individual contributors.
Teams are natural vehicles for sharing ideas which leads to process improvement.
The use of teams eliminates the need for supervision, thereby allowing the company to reduce staffing.
95.    One of the main reasons total quality management (TQM) can be used as a strategic weapon is that   270
The cumulative improvement from a company's TQM efforts cannot readily be copied by competitors.
Introducing new products can lure customers away from competitors.
Reduced costs associated with better quality can support higher shareholder dividends.
TQM provides a comprehensive planning process for a business.
96.    The carrying costs associated with inventory management include   282
Insurance costs, shipping costs, storage costs, and obsolescence.
Storage costs, handling costs, interest on capital invested, and obsolescence.
Purchasing costs, shipping costs, setup costs, and quantity discounts lost.
Obsolescence, setup costs, interest on capital invested, and purchasing costs.
97.    The order costs associated with inventory management include   282
Insurance costs, purchasing costs, shipping costs, and obsolescence.
Obsolescence, setup costs, quantity discounts lost, and storage costs.
Purchasing costs, shipping costs, setup costs, and quality discounts lost.
Quantity discounts lost, storage costs, handling costs, and interest on capital invested.
98.    The EOQ model attempts to   282
Minimize the lead time.
Minimize the inventory order quantities.
Minimize the sum of the order costs and the carrying costs.
Minimize the sum of the shortage cost and the backlog costs.
99.    The EOQ will decline due to   282
An increase in annual demand.
A decrease in carrying costs.
A decrease in the per-unit purchase price of inventory.
A decrease in the variable costs of placing and receiving an order.
100.    The EOQ formula assumes that   284
Demand is fixed and constant throughout the year.
Lead time is uncertain.
Quantity discounts are allowed.
Shortages are permitted.