Which of the following costs are capacity-sustaining activities in the product cost
hierarchy?
A.Product testing.
B.Energy to run machines.
C.Heat and lighting.
D.Direct Materials.
Different types of companies use different types of cost systems. An effective cost
system must have all of the following characteristics except:
A.Benefits from the cost system that exceed its costs.
B.Different costs for different purposes.
C.Decision focus.
D.Costs from the cost system that exceed benefits.
Is there an optimal transfer pricing policy that dominates all others?
A.Yes, managers strive to devise a textbook-perfect system regardless of cost-benefit
considerations.
B.Yes, managers strive to devise a textbook-perfect system taking into consideration
cost and benefits.
C.No, managers tend to settle for a system that seems to work reasonably well rather
than devise a textbook-perfect system.
D.No, managers tend to settle for a textbook-perfect system, rather than devise a system
that seems to work reasonably well.
Which of the following is an example of a major cost component of variable overhead?
A.Direct material.
B.Direct labor.
C.Indirect material.
D.All of the above.
Framing Division
The Framing Division had the following data:
Refer to the Framing Division. What is the investment turnover ratio for Year 2010?
A.1.0
B.1.5
C.1.6
D.2.0
In which way does activity-based costing (ABC) improve cost assignment?
A.Management is provided with true costs.
B.ABC uses a greater number of cost pools and cost drivers than traditional overhead
allocation techniques.
C.ABC follows generally accepted accounting principles more closely.
D.ABC is easier to use than traditional overhead allocation techniques.
Which of the following is a major weakness of the engineering method of cost
estimation?
A.The method is not particularly useful when the physical relation between inputs and
outputs is indirect.
B.The method is subjective.
C.The method requires that several relatively strict assumptions be satisfied.
D.The method is based on studies of what future costs should be rather than what past
costs have been.
What is the method of costing used by companies that use a combination of job and
process costing?
A.hybrid costing.
B.standard costing.
C.sunk costing.
D.combination costing
Which of the following statements is true concerning the critical success factors
dealing with service?
A.Service means giving the customer what the firm promised; it is the degree to which
the customer is satisfied.
B.Service is the price of a product which must cover its costs or the organization will no
longer make the product.
C.Service can be described as the expectations the customer has about all aspects, both
tangible and intangible, of the product’s purchase and use.
D.None of the answers is correct.
What kind of unit cost data is needed for external reporting and managerial decision
making?
External ReportingManagerial Decision Making
A.standard costing variable costing
B.variable costing full-absorption costing
C.full-absorption costing variable costing
D.normal costing full-absorption costing
Which of the following is a cost incurred when the firm discovers nonconforming
products and services before delivery to customers?
A.prevention costs.
B.appraisal costs.
C.internal failure costs.
D.external failure costs.
For external reporting purposes, how are fixed manufacturing costs treated?
A.As period costs.
B.Expensed as incurred.
C.Period costs included in the value of inventory.
D.Product costs included in the value of inventory.
How are fixed manufacturing costs treated?
A.Period costs for managerial accounting and product costs for financial accounting
purposes.
B.Product costs for managerial accounting and financial accounting purposes.
C.Period cost for managerial accounting and financial accounting purposes.
D.Product costs for managerial accounting and period costs for financial accounting
purposes.
All of the following are provisions of the Sarbanes-Oxley Act except:
A.The law states that the CEO and the CFO are responsible for signing their company’s
financial statements and indicating that the financial statements do not omit material
information.
B.The law requires the company’s auditor must attest to management’s assessment of
internal controls.
C.The law created the Public Company Accounting Oversight Board (PCAOB), which
oversees auditors of public companies.
D.The law requires that lower-level managers submit to lie-detector tests if fraud is
suspected.
Sun Devil, Inc.
Sun Devil, Inc. is considering the introduction of a new product with the following
price and cost characteristics
It expects to sell 70,000 units for the year.
Refer to Sun Devil, Inc; what would be the break-even point in units if the sales price
decreased by 20%?
A.5,000
B.7,500
C.20,000
D.8,571