1) A time driver is any factor that causes a change in the speed of an activity when the
factor changes.
2) Companies that overcost products will most likely lose market share.
3) All cost functions are linear.
4) A non-value-added cost is a cost that, if eliminated, would reduce the actual or
perceived value or utility (usefulness) customers experience from using the product or
service.
5) Intrinsic motivation comes from being given greater responsibility, doing interesting
and creative work, and having pride in doing that work.
6) Market research can be an effective tool in understanding the features customers
value.
7) A “push-through” system, often described as a materials requirement planning
system, focuses first on the forecasted amount and timing of finished goods and then
determines the demand for materials components and subassemblies at each of the prior
stages of production.
8) Indirect manufacturing costs are also referred to as manufacturing overhead costs or
factory overhead costs.
9) Two common forms of quantitative analysis methods of cost estimation are the
high-low method and regression analysis.
10) The constant gross-margin percentage NRV method makes the simplifying
assumption of treating the joint products as though they comprise a single product.
11) The costs of storage space owned are always relevant costs of carrying inventory.
12) The seller of Product A has no idle capacity and can sell all it can produce at $50
per unit. Outlay cost is $12. What is the opportunity cost, assuming the seller sells
internally?
A) $12
B) $38
C) $50
D) $62
13) Efficiency is ________.
A) the degree to which a predetermined objective or target is met
B) the difference between an actual input quantity and a budgeted input quantity
C) the continuous process of comparing a firm’s performance levels against the best
levels of performance in competing companies
D) the relative amount of inputs used to achieve a given output level
14) The East Company manufactures several different products. Unit costs associated
with Product ORD210 are as follows:
What are the inventoriable costs per unit associated with Product ORD210?
A) $73
B) $87
C) $98
D) $62
15) Direct material costs are usually locked in when they are ________.
A) designed
B) assembled
C) sold
D) delivered
16) Oaklis Company has provided the following data for maintenance cost:
Maintenance cost is a mixed cost with variable and fixed components. The fixed and
variable components of maintenance cost are closest to:
A) $24,000 per year; $2.30 per machine hour
B) $6,000 per year; $1.80 per machine hour
C) $6,000 per year; $2.30 per machine hour
D) $24,000 per year; $1.80 per machine hour
17) What would be the expected monetary value for Avalia Corp using the probability
method?
A) $40,000
B) $188,000
C) $123,500
D) $60,000
18) The following information applies to Krynton Company, which supplies
microscopes to laboratories throughout the country. Krynton purchases the microscopes
from a manufacturer which has a reputation for very high quality in its manufacturing
operation.
Annual demand (weekly demand = 1/52 of annual demand)52,000 units
Orders per year20
Lead time in days15 days
Cost of placing an order$100
What is the reorder point?
A) 1,040 units
B) 2,143 units
C) 1,580 units
D) 3,080 units
19) What would be the total variable cost at an activity level of 5,600 units? Assume
that this level of activity is within the relevant range.
A) $275,330
B) $361,570
C) $87,808
D) $280,336
20) The variable overhead spending variance measures the difference between
________, multiplied by the actual quantity of variable overhead cost-allocation base
used.
A) the actual variable overhead cost per unit and the budgeted variable overhead cost
per unit
B) the standard variable overhead cost rate and the budgeted variable overhead cost rate
C) the actual variable overhead cost per unit and the budgeted fixed overhead cost per
unit
D) the actual quantity per unit and the budgeted quantity per unit
21) If the level of activity increases within the relevant range:
A) variable cost per unit and total fixed costs also increase.
B) fixed cost per unit and total variable cost also increase.
C) total cost will increase and fixed cost per unit will decrease.
D) variable cost per unit and total cost also increase.