1) the additional cost incurred as the cost driver increases by one unit is:
a.average cost
b.controllable cost
c.variable cost
d.unit cost
2) neary co. produces three products x, y, and z from a joint process. each product may
be sold at the split-off point or processed further. additional processing requires no
special facilities, and production costs of further processing are entirely variable and
traceable to the products involved. last year all three products were processed beyond
split-off. joint production costs for the year were $80,000. sales values and costs needed
to evaluate neary’s production policy follow.
the amount of joint costs allocated to product y using the sales value at split-off method
is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and
round all dollar amounts to the nearest whole dollar):
a.$13,540
b.$32,000
c.$22,222
d.$28,499
e.$17,667
3) which of the following is not considered a benefit of activity-based costing?
a.decreased production activity levels
b.improved product pricing decisions
c.a better understanding of manufacturing overhead
d.more accurate unit cost information
e.improved strategic decisions
4) lester-sung, inc. is a large general construction firm in the commercial building
industry. the following is a list of costs incurred by this company:
1) the cost of an employee for 8 hours at $6.00 an hour.
2) the cost of insurance for the employees.
3) the cost of 1,000 board feet of 2 x 4 lumber.
4) the ceo’s salary.
required:
classify each cost above using the following categories:
(a) general, selling and administrative cost
(b) direct material
(c) direct labor
(d) overhead cost
5) which of the following statements regarding “opportunity costs” is true?
a.these costs are recorded routinely by cost accounting systems
b.these costs relate to the benefit lost or foregone when a chosen option (course of
action) precludes the benefits from an alternative option
c.these costs are generally deductible for federal income tax purposes
d.in terms of most short-run decisions, they are irrelevant
e.they are usually considered a sunk cost associated with one or more decision
alternatives
6) the identification of cost drivers is perhaps the most important step in developing the
cost estimate because:
a.it is the first step in cost estimation
b.it is the final step in cost estimation
c.there may be a number of relevant drivers, some not immediately obvious
d.the other steps are easier to execute
e.it requires much more time than the other steps
7) the reciprocal method can be solved using the excel function:
a.goal seek
b.regression
c.solver
d.scenarios
e.pivot tables
8) a measure of the quantity of resources consumed by an activity is:
a.quantity driver
b.resource consumption cost driver
c.not a cost driver
d.activity consumption cost driver
e.consumption cost driver
9) a concept which is commonly employed with allocation bases related to size is:
a.cost shifting
b.benefit received
c.equity share
d.cause and effect relationship
e.ability to bear
10) the three major differences between process and job order costing systems are those
relating to:
a.quantity, quality, and cost
b.speed, accuracy, and design
c.cost object, product or service variety, and timing of unit cost calculation
d.responsibility for cost, system design, and authorization codes
e.none of the above is correct
11) shaver co. manufactures a variety of electric razors for men and women. the
company’s plant is partially automated. listed below is cost driver information used in
the product-costing system:
in addition, shaver expects to spend $514,368 for 8,037 direct labor-hours. two current
product orders had the following requirements:
what is the total manufacturing overhead assigned to the current order for women’s
razors if the firm uses a volume-based plant wide overhead rate based on direct labor
hours?
a.$112.50
b.$150.00
c.$187.50
d.$9,600.00
e.$12,000.00
12) the predetermined factory overhead rate includes:
a.estimated annual sales
b.estimated total amount of cost driver
c.estimated total cost
d.estimated electricity consumed
13) diamond cleats co. manufactures cleats for baseball shoes. it has outlined the
following overhead cost drivers:
diamond cleats co. has an order for cleats that has the following production
requirements:
using activity-based costing, applied quality control factory overhead for the baseball
cleat order is:
a.$28,450
b.$30,220
c.$24,375
d.$21,150
e.$19,600
14) triad children’s center, a non-profit organization, uses relevant cost analysis to
determine whether or not new services are desirable. tcc is looking at adding a new
educational program for grade school children who are having difficulty with their
reading and math skills. the following relevant costs will be incurred if the program is
accepted:
tcc estimates that a maximum of 40 children will participate in this program in the first
year. if tcc decides to implement this program, funding will be received from the city
chamber of commerce ($50,000) and a local private university endowment fund
($35,000).
calculate the expected surplus or deficit from operations given the above information.
a.$28,000 surplus
b.$10,000 surplus
c.$17,000 deficit
d.$18,000 deficit