1) The journal entry to dispose of the difference between actual conversion costs
incurred and standard conversion costs allocated is different under backflush costing
and sequential tracking.
2) A direct cost is a cost that cannot be easily traced to the particular cost object under
consideration.
3) Separable costs that do not differ between alternatives are irrelevant for decision
making.
4) In the weighted-average costing method, the costs of direct materials in beginning
inventory are NOT included in the cost per unit calculation since direct materials are
almost always added at the start of the production process.
5) In the cumulative average-time learning model, cumulative average time per unit
declines by a constant percentage each time the cumulative quantity of units produced
doubles.
6) Kaizen budgeting is driven by ________.
A) management
B) employees
C) stockholders
D) creditors
7) When analyzing the change in operating income, the strategy component of
productivity will increase when ________.
A) capacity is reduced
B) quality is enhanced
C) selling prices are increased
D) more units are produced and sold
8) The Allianz Company produces a specialty wood furniture product, and has the
following information available concerning its inventory items:
Relevant ordering costs per purchase order$450
Relevant carrying costs per year for each package:
Required annual return on investment15%
Required other costs per year$4
Annual demand is 30,000 packages per year. The purchase price per package is $48.
What are the relevant total costs at the economic order quantity?
A) $17,390
B) $10,392
C) $13,942
D) $11,800
9) The cost of direct materials cost is classified as a:
Period cost Product cost
A) Yes Yes
B) No No
C) Yes No
D) No Yes
10) A product may be passed from one subunit to another subunit in the same
organization. The product is known as a(n) ________.
A) interdepartmental product
B) intermediate product
C) subunit product
D) transfer product
11) Corporate-sustaining costs ________.
A) are common to all individual customers
B) have a clear cause-and-effect relationship with several cost-allocation bases
C) should be allocated for decisions regarding reducing customer costs
D) evaluates the effectiveness of sales personnel
12) The amount of markup percentage is usually higher if ________.
A) there is idle capacity
B) demand is strong
C) competition is intense
D) demand is elastic
13) Which cost estimation method uses a formal mathematical method to develop cost
functions based on past data?
A) the cash accounting method
B) the conference method
C) the accrual accounting method
D) the quantitative analysis method
14) Engineered costs ________.
A) have a no repetitive relationship with output
B) have no measurable cause-and-effect relationship between output and resources used
C) include research and development and human resource costs
D) include a high level of certainty
15) Cola Drink Company processes direct materials up to the splitoff point where two
products, A and B, are obtained. The following information was collected for the month
of July:
The cost of purchasing 2,500 liters of direct materials and processing it up to the splitoff
point to yield a total of 2,000 liters of good products was $4,500. There were no
inventory balances of A and B.
Product A may be processed further to yield 1,375 liters of Product Z5 for an additional
processing cost of $150. Product Z5 is sold for $25.00 per liter. There was no beginning
inventory and ending inventory was 125 liters.
Product B may be processed further to yield 375 liters of Product W3 for an additional
processing cost of $275. Product W3 is sold for $30.00 per liter. There was no
beginning inventory and ending inventory was 25 liters.
What is Product Z5’s estimated net realizable value at the splitoff point?
A) $11,100
B) $22,350
C) $34,225
D) $34,375
16) Which of the following differentiates marketing from customer service?
A) Marketing is the process of promoting and selling products or services to customers
or prospective customers, whereas customer service is the process of providing
after-sales service to customers.
B) Marketing is the process of processing orders and shipping products or services to
customers, whereas customer service is the process of providing additional information
to customers about the product.
C) Marketing is the process of detailed planning, engineering, and testing of products
and processes, whereas customer service concentrates on existing customers.
D) Marketing is the process of processing orders and shipping products or services to
customers, whereas customer service is concerned with choosing the right customer for
the product.
17) Refining a cost system includes ________.
A) classifying as many costs as indirect costs as is feasible
B) creating as many cost pools as possible
C) identifying the activities involved in a process
D) seeking a lesser level of detail
18) When an industry has excess capacity, market prices may drop well below their
historical average. If this drop is temporary, it is called ________.
A) distress prices
B) dropped prices
C) low-average prices
D) substitute prices
19) Any factor where a change in the factor causes a change in the speed with which an
activity is undertaken is referred to as ________.
A) a time driver
B) a cost driver
C) manufacturing lead time
D) customer-response time
20) An analysis of Ruthen Corporation’s operating income changes between 2015 and
2016 show the following:
Operating income for 2015$4,750,000
Add growth component180,000
Deduct price-recovery component(60,000)
Add productivity component285,000
Operating income for 2016$5,155,000
Required:
Is Ruthen’s operating income gain consistent with the product differentiation or cost
leadership strategy? Explain briefly.
21) Discuss a range of factors that managers may have to consider when making capital
budgeting decisions that are strategic in nature.
22) Explain how a budget can help management implement strategy.
23) Discuss considerations that should be fully taken into account when developing
inventory related relevant costs for use in an economic order quantity (EOQ) model.
24) What is reengineering. Can you contrast a reengineering approach to change with a
kaizen approach to change?
25) Is it advisable to ignore facility-sustaining cost drivers during product costing?