1 In comparing financial and management accounting, which of the following more accurately describes management C

accounting information?
a. historical, precise, useful
b. required, estimated, internal
c. budgeted, informative, adaptable
d. comparable, verifiable, monetary

2 Modern management accounting can be characterized by its A

a. flexibility.
b. standardization.
c. complexity.
d. precision.

3 The process of ___________ causes the need for cost accounting. A

a. conversion
b. sales
c. controlling
d. Allocating

4 Which of the following statements is true? B

a. Management accounting is a subset of cost accounting.
b. Cost accounting is a subset of both management and financial accounting.
c. Management accounting is a subset of both cost and financial accounting.
d. Financial accounting is a subset of cost accounting.

5 The balanced scorecard perspective that focuses on using a firm’s intellectual capital to adapt to customer needs A
through product or service innovations is the:
a. learning and growth perspective c. customer value perspective
b. internal business perspective d. financial perspective

6 The value chain D

a. reflects the production of goods within an organizational context.
b. is concerned with upstream suppliers, but not downstream customers.
c. results when all non-value-added activities are eliminated from a production process.
d. is the foundation of strategic resource management.

7 The Institute of Management Accountants' Code of Ethics B

a. is a legally enforceable contract with all management accountants.
b. should be viewed as a goal for professional behavior.
c. is a legally enforceable contract with all CPAs.
d. provides ways to measure departures from ethical behavior.

8 Which of the following defines variable cost behavior? D

Total cost reaction Cost per unit reaction

to increase in activity to increase in activity

a. remains constant remains constant

b. remains constant increases
c. increases increases
d. increases remains constant

9 A(n) ________ cost increases or decreases in intervals as activity changes. C

a. historical cost
b. fixed cost
c. step cost
d. budgeted cost

10 A selling cost is a(n) C

product cost period cost inventoriable cost

a. yes yes no
b. yes no no
c. no yes no
d. no yes yes

11 Cost of Goods Sold is an B

a. unexpired product cost.
b. expired product cost.
c. unexpired period cost.
d. expired period cost.
12 Broussard Company is a construction company that builds houses on special request. What is the proper B
classification of the carpenters' wages?

Product Period Direct

a. yes yes no
b. yes no yes
c. no no no
d. no yes yes

13 Prime cost consists of B

direct material direct labor overhead

a. no yes no
b. yes yes no
c. yes no yes
d. no yes yes

14 The formula to compute cost of goods manufactured is B

a. beginning Work in Process Inventory plus purchases of raw material minus ending Work in
Process Inventory.
b. beginning Work in Process Inventory plus direct labor plus direct material used plus
overhead incurred minus ending Work in Process Inventory.
c. direct material used plus direct labor plus overhead incurred.
d. direct material used plus direct labor plus overhead incurred plus beginning Work in Process
Inventory.

15 Costs that are incurred for monitoring and inspecting are: C

a. prevention costs c. appraisal costs
b. detection costs d. failure costs

16 An actual cost system differs from a normal cost system in that an actual cost system B
a. assigns overhead as it occurs during the manufacturing cycle.
b. assigns overhead at the end of the manufacturing process.
c. does not assign overhead at all.
d. does not use an Overhead Control account.

17 When a manufacturing company has a highly automated manufacturing plant producing many different products, C
which of the following is the more appropriate basis of applying manufacturing overhead costs to work in process?
a. direct labor hours
b. direct labor dollars
c. machine hours
d. cost of materials used

18 In relationship to changes in activity, fixed overhead changes C

in total per unit

a. yes yes
b. no no
c. no yes
d. yes no

19 Applied overhead consists of which of the following? A

a. actual activity times predetermined overhead rate
b. estimated activity times predetermined overhead rate
c. actual activity times actual overhead rate
d. estimated activity times actual overhead rate

20 Actual overhead exceeds applied overhead and the amount is immaterial. Which of the following will be true? A
Upon closing,

Overhead is Cost of Goods Sold will

a. underapplied increase
b. overapplied decrease
c. overapplied increase
d. underapplied decrease

21 A short-run measure of activity that represents a firm’s anticipated activity level for an upcoming period based D
upon expected demand is referred to as:
a. theoretical capacity c. normal capacity
 b. practical capacity d. expected capacity

22 What is the best cost accumulation procedure to use when many batches, each differing as to product specifications, A
are produced?
a. job order
b. process
c. actual
d. Standard

23 Which of the following are drawbacks to applying actual overhead to production? D

a. A delay occurs in assigning costs to jobs or products.
b. Fluctuations in quantities produced during a period could cause varying per-unit charges for
fixed overhead.
c. Seasonality of overhead costs may cause distortions in job or product costs.
d. all answers are correct.

24 Which of the following would be least likely to be supported by subsidiary accounts or ledgers in a company that D
employs a job order costing system?
a. Work in Process Inventory
b. Raw Material Inventory
c. Accounts Payable
d. Supplies Inventory

25 The primary accounting document in a job order costing system is a(n) B

a. bill of materials.
b. job order cost sheet.
c. employee time sheet.
d. materials requisition.

26 In job order costing, payroll taxes paid by the employer for factory employees are commonly accounted for as B
a. direct labor cost.
b. manufacturing overhead cost.
c. indirect labor cost.
d. administrative cost.

27 A credit to the Manufacturing Overhead control account represents the C

a. actual cost of overhead incurred.
b. actual cost of overhead paid this period.
c. amount of overhead applied to production.
d. amount of indirect material and labor used during the period.

28 Overapplied overhead would result if b

a. the plant were operated at less than normal capacity.
b. overhead costs incurred were less than costs charged to production.
c. overhead costs incurred were unreasonably small in relation to units produced.
d. overhead costs incurred were greater than costs charged to production.

29 As data input functions are automated, Intranet data becomes more C

a. complicated to access.
b. manufacturing, but not accounting, oriented.
c. real-time accessible.
d. expensive to install, but easier to use.

30 A service organization would be most likely to use a predetermined overhead rate based on C
a. machine hours.
b. standard material cost.
c. direct labor.
d. number of complaints.

31 The cost of abnormal losses (net of disposal costs) should be written off as C

Product cost Period cost

a. yes no
b. yes yes
c. no yes
d. no no

32 Spoiled units are A

a. units that cannot be economically reworked to bring them up to standard.
b. units that can be economically reworked to bring them up to standard.
c. the same as defective units.
d. considered abnormal losses.
33 Which of the following add customer value? D
a. setup time
b. storage time
c. idle time
d. processing time

34 Which of the following is considered a value-added activity? B

Idle time Inspection time Transfer time

a. yes yes no
b. no no no
c. yes no yes
d. no yes yes

35 Which of the following is typically regarded as a cost driver in traditional accounting practices? D
a. number of purchase orders processed
b. number of customers served
c. number of transactions processed
d. number of direct labor hours worked

36 Costs that are common to many different activities within an organization are known as ____________ costs. B
a. product- or process-level
b. organizational-level
c. batch-level
d. unit-level

37 Which of the following is not a drawback of mass customization? D

a. The choices are too numerous.
b. The potential for errors is great.
c. Only a small percentage of available choices is normally selected.
d. All of the above are drawbacks.

38 Product costing systems in use over the last 40 years b

a. concentrated on using multiple cost pools and cost drivers.
b. were often technologically incapable of handling activity-based costing information.
c. have generally been responsive to changes in the manufacturing environment.
d. have been appropriate for managerial decision purposes as long as they met the
requirements of generally accepted accounting principles.

39 In activity-based costing, final cost allocations assign costs to C

a. departments.
b. processes.
c. products.
d. activities.

40 Activity-based costing and activity-based management are effective in helping managers do all of the following C
except
a. trace technology costs to products.
b. promote excellence standards.
c. identify only value-added activities.
d. analyze performance problems.

41 The amount of time between the development and the production of a product is B
a. the product life cycle.
b. lead time.
c. production time.
d. value-added time.

42 In the pharmaceutical or food industries, quality control inspections would most likely be viewed as C
a. non-value-added activities.
b. business-value-added activities.
c. value-added-activities.
d. process-efficiency activities.

43 An activity center is an organizational unit D

a. that makes a single product or performs a single service.
b. in which only value-added activities are performed.
c. that incurs only unit, batch, or product/process level costs.
d. for which management wants separate activity information.

44 Mass customization is closely associated with D

 Product Product Process Pareto
variety complexity errors principle

a. yes no no yes
b. yes yes yes no
c. no yes no no
d. yes no yes yes

45 Engaging in which of the following will result in radical changes being made to an organization's processes? c
a. Continuous improvement
b. Benchmarking
c. Reengineering
d. Mass customization

46 Which cost accumulation procedure is most applicable in continuous mass-production manufacturing C

environments?
a. standard
b. actual
c. process
d. job order

47 Equivalent units of production are equal to the C

a. units completed by a production department in the period.
b. number of units worked on during the period by a production department.
c. number of whole units that could have been completed if all work of the period had been used
to produce whole units.
d. identifiable units existing at the end of the period in a production department.

48 EUP calculations for standard process costing are the same as B

a. the EUP calculations for weighted average process costing.
b. the EUP calculations for FIFO process costing.
c. LIFO inventory costing for merchandise.
d. the EUP calculations for LIFO process costing.

49 Material is added at the beginning of a process in a process costing system. The beginning Work in Process D
Inventory for the process was 30 percent complete as to conversion costs. Using the FIFO method of costing, the
number of equivalent units of material for the process during this period is equal to the
a. beginning inventory this period for the process.
b. units started this period in the process.
c. units started this period in the process plus the beginning Work in Process Inventory.
d. units started and completed this period plus the units in ending Work in Process Inventory.

50 Process costing techniques should be used in assigning costs to products C

a. if a product is manufactured on the basis of each order received.
b. when production is only partially completed during the accounting period.
c. if a product is composed of mass-produced homogeneous units.
d. whenever standard-costing techniques should not be used.

51 A hybrid costing system combines characteristics of B

a. job order and standard costing systems.
b. job order and process costing systems.
c. process and standard costing systems.
d. job order and normal costing systems.

52 When the cost of lost units must be assigned, and those same units must be included in an equivalent unit schedule, D
these units are considered
a. normal and discrete.
b. normal and continuous.
c. abnormal and discrete.
d. abnormal and continuous.

53 The cost of abnormal continuous losses is C

a. considered a product cost.
b. absorbed by all units in ending inventory and transferred out on an equivalent unit basis.
c. written off as a loss on an equivalent unit basis.
d. absorbed by all units past the inspection point.

54 Which of the following statements is false? The cost of rework on defective units, if D
a. abnormal, should be assigned to a loss account.
b. normal and if actual costs are used, should be assigned to material, labor and overhead costs
of the good production.
c. normal and if standard costs are used, should be considered when developing the overhead
 application rate.
d. abnormal, should be prorated among Work In Process, Finished Goods, and Cost of Goods
Sold.

55 The addition of material in a successor department that causes an increase in volume is called A
a. accretion.
b. reworked units.
c. complex procedure.
d. undetected spoilage.

56 Which of the following statements regarding standard cost systems is true? A

a. Favorable variances are not necessarily good variances.
b. Managers will investigate all variances from standard.
c. The production supervisor is generally responsible for material price variances.
d. Standard costs cannot be used for planning purposes since costs normally change in the
future.

57 Standard costs C
a. are estimates of costs attainable only under the most ideal conditions.
b. are difficult to use with a process costing system.
c. can, if properly used, help motivate employees.
d. require that significant unfavorable variances be investigated, but do not require that
significant favorable variances be investigated.

58 A large labor efficiency variance is prorated to which of the following at year-end? D

WIP FG
Cost of Goods Sold Inventory Inventory

a. no no no
b. no yes yes
c. yes no no
d. yes yes yes

59 The material price variance (computed at point of purchase) is A

a. the difference between the actual cost of material purchased and the standard cost of material
purchased.
b. the difference between the actual cost of material purchased and the standard cost of material
used.
c. primarily the responsibility of the production manager.
d. both a and c.

60 The total labor variance can be subdivided into all of the following except C
a. rate variance.
b. yield variance.
c. learning curve variance.
d. mix variance.