Accounting Exam 3 example #25300

Which of the following costing methods charges all manufacturing costs to its products? Direct costing ABC costing Variable costing Absorption costing Period costing

Which of the following is not a product cost under variable costing? Direct materials. Fixed manufacturing overhead. Direct labor. Variable manufacturing overhead. All variable manufacturing costs.

Which of the following statements is true? Variable costing treats fixed overhead as a period cost. Absorption costing treats fixed overhead as a period cost. Absorption costing treats fixed overhead as an expense in the period it is incurred. Variable costing excludes all overhead from product costs. Managers can manipulate earnings more easily under variable costing by varying the production level.

When evaluating a special order, management should: Only accept the order if the incremental revenue exceeds all product costs. Only accept the order if the incremental revenue exceeds fixed product costs. Only accept the order if the incremental revenue exceeds total variable product costs. Only accept the order if the incremental revenue exceeds full absorption product costs. Only accept the order if the incremental revenue exceeds regular sales revenue.

Which of the following best describes costs assigned to the product under the absorption costing method? Direct labor (DL) Direct materials (DM) Variable selling and administrative (VSA) Variable manufacturing overhead (VOH) Fixed selling and administrative (FSA) Fixed manufacturing overhead (FOH) DL, DM, VSA, and VOH. DL, DM, and VOH. DL, DM, VOH, and FOH. DL and DM. DL, DM, FSA, and FOH.

Which of the following best describes costs assigned to the product under the variable costing method? Direct labor (DL) Direct materials (DM) Variable selling and administrative (VSA) Variable manufacturing overhead (VOH) Fixed selling and administrative (FSA) Fixed manufacturing overhead (FOH) DL, DM, VSA, and VOH. DL, DM, and VOH. DL, DM, VOH, and FOH. DL and DM. DL, DM, FSA, and FOH.

Income __________ when there is zero beginning inventory and all inventory units produced are sold. Will be lower under variable costing than absorption costing Will be the same under both variable and absorption costing Will be higher under variable costing than absorption costing Will be higher than gross margin under variable costing Will be lower than administrative costs under absorption costing

Special order decisions should be made using variable costing because: Special order decisions usually focus on fixed costs Variable costing includes all overhead costs in the calculation of product costs. Only variable costs will increase as a result of the special order. All costs, including variable and fixed costs, must be covered by the special order pricing. Fixed overhead costs will change as a result of the special order.

A formal statement of future plans, usually expressed in monetary terms, is a: Variance report. Position statement. Budget. Prospectus. Variance analysis.

A budget is best described as: A formal statement of a company's future plans usually expressed in monetary terms. A master control device. An informal statement of company's future plans usually expressed in monetary terms. The most crucial component of a company's evaluation process. The minimum acceptable performance level.

The most useful budget figures are developed: From the "top-down". From the "bottom-up" following a participatory process. By the budget committee. By the CEO. After the accounting period has begun.

The master budgeting process typically begins with the sales budget and ends with a cash budget and: Budgeted financial statements. Forecast budget. Capital expenditures budget. Rolling budget. Production budget.

Operating budgets include all the following budgets except the: Sales budget. Selling expense budget. Cash budget. Production budget. General and administrative expense budget.

The master budget of a merchandising company includes a: Production budget. Direct materials budget. Factory overhead budget. Direct labor budget. Purchases budget.

The usual starting point for preparing a master budget is forecasting or estimating: Expenditures. Sales. Production. Income. Cash payments.

A plan that lists dollar amounts to be received from disposing of plant assets and dollar amounts to be spent on purchasing additional plant assets is called a: Cash budget. Capital expenditures budget. Rolling budget. Sales budget. Production budget.

The difference between actual price per unit of input and the standard price per unit of input results in a: Standard variance. Quantity variance. Volume variance. Controllable variance. Price variance.

The difference between actual quantity of input used and the standard quantity of input used results in a: Controllable variance. Standard variance. Budget variance. Quantity variance. Price variance.

Standard costs are used in the calculation of: Price and quantity variances. Price variances only. Quantity variances only. Price, quantity, and sales variances. Quantity and sales variances.

An analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonably close to standard is known as: Controllable management. Management by variance. Performance management. Management by objectives. Management by exception.

In this type of budget, the master budget is based on a single prediction for sales volume, and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur: Sales budget. Standard budget. Flexible budget. Fixed budget. Variable budget.

A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a: Rolling budget. Production budget. Flexible budget. Merchandise purchases budget. Fixed budget.

Identify the situation below that will result in a favorable variance. Actual revenue is higher than budgeted revenue. Actual revenue is lower than budgeted revenue. Actual income is lower than expected income. Actual costs are higher than budgeted costs. Actual expenses are higher than budgeted expenses.

An internal report that helps management analyze the difference between actual performance and budgeted performance based on the actual sales volume (or other level of activity) is called a(n): Sales budget performance report. Flexible budget performance report. Master budget performance report. Static budget performance report. Operating budget performance report.

Which department is often responsible for the direct materials price variance? The accounting department. The production department. The purchasing department. The finance department. The budgeting department.

The overhead cost variance is: The difference between the overhead costs actually incurred and the overhead budgeted at the actual operating level. The difference between the actual overhead incurred during a period and the standard overhead applied. The difference between actual and budgeted cost caused by the difference between the actual price per unit and the budgeted price per unit. The costs that should be incurred under normal conditions to produce a specific product (or component) or to perform a specific service. The difference between the total overhead cost that would have been expected if the actual operating volume had been accurately predicted and the amount of overhead cost that was allocated to products using the standard overhead rate.

The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget is the: Production variance. Quantity variance. Volume variance. Price variance. Controllable variance.

When there is a difference between the actual and the standard capacity, which of the following, based solely on fixed overhead, occurs: Production variance. Volume variance. Overhead cost variance. Quantity variance. Controllable variance.

A cost center is a unit of a business that incurs costs without directly generating revenues. All of the following are considered cost centers except: Accounting department at Warner Bros. Purchasing department at Best Buy. Research department at Microsoft. Advertising department at Hertz. Juice division at Coca Cola.

A unit of a business that generates revenues and incurs costs is called a: Performance center. Profit center. Cost center. Responsibility center. Expense center.

The type of department that generates revenues and incurs costs, and its manager is responsible for the investments made in operating assets is called a(n): Profit center Cost center Service department Investment center Responsibility center

An expense that is readily traced to a department because it is incurred for that department's sole benefit is a(n): Common expense. Indirect expense. Direct expense. Administrative expense. Recurring expense.

Expenses that are not easily traced to a specific department, and which are incurred for the joint benefit of more than one department, are: Fixed expenses. Indirect expenses. Direct expenses. Uncontrollable expenses. Variable expenses.

The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be: Floor space of each department. Relative number of items each department had on sale. Number of customers to enter each department. An equal amount of cost for each department. Proportion of sales of each department.

Costs that the manager has the power to determine or significantly affect are called: Uncontrollable costs. Controllable costs. Joint costs. Direct costs. Indirect costs.

Within an organizational structure, the person most likely to be evaluated in terms of controllable costs would be: A payroll clerk. A cost center manager. A production line worker. A maintenance worker. A sales representative.

A cost incurred to produce or purchase two or more products at the same time is a(n): Product cost. Incremental cost. Differential cost. Joint cost. Fixed cost.

Allocating joint costs to products using a value basis method is based on their relative: Sales values. Direct costs. Gross margins. Total costs. Variable costs.

Calculating return on investment for an investment center is defined by the following formula: Contribution margin/Ending assets. Gross profit/Ending assets. Net income/Ending assets. Income/Average invested assets. Contribution margin/Average invested assets.

Rent and maintenance expenses would most likely be allocated based on: Sales volume by department. Square feet of floor space occupied. Number of hours worked. Number of invoices processed. Number of employees in each department.

In the preparation of departmental income statements, the preparer completes the following steps in the following order: Identify direct expenses; allocate indirect expenses; allocate service department expenses. Identify indirect expenses; allocate direct expenses; allocate service department expenses. Identify service department expenses; allocate direct expenses; allocate indirect expenses. Identify direct expenses; allocate service department expenses; allocate indirect expenses. Allocate all expenses.