Font size
WorksheetsAccounting 213 - GVSU - Conor Brown
Total questions: 73
Worksheet time: 1hrs 13mins
A fixed cost _________ in total when level of activity increases
Increases
Decreases
Stays the same
The average fixed cost per unit _________ when the level of activity increases
Increases
Decreases
Stays the same
Total variable cost _______ when the level of activity increases
Increases
Decreases
Stays the same
Variable cost per unit _______ when the level of activity increases
Increases
Decreases
Stays the same
What is the purpose of cost classifications?
Helps companies understand where their money is going and how it affects their profitability and productivity
The purpose of cost classifications is to confuse businesses and make it more difficult for them to make informed financial decisions
Cost classifications could be used to hide financial information from stakeholders or to artificially inflate profits.
To waste time and resources by creating unnecessary categorizations of costs that don't provide any real value
What is included in product costs?
Product costs include: Direct Labor, Factory Supervision, Indirect Materials, Depreciation of production equipment, Insurance of factory, direct materials
Product costs include the expenses incurred in the administration process such as office rent, salaries of the management team, and office supplies
Product costs include the expenses incurred in the financing process such as interest on loans, dividends, and stock issuances
Product costs include the expenses incurred in the selling process such as advertising, sales commissions, and shipping costs
What is included in period costs?
Period costs include advertising, sales commissions, depreciation of office equipment at corporate HQ
Selling and administrative expenses
Direct materials and labor costs
Overhead costs
What is included in manufacturing overhead?
Factory supervision, indirect materials, depreciation of production equipment, insurance for factory
Manufacturing overhead typically includes indirect materials, indirect labor, and other factory-related expenses
Rent, utilities, and property taxes
Direct materials, direct labor, and finished goods inventory
What is included in variable cost?
Direct labor, sales commissions, indirect materials, direct materials
Fixed expenses, Direct labor cost
Depreciation cost
Indirect cost, Overhead costs
What is included in the total fixed cost?
Advertising, factory supervision, depreciation of office equipment at corporate HQ, depreciation of production equipment, insurance for factory
What is included in total selling and administration cost?
Sales commissions
How do you calculate the predetermined overhead rate?
Direct costs are . . .
easily traceable to the cost object
Indirect costs are . . .
not easily traceable to cost object, or not worth the effort, and are instead allocated to products
Product costs are . . .
All costs involved in acquiring or making a product
Period costs are . . .
all costs that are not product costs
The wages of employees that build the sailboats?
Product
Period
The cost of advertising in the local newspapers?
Product
Period
The cost of an expensive aluminum mast installed in a sailboat?
Product
Period
The wages of the assembly shop's supervisor?
Product
Period
The wages of the company's bookkeeper?
Product
Period
Insurance for the shop and its equipment?
Product
Period
Which of the following costs would be considered a period rather than a product cost in a manufacturing company?
Manufacturing equipment depreciation
Property taxes on corporate headquarters
Direct materials costs
Electrical costs to light the production facility
Sales commissions
What is the correct relevant range definition?
The relevant range is the range of production for which cost behavior remains unchanged (variable rate per unit remains unchanged, fixed amount remains unchanged)
When direct costs are assigned to cost objects, they are ______
When indirect costs are assigned to cost objects, they are ______
What is Job-Order Costing?
Job-Order Costing is a method used to track the costs of producing a unique product or service.
What is an allocation base?
The allocation base is the measure used to assign overhead costs
Chosen allocation base should ideally cause or drive the overhead costs, a . . . .
Cost driver
Allocation base
Predetermined overhead rate
Job-order costing
What is absorption costing?
Absorption costing involves allocating all manufacturing costs to production units, including direct materials, direct labor, variable overhead, and fixed overhead costs. Where all fixed and variable manufacturing costs are "absorbed" into the product cost
Because absorption costing includes more in product costs . . .
the value of products in inventory will be higher with absorption costing and lower with variable costing
the value of products in inventory will be lower with absorption costing and higher with variable costing
the value of products in inventory will be higher with variable costing and lower with absorption costing
the value of products in inventory will be higher with absorption costing and higher with variable costing
Variable costing income . . .
is affected by only changes in unit sales.
is affected by only the number of units produced.
is affected by both unit sales and the number of units produced.
is affected by only the units purchased.
What does variable costing identify?
Variable costs associated with producing one more additional product
Which is true about traceable fixed costs?
Traceable fixed costs of one segment may be a common fixed cost of another segment.
The segment margin ....
is computed by subtracting the traceable fixed costs of a segment from its contribution margin, which is the best gauge of the long-run profitability of a segment.
Which is true about common fixed expenses?
Common fixed expenses cannot be eliminated by dropping one of the segments.
In accounting an activity is defined as?
An event that causes the consumption of overhead resources.
What is an activity cost pool?
A "cost bucket" in which costs related to a single activity measure are accumulated
What are the differences between Activity-Based Costing and Traditional Absorption Costing?
Numerous of overhead cost pools are used.
Nonmanufacturing and well as manufacturing costs may be assigned to products, but only on a cause and effect basis.
ABC excludes organization-sustaining costs and idle capacity costs from product costs
Uses only plantwide overhead rates for cost pools
Uses departmental overhead rates because it reduces the cost distortion
What are the five levels of activity based costing?
segment-level, batch-level, organization-level, product-level, producer-level
department-level, producer-level, organization-level, customer-level, delivery-level
division-level, product-level, customer-level, organization-sustaining level, unit-level
Which of the following is an example of a unit-level activity?
Providing power to run equipment
Which of the following is an example of a batch-level activity?
Placing purchase orders
Which of the following is an example of a product-level activity?
Product advertising
Which of the following is an example of a customer-level activity?
On-site visits
Which of the following is an example of a organization-sustaining activity?
Factory heating; banking fees
How do you calculate activity rates?
Activity Rate = Total Activity Cost / Total Activity
In accounting what is the definition of a budget?
A detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period.
What is an operating budget?
Ordinarily covers one year corresponding to a company's fiscal year
What is a continuous budget?
A 12-month budget that rolls forward one month as the current month is completed
What is a master budget?
It consists of several separate but independent budgets that formally outline the company's sales, production, and financial goals.
Which of the following are included in the master budget?
Direct labor budget
MOH budget
Selling and Administration budget
Cash budget
End of year budget
What is a planning budget?
A planning budget is prepared for a single planned level of activity.
Flexible budgets . . .
May be prepared for any activity level in the relevant range
Show costs that should have been incurred at the actual level of activity, enabling "apples to apples" cost comparison
Help managers control costs
Improve performance evaluation
Cannot be changed once they are developed
What is the budget variance equation?
Budget Variance = Budgeted Spent - Actual Spent
What is the variance between the flexible and planning budget?
Variance
Activity Variance
Flexible Variance
Cost Variance
In accounting what is a standard?,
A standard in accounting is a benchmark or "norms" for measuring performance
What are the two types of standards and their definitions?
Legal standards must be considered when setting the price for each unit, and Illegal standards determine the illegal amounts of quantity used in each unit.
De jure standards how much should be produced and De jure standards which are how much materials should be purchased
Official standards how much output should be sold per unit and Unofficial standards how much each unit should cost the company
Price Standards which is how much should be paid per unit and Quantity Standards which is how much input should be used to make a product
How do you calculate the spending variance?
Spending Variance = Quantity Variance - Spending Variance
Who is responsible for the Materials Price Variance?
Purchasing Manger
Sales Manager
Overhead Efficiency Manager
Labor Manager
Who is responsible for the Materials Quantity Variance?
Marketing Manager
Production Manager
What is true about the quantity variance?
Quantity variance is computed only on the quantity used.
What is true about the price variance?
Price variance is computed on the entire quantity purchased
In accounting what are the 6 steps to decision making?
Define the alternatives, identify the criteria, differential analysis, remember sunk costs, remember that future costs and benefits that do not differ between alternatives are irrelevant, finally, consider the opportunity costs
Sunk costs are always . . .
Relevant
Irrelevant
Not considered
When costs are allocated to segments, the only relevant costs are the .....
Fixed
Historical
Irrelevant
Avoidable
Increasing the capacity of a constrained resource should lead to . . .
increased production and sales
What does GAAP require with joint costs?
Allocated to products
What are the main factors that influence pricing decisions?
Costs, competition, and customers
In accounting, what does latitude mean?
That customers have options. They can buy your product, a competitor's, or none at all.
In accounting, what does private information mean?
Customers know how badly they want your product and how much they are willing to pay- you don't know this information
If a change in price has a big effect on units sold, then the demand is . . .
Elastic
Inelastic
If a change in price has a small effect on units sold, then the demand is . . . .
Elastic
Inelastic
What is value-based pricing?
Value-based pricing establish selling prices based on the economic value of the benefits provide by a product or service.
