Cost Accounting Midterm Practice

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BACC7114

Midterm Exam Practice Set

Spring 2013

BACC7114-Cost Accounting Midterm Exam Practice Set Spring 2013 Part I-Multiple Choice Questions (20 points)
1. Kaizen refers to incorporating cost reductions: a. in each successive budgeting period b. in each successive sales forecast c. in all customer service centers d. All of these answers are correct. A regional manager of a restaurant chain in charge of finding additional locations for expansion is MOST likely responsible for a(n): a. revenue center b. investment center c. cost center d. profit center Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs: A. Identify indirect costs B. Compute the total cost of the job C. Select cost-allocation bases D. Compute the indirect cost rate a. ACDB b. CADB c. BACD d. DCAB All of the following are true EXCEPT that indirect costs: a. may be included in prime costs b. are not easily traced to products or services c. vary with the selection of the cost object d. may be included in manufacturing overhead Sales total $200,000 when variable costs total $150,000 and fixed costs total $30,000. The breakeven point in sales dollars is: a. $200,000 c. $ 40,000 b. $120,000 d. $ 30,000

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BACC7114

Midterm Exam Practice Set

Spring 2013

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Which of the following items is NOT an assumption of CVP analysis? a. Costs may be separated into separate fixed and variable components. b. Total revenues and total costs are linear in relation to output units. c. Unit selling price, unit variable costs, and unit fixed costs are known and remain constant. d. Proportion of different products will remain constant when multiple products are sold. The basic source document for direct manufacturing labor is the: a. job-cost record b. materials-requisition record c. labor-time record d. All of these answers are correct.

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THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 8 THROUGH 10: Sunny Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2012: Direct materials Direct labor (7,000 hours @ $11/hour) Indirect labor Plant facility rent Depreciation on plant machinery and equipment Sales commissions Administrative expenses 8. $280,000 $ 77,000 $ 20,000 $ 60,000 $ 30,000 $ 40,000 $ 50,000

The actual amount of manufacturing overhead costs incurred in June 2012 totals: a. $557,000 b. $200,000 c. $110,000 d. $ 80,000 The amount of manufacturing overhead allocated to all jobs during June 2012 totals: a. $77,000 c. $110,000 b. $105,000 d. $200,000 For June 2012, manufacturing overhead was: a. overallocated b. underallocated c. neither overallocated nor underallocated d. indeterminable A budget should/can do all of the following EXCEPT: a. be prepared by managers from different functional areas working independently of each other b. be adjusted if new opportunities become available during the year c. help management allocate limited resources d. become the performance standard against which firms can compare the actual results 2

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BACC7114

Midterm Exam Practice Set

Spring 2013

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A plot of data that results in one extreme observation MOST likely indicates that: a. more than one cost pool should be used b. an unusual event such as a plant shutdown occurred during that month c. the cost-allocation base has been incorrectly identified d. individual cost items do not have the same cost driver To determine the effect of income tax on a decision, managers should evaluate: a. target operating income b. contribution margin c. selling price d. target net income

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14. The determination of a cost as either direct or indirect depends upon the: a. accounting system b. allocation system c. cost tracing system d. cost object chosen 15....
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