Test Bank Cost Accounting

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Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 2 An Introduction to Cost Terms and Purposes Objective 2.1 1) Cost objects include: A) products B) customers C) departments D) All of these answers are correct. Answer: D Diff: 2 Terms: cost object Objective: 1 AACSB: Reflective thinking 2) Actual costs are: A) the costs incurred B) budgeted costs C) estimated costs D) forecasted costs Answer: A Diff: 1 Terms: actual costing Objective: 1 AACSB: Reflective thinking 3) The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is: A) cost accumulation B) cost assignment C) cost tracing D) conversion costing Answer: B Diff: 1 Terms: cost assignment Objective: 1 AACSB: Reflective thinking 4) In order to make decisions, managers need to know: A) actual costs B) budgeted costs C) both costs D) neither cost Answer: C Diff: 1 Terms: budgeted costs Objective: 1 AACSB: Ethical reasoning 1 Copyright © 2012 Pearson Education, Inc.

5) The collection of accounting data in some organized way is: A) cost accumulation B) cost assignment C) cost tracing D) conversion costing Answer: A Diff: 1 Terms: cost accumulation Objective: 1 AACSB: Reflective thinking 6) Budgeted costs are: A) the costs incurred this year B) the costs incurred last year C) planned or forecasted costs D) competitor's costs Answer: C Diff: 2 Terms: budgeted costs Objective: 1 AACSB: Reflective thinking 7) Cost assignment : A) is always arbitrary B) is includes tracing and allocating C) is the same as cost accumulation D) is finding the difference between budgeted and actual costs Answer: B Diff: 2 Terms: cost assignment Objective: 1 AACSB: Reflective thinking 8) A cost system determines the cost of a cost object by: A) accumulating and then assigning costs B) accumulating costs C) assigning and then accumulating costs D) assigning costs Answer: A Diff: 2 Terms: cost accumulation Objective: 1 AACSB: Reflective thinking

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9) Products, services, departments, and customers may be cost objects. Answer: TRUE Diff: 1 Terms: cost object Objective: 1 AACSB: Reflective thinking 10) Costs are accounted for in two basic stages: assignment followed by accumulation. Answer: FALSE Explanation: Costs are accounted for in two basic stages: accumulation followed by assignment. Diff: 1 Terms: cost accumulation Objective: 1 AACSB: Reflective thinking 11) Actual costs and historical costs are two different terms referring to the same thing. Answer: TRUE Diff: 1 Terms: budgeted costs Objective: 1 AACSB: Reflective thinking 12) Accountants define a cost as a resource to be sacrificed to achieve a specific objective. Answer: TRUE Diff: 1 Terms: cost Objective: 1 AACSB: Reflective thinking 13) A cost object is always either a product or a service. Answer: FALSE Explanation: A cost object could be anything management wishes to determine the cost of, for example, a department. Diff: 2 Terms: cost object Objective: 1 AACSB: Reflective thinking 14) A customer could be considered a cost object. Answer: TRUE Diff: 2 Terms: cost object Objective: 1 AACSB: Analytical skills

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15) Lucas Manufacturing has three cost objects that it uses to accumulate costs for its manufacturing plants. They are: Cost object #1: Cost object #2: Cost object #3: The physical buildings and equipment The use of buildings and equipment The availability and use of manufacturing labor

The following manufacturing overhead cost categories are found in the accounting records: a. Depreciation on buildings and equipment b. Lubricants for machines c. Property insurance d. Supervisors salaries e. Fringe benefits f. Property taxes g. Utilities Required: Assign each of the above costs to the most appropriate cost object. Answer: Cost object # 1 includes categories a, c, and f. Cost object # 2 includes categories b and g. Cost object # 3 includes categories d and e. Diff: 2 Terms: cost...
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