Cost Accounting

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Multiple Choice Questions

16.Which terms would make the following sentence true? Manufacturing companies that benefit the most from activity-based costing are those where overhead costs are a _________ percentage of total product cost and where there is ___________ diversity among the various products that they produce. A)low, little

B)low, considerable
C)high, little
D)high, considerable

17.Would factory security and assembly activities be best classified at an appliance manufacturing plant as unit-level, batch-level, product-level, or organization-sustaining?

| |Security |Assembly |
|A) |Product |Unit |
|B) |Batch |Batch |
|C) |Organization |Unit |
|D) |Organization |Product |

18.Which of the following would be an acceptable measure of activity for a material handling activity cost pool?

| |Number of |Weight of | | |material moves |material moved |
|A) |Yes |Yes |
|B) |No |Yes |
|C) |Yes |No |
|D) |No |No |

19.An activity-based costing system that is designed for internal decision-making generally will not conform to generally accepted accounting principles. Which of the following is NOT a reason for this happening? A)Some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products. B)Some nonmanufacturing costs are assigned to products. C)Allocation bases other than direct labor-hours, direct labor cost, and machine-hours are used. D)First-stage allocations may be based on subjective interview data.

20.Providing the power required to run production equipment is an example of a: A)Unit-level activity.
B)Batch-level activity.
C)Product-level activity.
D)Organization-sustaining activity.

21.Parts administration is an example of a:
A)Unit-level activity.
B)Batch-level activity.
C)Product-level activity.

22.If a cost object such as a product or customer has a negative green margin, then: A)its red margin will be positive.
B)its red margin may be either positive or negative. C)its red margin will be negative.
D)its red margin will be zero.

31.If products are alike, then for costing purposes:
A)a simple costing system will yield accurate cost numbers B)an activity-based costing system should be used C)multiple indirect-cost rates should be used
D)varying demands will be placed on resources

32.Undercosting a particular product may result in:
A)loss of market share
B)lower profits
C)operating inefficiencies
D)understating total product costs

33.Overcosting of a product is MOST likely to result from: A)misallocating direct labor costs
B)overpricing the product
C)undercosting another product
D)understating total product costs

34.A company produces three products; if one product is overcosted then A)one product is undercosted.
B)one or two products are undercosted.
C)two products are undercosted.
D)no products are undercosted.

36.An accelerated need for refined cost systems is due to: A)global monopolies
B)rising prices
C)intense competition
D)a shift toward increased direct costs

37.The use of a single...
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