Cost Accounting Question Paper

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1. Human resource is an example of (an): (Points : 2)
Unit-level activity.
Batch-level activity.
Product-level activity.
Organization-sustaining activity.

2. Which of the following is not a limitation of activity-based costing? (Points : 2) Maintaining an activity-based costing system is more costly than maintaining a traditional direct labor-based costing system. Changing from a traditional direct labor-based costing system to an activity-based costing system changes product margins and other key performance indicators used by managers. Such changes are often resisted by managers. In practice, most managers insist on fully allocating all costs to products, customers, and other costing objects in an activity-based costing system. This results in overstated costs. More accurate product costs may result in increasing the selling prices of some products.

3. Matt Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 8,000 units and of Product B is 6,000 units. There are three activity cost pools, with total cost and total activity as follows: Activity cost poolTotal costActivity for Product AActivity for Product BTotal Activity Activity 1$20,000100400500

Activity 2$37,0008002001,000
Activity 3$91,2008003,0003,800

The activity-based costing cost per unit of Product A is closest to: (Points : 4) $2.40
$3.90
$10.59
$6.60

4. Which of the following activities would be classified as a batch-level activity? (Points : 2) Setting up equipment.
Designing a new product.
Training employees.
Milling a part required for the final product.

5. The purchasing agent of the Clampett Company ordered materials of lower quality in an effort to economize on price and in response to the demands of the production manager due to a mistake in...
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