Cost Accounting

Topics: Costs, Inventory, Variable cost Pages: 26 (4228 words) Published: June 24, 2013
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Chapter 2—Cost Terminology and Cost Behaviors

MULTIPLE CHOICE

1.The term "relevant range" as used in cost accounting means the range over which a.| costs may fluctuate.|
b.| cost relationships are valid.|
c.| production may vary.|
d.| relevant costs are incurred.|

ANS:BPTS:1DIF:EasyOBJ:2-2
NAT:AACSB: Reflective Thinking
LOC:AICPA Functional Competencies: Measurement, Reporting

2.Which of the following defines variable cost behavior?

Total cost reactionto increase in activity| Cost per unit reactionto increase in activity|

a.| remains constant remains constant| b.| remains constant increases|
c.| increases increases|
d.| increases remains constant|

ANS:DPTS:1DIF:EasyOBJ:2-2
NAT:AACSB: Reflective Thinking
LOC:AICPA Functional Competencies: Measurement, Reporting

3.When cost relationships are linear, total variable prime costs will vary in proportion to changes in a.| direct labor hours.|
b.| total material cost.|
c.| total overhead cost.|
d.| production volume.|

ANS:DPTS:1DIF:EasyOBJ:2-2
NAT:AACSB: Reflective Thinking
LOC:AICPA Functional Competencies: Measurement, Reporting

4.Which of the following would generally be considered a fixed factory overhead cost?

Straight-line| Factory| Units-of-production|
depreciation| insurance| depreciation|

a.| no no no|
b.| yes no yes|
c.| yes yes no|
d.| no yes no|

ANS:CPTS:1DIF:EasyOBJ:2-2
NAT:AACSB: Reflective Thinking
LOC:AICPA Functional Competencies: Measurement, Reporting

5.An example of a fixed cost is
a.| total indirect material cost.|
b.| total hourly wages.|
c.| cost of electricity.|
d.| straight-line depreciation.|

ANS:DPTS:1DIF:EasyOBJ:2-2
NAT:AACSB: Reflective Thinking
LOC:AICPA Functional Competencies: Measurement, Reporting

6.A cost that remains constant in total but varies on a per-unit basis with changes in activity is called a(n) a.| expired cost.|
b.| fixed cost.|
c.| variable cost.|
d.| mixed cost.|

ANS:BPTS:1DIF:EasyOBJ:2-2
NAT:AACSB: Reflective Thinking
LOC:AICPA Functional Competencies: Measurement, Reporting

7.A(n) ____ cost increases or decreases in intervals as activity changes. a.| historical cost|
b.| fixed cost|
c.| step cost|
d.| budgeted cost|

ANS:CPTS:1DIF:EasyOBJ:2-2
NAT:AACSB: Reflective Thinking
LOC:AICPA Functional Competencies: Measurement, Reporting

8.When the number of units manufactured increases, the most significant change in unit cost will be reflected as a(n) a.| increase in the fixed element.|
b.| decrease in the variable element.|
c.| increase in the mixed element.|
d.| decrease in the fixed element.|

ANS:DPTS:1DIF:EasyOBJ:2-2
NAT:AACSB: Reflective Thinking
LOC:AICPA Functional Competencies: Measurement, Reporting

9.Which of the following always has a direct cause-effect relationship to a cost?

Predictor| Cost driver|

a.| yes yes|
b.| yes no|
c.| no yes|
d.| no no|

ANS:CPTS:1DIF:ModerateOBJ:2-2
NAT:AACSB: Reflective Thinking
LOC:AICPA Functional Competencies: Measurement, Reporting

10.A cost driver
a.| causes fixed costs to rise because of production changes.| b.| has a direct cause-effect relationship to a cost.|
c.| can predict the cost behavior of a variable, but...
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