1.

________foucuses on the management of activities with the objectives of improving the value
received by the customer and the profit received by providing this value.
a. Activity-based management
b. Contemporary cost control
c. Functional-based cost management system
d. JIT
2.Which of the following costs incurred by a chair manufacturer would be traced to the product
cost through direct tracing?

a. the depreciation on factory equipment

b. the supervisors salary

c. the insurance on the factory building

d. the woodworkers salary
3. Which of the following cost is not a product cost?

a. rent on the head office building

b. indirect labour

c. repairs on manufacturing equipment

d. steel used in inventory items produced
4. Assuming costs are represented on the vertical axis and volume of activity in the horizontal axis
which of the following costs would be represented by a line that starts at the origin and reaches a
maximum value beyond which the line is parallel to the horizontal axis?

a. total direct material costs.

b. a consultant paid $100 per hour with a maximum fee of $2,000.

c. employees who are paid $15 per hour and guaranteed a minimum weekly wage of$300.

d. rent on exhibit space at a convention.
5. Which of the following items would be associated with both a functional-based cost account
information system and an activity based cost information system?
a. Overhead is assigned on a plant-wide rate based on direct labor hours.
b. Customer service sots are assigned to products using number of complaints as the
activity driver.
c. Direct labor cost is assigned to products using direct tracing.
d. None of these.
6. Which of the following costs is a period cost?

a. depreciation of factory equipment.

b. transportation-in for material shipment.

c. amortization of a patent for the companys product

d. depreciation of office computers
7. Cost behavior analysis focuses on how costs

a. react to change in profit.

b. change over time.

c. react to change in activity level


d. both a. and c.
8. Factors that causes changes in resource usage, activity usage, costs and revenues are called

a. in direct costs.
b. drivers.
c. assignments.
d. cost objects.

9. In a company, engineers have redesigned production process lowering production costs,

shortening production cycle time, reducing waste and improving quality. Which types of managerial
activity applies to this situation?

a. Controlling

b. continuous improvement

c. planning

d. decision making
10. Zipp Company manufactures two products (X and Y). The overhead cost ($84,000) have been
divided into three cost pools that use the following activity drivers.

Products
Numbers of Setups
Machine Hours
Packing Orders
X
10
500
75
Y
10
2,000
175
Cost per pool
$9,000
$60,000
$15,000

If the number of machine hours is used to assign machined hour cost, determine the amount of
machine hour cost to be assigned to Product X.
a. $12,000
b. $60,000
c. $48,000
d. $16,800
11. If activity-based costing is used, product inspections would be classified as a

a. unit-level activity

b. batch-level activity

c. product-level activity

d. facility-level activity
12. All of the following are non-unit-based activity drivers EXCEPT

a. number of setups.

b. number of direct labor hours.

c. number of inspections

d. number of material moves.
13. Products might consume overhead in different proprieties due to difference is

a. product size.

b. setup times.

c. product complexity

d. all of those.
14.______________ involves choosing among various sets of activities that are caused by
competing strategies.

a. Activity sharing

b. Activity elimination

c. Activity selection

d. Activity reduction
15. Activity-based management attempts to

a. identify and eliminate (where possible) all unnecessary activities.

b. increase the efficiency of necessary activities.

c. add new activities that increase value

d. all of these.

16. The use of unit-based activity drives to assign cost tends to

a. overcost low-volume products.

b. overcost high-volume products.

c. undercost all products.

d. overcost all products.
17. High quality cost management system have an organization-wide perspective. Which of the
following would NOT be a benefit of a cost management system?

a. increase speed by ignoring non-financial information.

b. reduce duplicate data storage and use of data.

c. improve timelines of reports

d. increase the efficiency of generating reliable and accurate information.
18. The cost management information system is concerned with

a. reporting financial information according to GAAP.

b. providing cost information that is used in planning, control, and decision-making.

c. reporting to external users.

d. providing financial information to investors.
19. In an accounting information system, the inputs are usually

a. financial statements.

b. analyzing data.

c. performance reports.

d. economic events.
20. Which of the following is an example of a committed fixed expense?

a. depreciation on a factory building.

b. supervisors salary.

c. direct labor.


d. insurance on a building.
21. Which of the following statement is TRUE about the learning curve?

a. The curve decreases at an increasing rate.

b. The learning effect will eventually disappear as the number of units produced increases.
c. Failure to recognize learning curve effects will cause units produced later in a new
production process to receive less cost than they should.
d. All of these.
22. ALF Systems undertakes its own machine maintenance. The depreciation on the maintenance
equipment is $20,000 per year, with the operating cost of this equipment being $2 per machine
hours. Last year 275,000 machine hours were used to produce 100,000 units.


Compute the total machine maintenance cost for last year.
a. $570,000
b. $550,000
c. $420,000
d. $20,000
23. Committed resources:

a. Are only purchased as needed

b. Are acquired from outside sources, by a contract for the exact amount of their usage.

c. Will never have unused capacity.

d. May sometimes not be used fully.

e. None of the above.

24. A manufacturer plans to increase production within the relevant range of activity. What
behavior can the company expect for each of the following?

Fixed cost per unit Variable cost per unit

a. No change
No change


b. No change
Increase

c. Increase
No change

d. Decrease Increase

e. Decrease
No change

25. The following information is provided.

Estimated manufacturing overhead $690,000
Estimated machine hours 46,000
Actual machine hours worked 50,000

Actual cost incurred
Indirect materials $170,000
Indirect labor 230,000
Others 120,000
Insurance 100,000
Rent 50,000
The company uses a predetermined overhead rate to apply overhead. Manufacturing overhead
applied is
a. $750,000
b. $700,000
c. $690,000
d. $648,000
26. DIF Ltd undertakes its own machine maintenance. The depreciation on the equipment is
$20,000 per year and the operating cost is $2 per machine hours(MHR). Last year 275,000 machine
hours were used to produce 100,000 units. The cost function for the total machine maintenance
cost is:

a. Y = $20,000 + $5.5 MHR

b. Y = $570,000

c. Y = $20,000 + $2 MHR

d. Y = $2 MHR

e. None of above
27. HCH Ltd uses a pre-determined overhead rate of $12 per direct labor hour to apply overhead.
During the year, 30,000 direct labor hours were worked and 35,000 machine hours were worked.
Actual overhead costs for the tear were $320,000. The overhead variance is
a. $36,000 overapplied.
b. $36,350 underapplied.
c. $40,000 underapplied.
d. $100,000 overapplied.
e. None of above.

28. The following information is available for electricity costs for the last six months of the year:
Month
Production Volume
Electricity Costs
January
1,400
2,200
February
2,800
5,400
March
3,200
5,700
April
1,750
3,900
May
1,200
2,400
June
2,100
4,050

Using the high-low method, estimated variable cost per unit of production is
a. $1.26
b. $1.53
c. $1.65
d. $1.94
e. None of the above