Test your basic knowledge |

Cost Accounting

Instructions:

Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can study here.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. Byproduct
The products of a joint production process that have low total sales values compared with the total sales value of the main product or of joint products.
Used when implementing strategy. It is the quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan.
Approach 2 Allocates joint cost using Physical measures - such as the weight - quantity (physical units) or volume of the joint products.
Is spoilage inherent in a particular production process. The cost of normal spoilage are typically included as a component of the cost of goods units manufactured because good units cannot be made without making some units that are spoiled. pp646 is

2. Purpose of a budget?
The difference between actual results and expected performance. The expected performance is also called budgeted performance - which is a point of reference for making comparisons.
The normal spoilage is the spoilage related to the good units produced - normal spoilage rates are computed by dividing units or normal spoilage by total good units completed - not total actual units started in production.
All costs - manufacturing - marketing - distribution and so on incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.
Used when implementing strategy. It is the quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan.

3. Reciprocal allocation method
Allocates joint costs to joint products produced during the accounting period on the basis of a compatible physical measure - such as the relative weight - quantity - or value at the split off point.
Is spoilage inherent in a particular production process. The cost of normal spoilage are typically included as a component of the cost of goods units manufactured because good units cannot be made without making some units that are spoiled. pp646 is
Allocates support-department costs to operating departments by fully recognizing the mutual services provided among all support departments. It fully incorporates interdepartmental relationships into the support-department cost allocation.
The normal spoilage is the spoilage related to the good units produced - normal spoilage rates are computed by dividing units or normal spoilage by total good units completed - not total actual units started in production.

4. Actual cost allocation
Used to estimate the cost function of individual activities - the manager collects data on the activity's costs and the quantities of competing cost drivers over a reasonably long period. Managers must identify a cost driver for each activity in the
When actual rates are used for cost allocation - managers do not know the rates until the end of the budget period. If actual rates are used - the efficiency of the supplier department affects the cost allocated to the user department.
Are expected future costs that differ among alternative courses of action being considered. Relevant costs must occur in the future and differ among the alternative courses of action.
Predicted or forecasted cost (future cost) as distinguished from an actual or historical cost.

5. Separable costs
It is the marginal profit per unit sale. The difference between total revenues and total revenues cost. It indicates why operating income changes as the number of units sold changes. The difference between total revenues minus total variable costs.
All costs - manufacturing - marketing - distribution and so on incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.
When the cost object is a distinct product or service called a job. Job costing systems accumulate costs separately for each product or service. Work is broken into jobs; each job is tracked separately
When actual rates are used for cost allocation - managers do not know the rates until the end of the budget period. If actual rates are used - the efficiency of the supplier department affects the cost allocated to the user department.

6. Equivalent unit computation in process costing.
Derived amount of output units that (a) takes the quantity of each output (factor of production) in units completed and in incomplete units of work in process and (b) converts the quantity of input into the amount of completed output units that could
Is units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units.
Allocates joint cost to joint products produced during the accounting period in such a way that each individual product achieves an identical gross margin percentage. The method works backward int that the overall gross margin is computed first. Then
It is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs.

7. When do we have a favorable price variance?
We use reciprocal method to have accurate service department cost allocations.
Department that directly adds value to a product or service. Also called a production department in manufacturing companies.
Are expected future costs that differ among alternative courses of action being considered. Relevant costs must occur in the future and differ among the alternative courses of action.
When the actual price of a product is less than the budgeted price - resulting in an increase in operating income.

8. Operating department
The products of a joint production process that have low total sales values compared with the total sales value of the main product or of joint products.
Department that directly adds value to a product or service. Also called a production department in manufacturing companies.
Assignment of indirect costs to a particular cost object.
Department that provides the services that assist other internal departments (operating departments and other support departments) in the company.

9. End products (Separable products at the split off point)
The budgeted total fixed costs are the same for static budget and flexible budget as long as long as the number of units falls within the relevant range. Therefore - the budget is the same amount of fixed costs.
Are expected future costs that differ among alternative courses of action being considered. Relevant costs must occur in the future and differ among the alternative courses of action.
Tanning cream and Instant cocoa mix
Step 1 - Identify the problem and uncertainties Step 2 - Obtain information Step 3 - Make predictions about the future Step 4 - Make decisions by choosing among alternatives Step 5 - Implement the decision - Evaluate Performance - and learn

10. When to use special order?

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183

11. Supporting department (service department)
Feedback is important because it might affect future predictions - the prediction methods used - the way choices are made - or the implementation of the decision.
Allocation method that classifies costs in each cost pool into two pools (a variable-cost pool and a fixed-cost pool) with each pool using a different cost-allocation base.
The juncture in a point-production process when two or more products become separately identifiable
Department that provides the services that assist other internal departments (operating departments and other support departments) in the company.

12. Single-rate method
Cost allocation method that allocates each support department's costs to operating departments only
Allocation method that allocates costs in each cost pool to cost objects using the same rate per unit of a single allocation base.
When the cost object is a distinct product or service called a job. Job costing systems accumulate costs separately for each product or service. Work is broken into jobs; each job is tracked separately
Accounting for spoilage aims to determine the magnitude of spoilage costs and to distinguish between costs of normal and abnormal spoilage. Also - to manage - control - and reduce spoilage costs - they can be highlighted - not simply folded into prod

13. What are the steps in the decision-making model?
Step 1 - Identify the problem and uncertainties Step 2 - Obtain information Step 3 - Make predictions about the future Step 4 - Make decisions by choosing among alternatives Step 5 - Implement the decision - Evaluate Performance - and learn
When a joint production process yields one product with a high total sales value - compared with total sales values of other products of the process.
Variable manufacturing overhead costs
Is units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units.

14. Physical-Measure Method (Physical Units)...
Allocates support-department costs to operating departments by fully recognizing the mutual services provided among all support departments. It fully incorporates interdepartmental relationships into the support-department cost allocation.
Allocates joint costs to joint products produced during the accounting period on the basis of a compatible physical measure - such as the relative weight - quantity - or value at the split off point.
When actual rates are used for cost allocation - managers do not know the rates until the end of the budget period. If actual rates are used - the efficiency of the supplier department affects the cost allocated to the user department.
Managers compare how revenue - costs - and contribution margin change across various alternatives then they choose the alternative that maximizes operating income. It also expands the use of information provided by breakeven analysis. Furthermore - i

15. When do we use reciprocal allocation?
We use reciprocal method to have accurate service department cost allocations.
Predicted or forecasted cost (future cost) as distinguished from an actual or historical cost.
Method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventorial costs. - Fixed and manufacturing overhead are the same. It is a method of inventory costing in which all variable/fixe
Special orders are used when a company receives a onetime only unexpected order that will not affect the company's current fixed manufacturing costs - nor will the special order affect the selling price or the quantity of items sold to regular custom

16. What is cost behavior?
Is spoilage inherent in a particular production process. The cost of normal spoilage are typically included as a component of the cost of goods units manufactured because good units cannot be made without making some units that are spoiled. pp646 is
Is a mathematical description of how a cost changes with changes in the level of an activity relating to that cost. Pg.341 It can be plotted on a graph by measuring the level of an activity - such as number of batches produces or number of machines u
Predicted or forecasted cost (future cost) as distinguished from an actual or historical cost.
The sensitivity of costs to changes in production or sales volume. Better collaboration - planning - and motivation are a result of different sets of budget decisions. It helps managers make strategic and operating decisions that have a positive envi

17. Reciprocal allocation
All costs - manufacturing - marketing - distribution and so on incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.
Predicted or forecasted cost (future cost) as distinguished from an actual or historical cost.
A formal method of making a choice between different courses of action - which often involves both quantitative and qualitative analyses.
Is a cost allocation method that fully recognizes the mutual services provided among all support departments.

18. Dual rate method
When a joint production process yields two or more products with high total sales values compared with the total sales values of other products - if any.
Cocoa butter and Cocoa powder
Allocation method that classifies costs in each cost pool into two pools (a variable-cost pool and a fixed-cost pool) with each pool using a different cost-allocation base.
Used when implementing strategy. It is the quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan.

19. Rework
Allocates joint costs to joint products produced during the accounting period on the basis of the relative total sales value at the splitoff point.
Is units of production whether fully or partially completed that do not meet the specifications required by customers for good units and that are discarded or sold at reduced prices.
A. to compute inventory cost and cost of goods sold b. to determine cost reimbursement under contracts c. for insurance settlement computations d. for rate regulation e. for litigation purposes
Is units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units.

20. Main product
Variable manufacturing overhead costs
Cocoa beans
We use reciprocal method to have accurate service department cost allocations.
All costs - manufacturing - marketing - distribution and so on incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.

21. Net realizable value (NRV) method...
Cost allocation method that partially recognizes the mutual services provided among all support departments. Also called sequential allocation method.
We use reciprocal method to have accurate service department cost allocations.
Tanning cream and Instant cocoa mix
Allocates joint cost to joint products produced during the accounting period on the basis of their relative NRV final sales value minus separable costs. The NRV method is typically used in preference to the sales value at splitoff method - only when

22. Normal Spoilage
Accounting for spoilage aims to determine the magnitude of spoilage costs and to distinguish between costs of normal and abnormal spoilage. Also - to manage - control - and reduce spoilage costs - they can be highlighted - not simply folded into prod
Is spoilage inherent in a particular production process. The cost of normal spoilage are typically included as a component of the cost of goods units manufactured because good units cannot be made without making some units that are spoiled. pp646 is
Cocoa butter and Cocoa powder
Is units of production whether fully or partially completed that do not meet the specifications required by customers for good units and that are discarded or sold at reduced prices.

23. Abnormal Spoilage
Is spoilage that is not inherent in a particular production process and would not arise under efficient (normal) operating condition. Abnormal spoilage is usually regarded as avoidable and controllable. Cost of abnormal spoilage is written off as a l
When the cost object is a distinct product or service called a job. Job costing systems accumulate costs separately for each product or service. Work is broken into jobs; each job is tracked separately
Accounting for spoilage aims to determine the magnitude of spoilage costs and to distinguish between costs of normal and abnormal spoilage. Also - to manage - control - and reduce spoilage costs - they can be highlighted - not simply folded into prod
Cost allocation method that allocates each support department's costs to operating departments only

24. What is cost allocation?
Is spoilage that is not inherent in a particular production process and would not arise under efficient (normal) operating condition. Abnormal spoilage is usually regarded as avoidable and controllable. Cost of abnormal spoilage is written off as a l
Approach 2 Allocates joint cost using Physical measures - such as the weight - quantity (physical units) or volume of the joint products.
Assignment of indirect costs to a particular cost object.
Cost allocation method that allocates each support department's costs to operating departments only

25. What is the value of feedback in decision-making?
Managers compare how revenue - costs - and contribution margin change across various alternatives then they choose the alternative that maximizes operating income. It also expands the use of information provided by breakeven analysis. Furthermore - i
Feedback is important because it might affect future predictions - the prediction methods used - the way choices are made - or the implementation of the decision.
Cocoa butter and Cocoa powder
When a joint production process yields two or more products with high total sales values compared with the total sales values of other products - if any.

26. What is process costing?
Costing system in which the cost object is masses of identical or similar units of a product or service.
Allocates joint costs using market base data such as revenues.
Special orders are used when a company receives a onetime only unexpected order that will not affect the company's current fixed manufacturing costs - nor will the special order affect the selling price or the quantity of items sold to regular custom
Is units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units.

27. What are relevant costs?
Method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventorial costs. - Fixed and manufacturing overhead are the same. It is a method of inventory costing in which all variable/fixe
Variable manufacturing overhead costs
Is residual material that results from manufacturing a product. It has low total sales value compared with the total sales value of the product.
They are expected future costs and relevant revenues are expected future revenues that differ among the alternative courses of action being considered. In order to be relevant costs and relevant revenues - they must: Occur in the future - every decis

28. Joint product
Managers compare how revenue - costs - and contribution margin change across various alternatives then they choose the alternative that maximizes operating income. It also expands the use of information provided by breakeven analysis. Furthermore - i
Allocation method that classifies costs in each cost pool into two pools (a variable-cost pool and a fixed-cost pool) with each pool using a different cost-allocation base.
When a joint production process yields two or more products with high total sales values compared with the total sales values of other products - if any.
All costs - manufacturing - marketing - distribution and so on incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.

29. What is variable costing?
Cost allocation method that fully recognizes the mutual services provided among all support departments. Also called matrix-method.
Qualitative costs and benefits (those costs and benefits that are non-quantifiable and/or immeasurable within the scope of this analysis) were determined based on the literature review and information gathering process.
It is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs.
Allocates joint cost to joint products produced during the accounting period on the basis of their relative NRV final sales value minus separable costs. The NRV method is typically used in preference to the sales value at splitoff method - only when

30. 4 overhead variances.
All costs - manufacturing - marketing - distribution and so on incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.
Variable manufacturing overhead costs
They are expected future costs and relevant revenues are expected future revenues that differ among the alternative courses of action being considered. In order to be relevant costs and relevant revenues - they must: Occur in the future - every decis
It is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs.

31. Who are users of management accounting information?
We use reciprocal method to have accurate service department cost allocations.
Managers
Allocation method that allocates costs in each cost pool to cost objects using the same rate per unit of a single allocation base.
A formal method of making a choice between different courses of action - which often involves both quantitative and qualitative analyses.

32. Why do we allocate costs?
Allocates joint costs using market base data such as revenues.
A formal method of making a choice between different courses of action - which often involves both quantitative and qualitative analyses.
A. to compute inventory cost and cost of goods sold b. to determine cost reimbursement under contracts c. for insurance settlement computations d. for rate regulation e. for litigation purposes
It is a method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs.

33. Joint cost
The products of a joint production process that have low total sales values compared with the total sales value of the main product or of joint products.
Special orders are used when a company receives a onetime only unexpected order that will not affect the company's current fixed manufacturing costs - nor will the special order affect the selling price or the quantity of items sold to regular custom
Is a cost of a production process that yields multiple products simultaneously.
Is spoilage inherent in a particular production process. The cost of normal spoilage are typically included as a component of the cost of goods units manufactured because good units cannot be made without making some units that are spoiled. pp646 is

34. Intermediate products (Separable products at the split off point)
Department that provides the services that assist other internal departments (operating departments and other support departments) in the company.
Cocoa butter and Cocoa powder
Allocates joint costs to joint products produced during the accounting period on the basis of the relative total sales value at the splitoff point.
Allocates joint costs to joint products produced during the accounting period on the basis of a compatible physical measure - such as the relative weight - quantity - or value at the split off point.

35. Why would we use Just-in-time production system? Just-in-time (JIT) production (also called lean production)
Is residual material that results from manufacturing a product. It has low total sales value compared with the total sales value of the product.
The products of a joint production process that have low total sales values compared with the total sales value of the main product or of joint products.
Tanning cream and Instant cocoa mix
Is a demand-pull manufacturing system in which each component in a production line is produced as soon as - and only when - needed by the next step in the production line. This system achieves close coordination among workstations. It smoothes the fl

36. Quantitative costs
It is the marginal profit per unit sale. The difference between total revenues and total revenues cost. It indicates why operating income changes as the number of units sold changes. The difference between total revenues minus total variable costs.
Used when implementing strategy. It is the quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan.
Are outcomes that are measured in numerical terms. Some quantitative factors are financial; examples include the cost of direct materials - direct manufacturing labor - and marketing. Other quantitative factors are nonfinancial; they can be measured
When a joint production process yields one product with a high total sales value - compared with total sales values of other products of the process.

37. Approach two of Joint Costs
The juncture in a point-production process when two or more products become separately identifiable
A formal method of making a choice between different courses of action - which often involves both quantitative and qualitative analyses.
Approach 2 Allocates joint cost using Physical measures - such as the weight - quantity (physical units) or volume of the joint products.
Accounting for spoilage aims to determine the magnitude of spoilage costs and to distinguish between costs of normal and abnormal spoilage. Also - to manage - control - and reduce spoilage costs - they can be highlighted - not simply folded into prod

38. Sales Value at splitoff method...
Special orders are used when a company receives a onetime only unexpected order that will not affect the company's current fixed manufacturing costs - nor will the special order affect the selling price or the quantity of items sold to regular custom
Approach 2 Allocates joint cost using Physical measures - such as the weight - quantity (physical units) or volume of the joint products.
Allocates joint costs to joint products produced during the accounting period on the basis of the relative total sales value at the splitoff point.
Method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventorial costs. - Fixed and manufacturing overhead are the same. It is a method of inventory costing in which all variable/fixe

39. Use of cost drivers in ABC system

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183

40. Approach one of Joint Costs
Used when implementing strategy. It is the quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan.
Tanning cream and Instant cocoa mix
Is a cost allocation method that fully recognizes the mutual services provided among all support departments.
Allocates joint costs using market base data such as revenues.

41. How do we account for abnormal spoilage?
Department that directly adds value to a product or service. Also called a production department in manufacturing companies.
Accounting for spoilage aims to determine the magnitude of spoilage costs and to distinguish between costs of normal and abnormal spoilage. Also - to manage - control - and reduce spoilage costs - they can be highlighted - not simply folded into prod
All costs - manufacturing - marketing - distribution and so on incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.
Is units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units.

42. Constant Gross-Marging Percentage NRV method...
Predicted or forecasted cost (future cost) as distinguished from an actual or historical cost.
Allocates joint cost to joint products produced during the accounting period in such a way that each individual product achieves an identical gross margin percentage. The method works backward int that the overall gross margin is computed first. Then
Special orders are used when a company receives a onetime only unexpected order that will not affect the company's current fixed manufacturing costs - nor will the special order affect the selling price or the quantity of items sold to regular custom
The difference between actual results and expected performance. The expected performance is also called budgeted performance - which is a point of reference for making comparisons.

43. Step down method allocation
Cost allocation method that partially recognizes the mutual services provided among all support departments. Also called sequential allocation method.
Is spoilage that is not inherent in a particular production process and would not arise under efficient (normal) operating condition. Abnormal spoilage is usually regarded as avoidable and controllable. Cost of abnormal spoilage is written off as a l
The sensitivity of costs to changes in production or sales volume. Better collaboration - planning - and motivation are a result of different sets of budget decisions. It helps managers make strategic and operating decisions that have a positive envi
Costing system in which the cost object is masses of identical or similar units of a product or service.

44. how do we account for normal spoilage?
Department that provides the services that assist other internal departments (operating departments and other support departments) in the company.
Is spoilage that is not inherent in a particular production process and would not arise under efficient (normal) operating condition. Abnormal spoilage is usually regarded as avoidable and controllable. Cost of abnormal spoilage is written off as a l
The normal spoilage is the spoilage related to the good units produced - normal spoilage rates are computed by dividing units or normal spoilage by total good units completed - not total actual units started in production.
They are expected future costs and relevant revenues are expected future revenues that differ among the alternative courses of action being considered. In order to be relevant costs and relevant revenues - they must: Occur in the future - every decis

45. Main product
Tanning cream and Instant cocoa mix
When a joint production process yields one product with a high total sales value - compared with total sales values of other products of the process.
All costs - manufacturing - marketing - distribution and so on incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.
Predicted or forecasted cost (future cost) as distinguished from an actual or historical cost.

46. What is variance?
Past manufacturing hourly wage rate and past manufacturing labor costs. Historical costs themselves are past costs that therefore are irrelevant to decision making. Managers divide the outcomes of decisions into two broad categories.
The difference between actual results and expected performance. The expected performance is also called budgeted performance - which is a point of reference for making comparisons.
A. to compute inventory cost and cost of goods sold b. to determine cost reimbursement under contracts c. for insurance settlement computations d. for rate regulation e. for litigation purposes
Are expected future costs that differ among alternative courses of action being considered. Relevant costs must occur in the future and differ among the alternative courses of action.

47. Splitoff point
The juncture in a point-production process when two or more products become separately identifiable
Used when implementing strategy. It is the quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan.
Are expected future costs that differ among alternative courses of action being considered. Relevant costs must occur in the future and differ among the alternative courses of action.
Allocates support-department costs to operating departments by fully recognizing the mutual services provided among all support departments. It fully incorporates interdepartmental relationships into the support-department cost allocation.

48. Reciprocal method allocation
Is a cost allocation method that fully recognizes the mutual services provided among all support departments.
Are expected future costs that differ among alternative courses of action being considered. Relevant costs must occur in the future and differ among the alternative courses of action.
Cost allocation method that partially recognizes the mutual services provided among all support departments. Also called sequential allocation method.
Cost allocation method that fully recognizes the mutual services provided among all support departments. Also called matrix-method.

49. Know the cost function
Allocates joint cost to joint products produced during the accounting period in such a way that each individual product achieves an identical gross margin percentage. The method works backward int that the overall gross margin is computed first. Then
Is a mathematical description of how a cost changes with changes in the level of an activity relating to that cost. Pg.341 It can be plotted on a graph by measuring the level of an activity - such as number of batches produces or number of machines u
Department that directly adds value to a product or service. Also called a production department in manufacturing companies.
Used when implementing strategy. It is the quantitative expression of a proposed plan of action by management and is an aid to coordinating what needs to be done to execute that plan.

50. Qualitative costs
They are expected future costs and relevant revenues are expected future revenues that differ among the alternative courses of action being considered. In order to be relevant costs and relevant revenues - they must: Occur in the future - every decis
Cost allocation method that fully recognizes the mutual services provided among all support departments. Also called matrix-method.
Predicted or forecasted cost (future cost) as distinguished from an actual or historical cost.
Qualitative costs and benefits (those costs and benefits that are non-quantifiable and/or immeasurable within the scope of this analysis) were determined based on the literature review and information gathering process.