CHAPTER 4:
Quiz/Demonstration Exercises
Learning Objective 1
1.
The primary purposes of a cost-management system do not include _____.
a.
b.
c.
d.
2.
operational control
cost allocation
strategic management decisions
inventory valuation
Which of the following is not a decision that is strategic in nature?
a.
b.
c.
d.
timely feedback
optimal customer mix
outsourcing
investment
Learning Objective 2
3.
The tracing or reassigning of costs to one or more cost objectives is referred
to as _____.
a.
b.
c.
d.
4.
mixed-up costing
cost allocation
historical costing
cost making
An example of a cost object is all of the following except _____.
a.
b.
c.
d.
products
checks processed
departments
time
Learning Objective 3
Items 5 and 6 are based on the following data:
MARIO, Inc., incurred the following costs in 20x7 in producing the video games:
Wages
used
Machine operators
Factory janitors
Factory supervisor
5.
Computer chips
Casings
Labels
Glue
$300,000
200,000
100,000
25,000
Mario's 20x7 product indirect labor was _____.
a. $ 20,000
370,000
6.
$350,000
20,000
50,000
Materials
b. $ 70,000
c. $ 350,000
d.
$
d.
$
Mario's product direct materials costs for 20x7 were _____.
a. $ 625,000
b. $ 600,000
c. $ 300,000
25,000
Learning Objective 6
7.
Which of the following can be variable costs?
a.
b.
c.
d.
e.
f.
8.
raw materials
indirect labor
direct labor
factory overhead
only a., b., and c.
a., b., c., and d.
YIPPEE Company had the following partial balance sheet for the year
ended 20x7.
Cash
Accounts receivable
Merchandise inventories
Plant and equipment
YIPPEE is an example of a _____.
a.
b.
c.
manufacturing company
service company
wholesale organization
$ 400,000
300,000
8,773,420
3,000,000
d.
none of these
Learning Objective 7
9.
Cost drivers are usually selected based on which criteria?
a.
b.
c.
d.
reasonable cause-and-effect relationship
available data
benefits outweigh the costs
all of the above
10. A cost pool is a group of costs that is allocated to cost objectives using _____.
a.
b.
c.
d.
e.
at least two cost drivers
the number of products made
the number of products sold
only one cost driver
no more than five cost drivers
Learning Objective 9
11.
The third step in the design and implementation of an activity-based-costing
system is _____.
a.
b.
c.
d.
12.
calculate and interpret the activity-based information
collect relevant data concerning costs
determine cost objectives
develop a processed-based map that represents the flow of activities
Activity-based costing usually can _____.
a. decrease the number of cost drivers
b. reduce the accuracy of the cost allocations
c. turn indirect costs into direct costs
d.
decrease the amount of money spend on a system
CHAPTER 4:
Exercises
1. [b]
Solutions
2. [a]
to
Quiz/Demonstration
3. [b]
4. [d]
5. [b]
If the cost objective is the product, then direct labor costs are
those traceable to the product. Under most accounting systems, only
the machine operators costs would be traceable to the product and
the janitors and supervisors wages would be classified as indirect. If
the entire manufacturing plant were considered the cost objective,
then indirect labor would be $0.
6. [b]
While all of the materials costs would be direct to the plant,
only the computer chip, casing, and label costs would be direct to the
product.
7. [f]
8. [c]
9. [d]
Manufacturing companies typically have three categories of
inventory while merchandisers have only one category listed in their
balance sheets. The income statements also differ (e.g., a cost of
goods manufactured and sold versus a cost of purchased goods
sold).
10. [d]
11. [b]
12. [b]