CPA Business Environment and Concepts (BEC) : Operations Management: Cost Accounting
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Example Questions
Example Question #11 : Operations Management: Cost Accounting
Which of the following costing methods provides the added benefit of usefulness for external reporting purposes?
A: Variable B: Absorption
A
Neither
B
Both
B
Absorption costing methods represent GAAP generally used for the presentation of extenuation financial statements and are therefore for the benefit of external users.
Example Question #12 : Operations Management: Cost Accounting
Which of the following methods is the most commonly used and simplest method to allocate service costs?
Step up method
Indirect method
Direct method
Step down method
Direct method
The direct method is the most commonly used and simplest method of allocating service costs. The step-down method is a more complex approach and the step up is a distractor.
Example Question #1 : Activity Based Costing
Which of the following is true about activity-based costing?
It can be used only with job costing
It can be used with either process or job costing
It can be used on with process costing
It should not be used with process or job costing
It can be used with either process or job costing
ABC assumes that the resource-consuming activities that generate costs are activities and not outputs. ABC is appropriate for all types of cost accumulation systems, including both job order and process costing.
Example Question #2 : Activity Based Costing
Limitations of an activity-based costing system include which of the following?
It eliminates arbitrary assignment of overhead costs
Control of overhead costs is enhanced
The expense of obtaining cost data is relatively high
Activity based costing systems are less reliable
The expense of obtaining cost data is relatively high
Activity-based costs anticipate increased cost pools and increased allocation bases. The determination of the amounts that go in these pools and their related cost drivers will likely be more costly than in traditional systems.
Example Question #3 : Activity Based Costing
The basic assumption of activity-based costing is that:
Only variable costs are included in activity cost pools
Products or services require the performance of activities and activities consume resources
All manufacturing costs vary directly with units of production
Only costs that respond the unit level drivers are product costs
Products or services require the performance of activities and activities consume resources
ABC divides the production processes into activities where costs are accumulated. The production process assumes activities consume resources and that the outcome of the production process requires performance of the activities.
Example Question #4 : Activity Based Costing
For purposes of allocating joint costs to joint products, the sales price at point of sale, reduced by cost to complete after split-off, is assumed to be equal to the:
Total costs
Sales price less a normal profit margin at point of sale
Joint costs
Net sales value at split off
Net sales value at split off
Sales price less the cost to complete is defined as the net sales value at split-off. In other words, this is the additional contribution to income generated by completing the product.
Example Question #15 : Operations Management: Cost Accounting
Which of the following is not a basic approach to allocating costs for costing inventory in joint cost situations?
Physical measures such as weights or volume
Sales value at split off
Flexible budget amounts
Flexible budget amounts
Flexible budget amounts are not a basic approach to allocating costs for costing inventory in joint cost situations.
Example Question #3 : Activity Based Costing
Which of the following parts of a manufacturing facility would be a cost center?
Both
Engineering manager
Engineering department
Neither
Both
A cost center is where costs are grouped, assigned, or collected.
Example Question #1 : Absorption Costing
Which of the following costs are included in product or inventoriable costs in an absorption costing system? Direct material, direct labor, and:
all overhead
variable overhead
all overhead and all period expenses
all overhead and selling expenses
all overhead
All overhead costs are included in product or inventoriable costs in an absorption system along with direct material and labor costs.
Example Question #11 : Operations Management: Cost Accounting
Many companies have made significant strides in reducing their inventories. Which of the following would be least likely to encourage managers to reduce inventory?
Using throughput costing
Instituting a charge against the budget for managers based on the size of the inventory
Using absorption costing
Using variable costing
Using absorption costing
By using absorption costing managers have the least incentive to reduce the current amount of inventory.
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