1. Which of the following is NOT a purpose for allocating costs to cost objects?
a) To provide information for economic decisions.
b) To determine selling prices.
c) To motivate managers and employees.
d) To justify costs or compute reimbursements.
2. Which of the following manufactured products should use process costing?
a) Expensive jewelry.
b) Bags of cement.
c) Custom build houses.
d) Designer watches.
3. Which of the following is NOT a common criteria used to guide decisions related to coast allocations?
a) Ability to bear.
b) Benefit received.
c) Causality.
d) Stable market prices.
4. In a FIFO process costing system, which of the following are assumed to be completed first in the current period?
a) Units started this period.
b) Units started last period.
c) Units transferred out.
d) Units still in process.
5. Which of the following costs is invententoried when using variable costing method?
a) Rent on a factory building.
b) Electricity consumed in a manufacturing process.
c) Sales commission paid on each sale.
d) Advertising costs incurred for the product.
6. Which of the following statements is true of a linear cost function?
a) It presents variable cost as a slope coefficient.
b) It presents total cost as an intercept.
c) It presents variable cost as an intercept.
d) It presents total cost as a slope coefficient.
7. Which of the following is true of historical costs?
a) They are useful for making future predictions.
b) They are used for decision making.
c) They are always accounted as opportunity costs.
d) They cannot be fixed costs.
8. Short-run prices should at least recover ____________.
a) Full cost of producing a product.
b) Fixed manufacturing overhead.
c) Variable cost of producing a product.
d) Variable and fixed manufacturing overhead.
9. The method that allocates costs by explicitly including all the services rendered among all support departments is the _____________.
a) Direct method.
b) Reciprocal method.
c) Step-down method.
d) Sequential method.
10. In joint costing, which of the following is a market-based approach to allocating costs?
a) Sales units.
b) Units of production.
c) Physical measures.
d) Net realizable value.
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