Direct costing differs from absorption costing in that:

Fixed overhead isn't included in product cost under direct costing

An opportunity cost is:

the profit foregone by selecting one alternative instead of another

Examples of activities at the product level of costs include:

designing, changing, and advertising

The term "differential cost" refers to:

The cost difference between two alternatives is known as

For a special order using idle capacity, which cost is irrelevant?

depreciation of the factory building

A result from lowering the break-even point is:

an increase in the sales price per unit

Examples of plant-level costs are:

depreciation and insurance on buildings

Examples of activities at the batch level of costs include:

scheduling, setting up, and moving

A company allocates variable electricity costs by kWh. To allocate fixed costs, it needs info on:

square footage in each department

In determining the right method for allocating equipment depreciation to departments, the best recommendation is to:

use the cost of equipment in the department as a basis for allocation

Overapplied factory overhead would result if:

factory overhead costs incurred were less than costs charged to production

Examples of unit-level activity drivers include:

units of output and direct labor hours

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Cost Accounting Quiz

31 termsStudBud Administration33 plays

Test your knowledge on product costing, department classification, cost allocation methods, and break-even analysis in this challenging quiz.

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Questions 31

Answers

1
Direct costing differs from absorption costing in that:
Variable overhead isn’t part of product cost under direct costing
Marketing and admin costs are part of product cost in direct costing
Direct materials and labor aren't part of product cost in direct costing
Fixed overhead isn't included in product cost under direct costing
2
An opportunity cost is:
A cost that can be delayed with little / no impact on current operations is
the total cost difference between two alternatives is called
the profit foregone by selecting one alternative instead of another
a cost that cannot be avoided because it has already been incurred
a cost that may be saved by not adopting an alternative
3
A term more descriptive of the type of cost accounting often called direct costing is:
out-of-pocket costing
variable costing
prime costing
full costing
relevant costing
4
Examples of activities at the product level of costs include:
designing, changing, and advertising
cutting, painting, and packaging
heating, lighting, and security
scheduling, setting up, and moving
none of the above
5
Based on the cost-volume-profit chart in the figure below for a manufacturing company, the correct statement is:
line d graphs total costs
line b graphs total fixed costs
Point C is where the marginal contribution per unit goes up
area e (between lines b and d) represents the contribution margin
area a represents the area of net loss
6
The break-even volume in units is found by dividing fixed expenses by the:
unit contribution margin
unit gross profit
total variable expenses
contribution margin ratio
unit net profit
7
The method of product costing in which only variable overhead is included in the overhead rate is:
none of the above
direct costing
conventional costing
absorption costing
full costing
8
The term "differential cost" refers to:
A cost shared by all alternatives and hard to assign to one is
The cost difference between two alternatives is known as
the profit foregone by selecting one alternative instead of another
A non-cash cost that's still relevant in decision-making is called
a cost that continues to be incurred even though there is no activity
9
A department that would be classified as a producing department is:
Utilities
Finishing
Shipping
Medical
Production Control
10
For a special order using idle capacity, which cost is irrelevant?
materials
fixed factory overhead that can be avoided
variable overhead
direct labor
depreciation of the factory building
11
A result from lowering the break-even point is:
a decrease in the contribution margin per unit
an increase in the sales price per unit
an increase in the semivariable cost per unit
an increase in the variable cost per unit
an increase in income tax rates
12
FOH rates reflect sales cycles best when using long-term activity levels...
maximum capacity
theoretical capacity
normal capacity
practical capacity
expected actual capacity
13
In a make-or-buy decision, which cost is relevant in the short run?
variable overhead
all of the above
direct materials
Fixed overhead that can be avoided if the part is bought outside
direct labor
14
Examples of plant-level costs are:
salaries of designers and programmers
salaries of schedulers and setup personnel
none of the above
portions of electricity and indirect materials
depreciation and insurance on buildings
15
Examples of activities at the batch level of costs include:
designing, changing, and advertising
cutting, painting, and packaging
scheduling, setting up, and moving
heating, lighting, and security
none of the above
16
Traditional costing allocates overhead using which of these as a base:
product-level drivers
plant-level drivers
none of the above
unit-level drivers
batch-level drivers
17
Activity level after reducing theoretical capacity for unavoidable delays is called:
practical capacity
normal capacity
none of the above
excess capacity
expected actual capacity
18
Too much capacity or uneven equipment use causes a condition called:
idle capacity
none of the above
theoretical capacity
practical capacity
excess capacity
19
A company allocates variable electricity costs by kWh. To allocate fixed costs, it needs info on:
number of machines in each department
rated horsepower of equipment
square footage in each department
estimated materials consumption
number of employees
20
A base used to allocate the cost of a resource to the different activities using that resource is a(n):
none of the above
resource driver
final cost object
activity driver
driver
21
The costing procedure that treats fixed manufacturing costs as period costs is:
absorption costing
none of the above
conventional costing
direct costing
full costing
22
ABC systems allocate overhead using which of these as a base:
plant-level drivers
batch-level drivers
product-level drivers
all of the above
unit-level drivers
23
Costs that are treated as product costs under variable (direct) costing are:
only variable production costs
only direct costs
all variable and fixed manufacturing costs
variable manufacturing costs and fixed general and administrative costs
all variable costs
24
A department that would be classified as a service department is:
Receiving
Refining
Mixing
Finishing
Assembly
25
In determining the right method for allocating equipment depreciation to departments, the best recommendation is to:
use the cost of equipment in the department as a basis for allocation
allocate on the basis of square footage used in a given department
allocate on the basis of companywide rates
charge the amounts to General Plant
use algebraic techniques
26
The most reasonable basis for allocating worker's compensation insurance is:
departmental payroll
kilowatt-hours
building depreciation
number of employees
materials used
27
A base used to allocate the cost of products, customers, or other final cost objects is a(n):
resource driver
final cost object
activity driver
none of the above
driver
28
FOH is $900k. Last year: 60k units, next year: 90k, avg: 75k. Applied at $10/unit. FOH rate is based on:
expected actual capacity
historical capacity costs
normal capacity
theoretical (engineering) capacity
a short-term planning approach
29
When referring to the "margin of safety," an accountant would be thinking of:
the excess of sales revenue over variable costs
the excess of actual sales over budgeted sales
the excess of budgeted or actual sales revenue over fixed costs
the excess of budgeted or actual sales over the contribution margin
none of the above
30
Overapplied factory overhead would result if:
Incurred FOH costs were too high for the number of units produced
theoretical capacity were used in computing the overhead rate
Incurred FOH costs were more than those charged to production
factory overhead costs incurred were less than costs charged to production
the plant were operating at less than normal capacity
31
Examples of unit-level activity drivers include:
number of products and design changes
square footage occupied
number of batches and material moves
units of output and direct labor hours
all of the above

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