Multiple choice question

1. In making managerial decisions, relevant information is
a. Future cost that differ between alternatives
b. Future costs that do not differ between alternatives
c. Past costs that differ between alternatives
d. Past costs that do not differ between alternatives

2. The role of historical data from the accounting system in making managerial decisions is
a. To assist in making productions that inputs to a decision model
b. To serve directly as inputs in decision models
c. To assist in making predictions about other information needed for making decisions
d. All of the above

3. The tracing or reassigning of costs to one or more cost objectives is referred to as:
a. Cost allocation
b. Historical costing
c. Step up costing
d. Cost apportionment
e. All of the above

4. The three main categories of manufacturing costs are:
a. Direct materials, direct labor and factory overheads
b. Direct labor, indirect labor and overtime premiums
c. Raw materials, work in progress and finished goods
d. Raw materials, direct labor and finished goods

5. According to economic theory, costs play a role in price determination when
a. The company operates in an industry characterized as having imperfect competition
b. A company is selling commodities such as wheat and rice
c. Perfect competition exists
d. All of the above

6. When a multiproduct plant is being operated at capacity, the products which should be emphasized are those that provide
a. The highest contribution margin per unit of the limited resource
b. The highest contribution margin per unit of product
c. The highest contribution margin per sales dollar
d. The highest contribution margin ratio

Answer:
1 to 6 = a

Multiple choice question

1. A cost that changes abruptly at intervals of activity because the resources and the costs come in indivisible chunks is called a(n):
a. Step cost
b. Activity cost
c. Allocated cost
d. Apportioned cost

2. The _________ portion of a mixed cost varies proportionately with activity within the relevant range.
a. Variable
b. Indivisible
c. Fixed
d. Semi-fixed

3. Managers influence cost behavior through their:
a. Technology decisions
b. Product and service decisions
c. Capacity decisions
d. All of above

4. In the cost function equation Y=F + VX, Y represents the:
a. Total cost at the X level of activity
b. Fixed cost at the Y level of activity
c. Variable cost per unit of activity X
d. Variable cost at the F level of activity

5. _______ is the formal method of analysis used by managers to identify appropriate cost drivers and their effects on the costs of making a product or providing a service.
a. Activity Analysis
b. Cost analysis
c. Crystal grazing
d. Life costing

6. The food & beverage section of ABC Ltd incurred the following costs for March 20XX:
Monthly Cost March 20XX ($)
Supervisor’s salary $ 2,000
Hourly workers’ wages & benefits $10,903
Food $ 11,357
Equipment depreciation & rental $ 9,100
Supplies $ 2,750
Total F & B costs $36,110
The F & B section served 10,505 meals during the month. Using an account analysis to classify costs, the cost function for ABC Ltd’s Food & beverage section is :
a. $11,100+$2.381 per meal
b. $4,000 + $3.222 per meal
c. $6,105 +$3.039 per meal
d. $11,100+$2.381 per meal

Answers:
1 a; 2 a; 3 d; 4 a; 5 a; 6 a