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Cost Accounting and Control

Showing 1-75 of 102 answers

A computer manufacturer recently shipped several laptops to a customer (cost: $25,000) and billed the customer $30,000. Which of the following options correctly expresses the accounts that are debited and credited to record this transaction?

Debits: Accounts Receivable, Cost of Goods Sold; credits: Sales Revenue, Finished-Goods Inventory. Correct

A cost that remains constant in total but varies on a per-unit basis with changes in activity is called a

fixed cost Correct

A tailoring company has gathered information on utility costs for the past year. The accountant has decided that utilities are a function of the hours worked during the month. The following information is available and representative of the company's utility costs:

P 959 Correct

ABC Corporation has the following data for use of its machinery

P0.98 Correct

Activity based costing assigns overhead to products produced on a basis of usage of activities during the production process like purchase order activities, machine set-ups and other activities that are required to complete the manufacturing process.

TRUE Correct

Activity-based costing systems have a tendency to distort product costs.

FALSE Correct

Actual Cost is a past cost or historical cost.

TRUE Correct

All of the following are examples of opportunity costs: salary given up to start a business; rental income given up when you live in a house you own; interest income that could be earned on money spent for a car.

TRUE Correct

All of the following are examples of product costs except:

depreciation on the company's retail outlets Correct

An example of a customer-value-added activity is final painting and polishing of the product.

TRUE Correct

As activity increases within the relevant range, fixed costs remain constant on a per unit basis.

FALSE Correct

Assume that Jobs #100 and #300 are incomplete at the end of December. What is the balance in Work in Process Inventory at that time?

P28,920 Correct

At Break-even Point, there could either be a net income or net loss.

FALSE Correct

Based on the preceding number, compute the fixed cost element (to the nearest whole peso)

P138 Correct

Break-even Point is the point of activity level where total revenue is equal to total cost.

TRUE Correct

Budgeted Cost is the amount that is anticipated to be incurred in the future

TRUE Correct

Businesses are established because owners are just after the break-even point.

FALSE Correct

Consumption ratios are useful in determining the existence of product-line diversity.

TRUE Correct

Contribution Margin is the amount remaining from sales revenue after deducting the variable expenses.

TRUE Correct

Cost accounting serves as a bridge between financial and managerial accounting.

TRUE Correct

Direct labor is gaining importance in many manufacturing applications with respect to being a significant cost driver.

FALSE Correct

External parties and management never use product cost information for investment decision and, planning and controlling.

FALSE Correct

External parties and management uses product cost information for investment decision and, planning and controlling

TRUE Correct

External parties and management uses product cost information for:

investment decision and, planning and controlling Correct

Financial accounting adheres strict compliance to Generally Accepted Accounting Principles (GAAP)

TRUE Correct

Financial accounting is most concerned with addressing the needs of individual departments of the company.

FALSE Correct

Financial accounting is most concerned with meeting the needs of external users.

TRUE Correct

Generally speaking, companies prefer doing business with customers who order small quantities rather than large quantities.

FALSE Correct

Generally speaking, cost accounting can be defined as a

Internal reporting system that provides product costing and other information used by managers in performing their functions Correct

HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.

$1.00 per part Correct

How much is the factory overhead cost per unit for Computer under activity-based costing?

P25.48 per unit Correct

If a company opt to use the activity-based costing in allocating overhead costs, companies do not need to classify at which level of activities costs were incurred.

FALSE Correct

If direct labor is a good cost driver, increases in direct labor are matched with increases in manufacturing overhead.

TRUE Correct

If the company still employs the plantwide factory overhead rate method, how much is the overhead cost per unit for TV, Computer and cellphone using the total direct labor hours as a basis of allocation.

P7.00 per direct labor hour Correct

If the resolution efforts of resolving ethical issues are not successful, the member may wish to consider disassociating from the organization.

TRUE Correct

If the resolution efforts of resolving ethical issues are not successful, the member should stay at the organization and must find other ways to resolve such issues.

FALSE Correct

IMA members have a responsibility to comply with and uphold the standards of Competence, Confidentiality, Integrity, and Credibility

TRUE Correct

In applying the Standards of Ethical Professional Practice, the member will never encounter unethical issues or behavior.

FALSE Correct

In comparing financial and management accounting, which of the following more accurately describes management accounting information?

budgeted, informative, adaptable Correct

In the value chain, planning and controlling activities in the organization is to be managed on a sequential order of the business functions.

TRUE Correct

Institute of Management Accountants' (IMA) overarching ethical principles include the following except one:

Credibility Correct

Inventoriable costs that have become expenses can be found in:

cost of goods sold Correct

It is a cycle of processes in an organization

Value Chain Correct

It is a systematic process of providing financial information of an organization or unit that is intended to be useful in decision making

Accounting Correct

It is in the planning phase where the problems and issues of the company are identified.

TRUE Correct

It is the point of activity level where total revenue is equal to total cost

break-even point Correct

It is the position in the organization structure wherein the personnel assigned are directly involved in the responsibility of achieving the goals of an organization

Line position only Correct

Managerial accounting adheres strict compliance to Generally Accepted Accounting Principles (GAAP)

FALSE Correct

Managerial accounting is most concerned with addressing the needs of the company as a whole.

FALSE Correct

Managerial accounting is most concerned with meeting the needs of internal users.

TRUE Correct

Manufacturing overhead includes:

all manufacturing costs except direct labor and direct materials Correct

Many traditional costing systems trace manufacturing overhead to individual activities and require the development of numerous activity-costing rates.

FALSE Correct

Materials used in the operation of a factory, such as cleaning supplies, that are not an integral part of the final product should be classified as:

manufacturing overhead Correct

Media, Inc., an advertising agency, applies overhead to jobs on the basis of direct professional labor hours. Overhead was estimated to be $150,000, direct professional labor hours were estimated to be 15,000, and direct professional labor cost was projected to be $225,000. During the year, Media incurred actual overhead costs of $146,000, actual direct professional labor hours of 14,500, and actual direct labor cost of $222,000. By year-end, the firm's overhead was:

$1,000 underapplied Correct

Net Income is the amount available to cover fixed costs

FALSE Correct

One major difference between financial and management accounting is that

All of the following Correct

One of the uses of financial accounting data is to determine product costs in order to help management in making decisions.

FALSE Correct

Opportunity costs are the potential benefit that is given up when one alternative is selected over another.

TRUE Correct

Overriding criteria of financial accounting

Must conform with Generally Accepted Accounting Principles (GAAP) Correct

Overriding criteria of managerial accounting

Does not conform with GAAP as long as it is relevant to management decision making and complies with standards set by the management Correct

Period Costs are also inventoriable costs.

FALSE Correct

Period Costs are treated as outright expenses

TRUE Correct

Prime cost is the sum of direct labor and manufacturing overhead.

FALSE Correct

Prime costs consist of:

direct labor and direct materials Correct

Product Costs are also inventoriable costs

TRUE Correct

Product Costs are always presented in the income statement as part of cost of goods sold.

FALSE Correct

Product Costs can either be presented in the balance or income statement

TRUE Correct

Purpose of information of financial accounting

Conveys financial information to investors, banks, government regulatory agencies and other outside parties Correct

Purpose of information of managerial accounting

Helps managers to make decisions to fulfill an organization's objectives Correct

Purpose of informationof managerial accounting

Helps managers to make decisions to fulfill an organization's objectives Correct

Q: How much should be the actual peso sales to realize the desired profit?

P1,156,250 Correct

Q: What is the amount of desired profit before tax?

P312,500 Correct

Q: What should be the actual unit sales to realize the desired profit?

4,625 units Correct

Referring to the preceding problem, the cost of wages and salaries and other overhead that would be charged to each delivery is closest to:

$19.63 Correct

Scope of information of financial accounting

Entireorganization Correct