Practice Test

Q1) ABC is a Show Answer

Q2) An activity which generates cost is a Show Answer

Q3) The customer order processing activity has cost Driver Show Answer

Q4) ABC stands for Show Answer

Q5) Documentation activity has cost driver Show Answer

Q6) ABC based costing Show Answer

Q7) ABC tries to Show Answer

Q8) The Steps in ABC includes: Show Answer

Q9) A Cost driver is an Show Answer

Q10) Cost driver may be Show Answer

Q11) No. of purchase order is an Show Answer

Q12) No of inspection is an Show Answer

Q13) ABC provides information which is Show Answer

Q14) Cost Driver for customer processing is Show Answer

Q15) Cost Driver for inspection activity is Show Answer

Q16) Cost Driver For production activities is Show Answer

Q17) Cost Drivers for personnel activity is Show Answer

Q18) Cost Driver for Financial Accounting is Show Answer

Q19) Under ABC cost reduction is achieved by Show Answer

Q20) Under Traditional costing cost reduction is achieved by Show Answer

Q21) ABC cannot be applied where Show Answer

Q22) Following is not a facility level activity Show Answer

Q23) Machine set up is Show Answer

Q24) Inspection is the Show Answer

Q25) Testing of product is a Show Answer

Q26) Documentation activity has cost driver Show Answer

Q27) The transaction which influences the cost are Show Answer

Q28) The stages in the life cycle of a product include Show Answer

Q29) Initial Coat includes Show Answer

Q30) Operating cost includes Show Answer

Q31) Bench marking involves Show Answer

Q32) Target Costing is Show Answer

Q33) Elements of Target coating includes Show Answer

Q34) Following is not a product line activity Show Answer

Q35) Activity based costing is a technique of allocation of overheads. Show Answer

Q36) Under ABC costs are grouped according to what drives them. Show Answer

Q37) Cost drivers drive the cost. Show Answer

Q38) Cost driver does not generate cost. Show Answer

Q39) ABC establishes a link between activities and cost. Show Answer

Q40) Cost driver for inspection is inspection plan. Show Answer

Q41) Cost driver for maintenance is no of machine breakdown. Show Answer

Q42) Introduction is the first stage in the life cycle of a product. Show Answer

Q43) At maturity stage sales decline. Show Answer

Q44) Initial cost in the life cycle is incurred at the initial stage. Show Answer

Q45) Cost of material handling is operating cost. Show Answer

Q46) Bench marking is marking on the benches. Show Answer

Q47) Planning is the last stage in the Benchmarking process. Show Answer

Q48) Benchmarking is the process of comparing performance with the Bench mark. Show Answer

Q49) In global Benchmarking bench marking is done is done on local scale. Show Answer

Q50) Information for Benchmarking is acquired from Industry Associations. Show Answer

Q51) There are five stages in global Bench marking. Show Answer

Q52) In Target costing wasteful activities are eliminated. Show Answer

Q53) Co-ordination is a primary element of target costing. Show Answer

Q54) Gathering market information is one of the elements of target costing. Show Answer

Q55) Target costing id method of costing. Show Answer

Q56) Place the following steps for the implementation of target costing in order:
A = Derive a target cost
B = Develop a target price
C = Perform value engineering
D = Determine target profit Show Answer

Q57) In target costing Show Answer

Q58) The product strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide adequate operating income is referred to as Show Answer

Q59) The costing technique that produces a stipulated profit when a product is sold at its estimated market-driven price is termed: Show Answer

Q60) The four tasks that follow take place in the concept known as target costing:
(1) Value engineering
(2) Establish a target selling price
(3) Establish a target cost
(4) Establish a target profit
Which is the correct sequence of these tasks? Show Answer

Q61) R uses target costing and sells a product for Rs. 36 per unit. The company seeks a profit margin equal to 25% of sales. If the current manufacturing cost is Rs. 29 per unit, the firm will need to implement a cost reduction of Show Answer

Q62) S Corporation uses target costing and sells a product for Rs. 40 per unit. The company seeks a profit margin equal to 30% of sales. If target-costing calculations revealed a need for a Rs. 4 cost reduction, the firm's current manufacturing cost must be: Show Answer

Q63) Which of the following denotes a target cost? Show Answer

Q64) Which of the following is true with respect to target costing? Show Answer

Q65) Which of the following is usually the longest stage in the product life cycle? Show Answer

Q66) Which of the following is not a characteristic or assumption of Product Life Cycle Costing? Show Answer

Q67) Most of a product's life-cycle costs are locked in by decisions made during the business function of the value chain. Show Answer

Q68) Life-cycle costing is particularly important when Show Answer

Q69) Life-cycle costing Show Answer

Q70) The comparison of a company's practices and performance levels against those of other organizations is most commonly known as Show Answer

Q71) Comparing the way a "best-in-class" company performs a specific activity (such as distribution) is called Show Answer

Q72) Benchmarking allows a company to Show Answer

Q73) Benchmarking Show Answer

Q74) Which of the following is not a step in benchmarking procedures? Show Answer

Q75) In ABC indirect costs are allocated to the products based on Show Answer

Q76) Four basic steps are used in an ABC system.
List the proper order of these steps given below:
(A) Identify the primary activities and estimate a total cost pool for each.
(B) Allocate the costs to the cost object using the activity cost allocation rates.
(C) Select an allocation base for each activity.
(D) Calculate an activity cost allocation rate for each activity. Show Answer

Q77) AM of the following are considered to be part of the activity levels often used to implement ABC, with the exception of Show Answer

Q78) Which of the following systems focuses on activities as the fundamental cost objects and uses the costs of those activities for compiling the indirect costs of products? Show Answer

Q79) Regarding activity-based costing systems, which of the following statements is true? Show Answer

Q80) Examples of activities at the batch level of costs include: Show Answer

Q81) Examples of activities at the product level of costs include: Show Answer

Q82) Which of the following is typically regarded as a cost driver in traditional accounting practices? Show Answer

Q83) The term cost driver refers to Show Answer

Q84) Cost allocation bases in activity-based costing should be Show Answer

Q85) Costs that are common to many different activities within an organization are known as costs. Show Answer

Q86) Relative to traditional product costing, activity-based costing differs in the way costs are Show Answer

Q87) In activity-based costing, final cost allocations assign costs to Show Answer

Q88) Activity rates are determined by Show Answer

Q89) Providing the power required to run production equipment is an example of a Show Answer

Q90) The following tasks are associated with an activity-based costing system:
(1) Calculation of cost application rates
(2) Identification of cost drivers
(3) Assignment of cost to products
(4) Identification of cost pools
Which of the following choices correctly expresses the proper order of the preceding tasks? Show Answer

Q91) Which of the following is not a broad, cost classification category typically used in activity-based costing? Show Answer

Q92) In an activity-based costing system, direct materials used would typically be classified as a Show Answer

Q93) In an activity-based costing system, materials receiving would typically be classified as a Show Answer

Q94) The salaries of a manufacturing plant's management are said to arise from Show Answer

Q95) An activity that has a direct cause-effect relationship with the resources consumed is a (n) Show Answer

Q96) A well-designed activity-based costing system starts with Show Answer

Q97) Assigning overhead using ABC will usually Show Answer

Q98) The primary benefit of ABC is it provides Show Answer

Q99) Which of the following is not a benefit of activity-based costing? Show Answer

Q100) Which of the following is a limitation of activity-based costing? Show Answer

Q101) Which of the following is not a facility-level activity? Show Answer

Q102) Which of the following is not a product-level activity? Show Answer

Q103) Which of the following is not a batch-level activity? Show Answer

Q104) Which of the following is not a unit-level activity? Show Answer

Q105) Which of the following is not a facility-level activity? Show Answer

Q106) Which of the following is not a product-level activity? Show Answer

Q107) Which of the following is not a batch-level activity? Show Answer

Q108) Which of the following is not a unit-level activity? Show Answer

Q109) Which of the following is a unit-level activity? Show Answer

Q110) Which of the following is a batch-level activity? Show Answer

Q111) Which of the following is a product-level activity? Show Answer

Q112) Which of the following is a facility-level activity? Show Answer

Q113) Activities required to support or sustain an entire production process are called Show Answer

Q114) Cost allocation bases in activity-based costing should be Show Answer

Q115) What is the purpose of ABC? Show Answer

Q116) What type of activity is the cost of processing purchase orders? Show Answer

Q117) What type of activity is the cost of designing products? Show Answer

Q118) Which one of the following is the most appropriate cost driver for the ordering and receiving materials cost pool? Show Answer

Q119) In an activity-based cost system, to what does 'pooling costs' refer? Show Answer

Q120) What is one aspect of ABC that differs from traditional costing? Show Answer

Q121) ABC is Show Answer

Q122) Which of the following is a typical cost pool? Show Answer

Q123) In establishing an Activity Based Costing System, an organization's goal is to Show Answer

Q124) Cost drivers are Show Answer

Q125) How is an activity cost rate calculated when using ABC to assign manufacturing overhead costs? Show Answer

Q126) Which one of the following is a collection of overhead costs related to a cost object? Show Answer

Q127) An accounting system that collects financial and operating data on the basis of the underlying nature and extent of the cost drivers is Show Answer

Q128) Life cycle costing is the profiling of cost over a product's production life. Show Answer

Q129) Traditional costing systems are generally more accurate than ABC costing. Show Answer

Q130) Companies that use ABC trace direct materials and direct labour to cost objects just as would be done using traditional costing systems. Show Answer

Q131) The use of direct labour hours or direct machine hours to trace costs to products occurs with the use of absorption costing but not with the use of ABC. Show Answer

Q132) Activity-based costing involves a two-stage allocation in which overhead costs are first assigned to departments and then to jobs on the basis of direct labour hours. Show Answer

Q133) Machine setup is normally considered a batch-level cost. Show Answer

Q134) Machine setup is normally considered a unit-level cost. Show Answer

Q135) Building depreciation is generally considered an organizational or facility cost. Show Answer

Q136) Activity-based costing is appropriate for a company that manufactures a wide variety of products. Show Answer

Q137) Activity-based costing is appropriate for a company that manufactures a single product. Show Answer

Q138) Activity-based costing is appropriate for a company that has low overhead costs that are proportional to the unit volumes of products. Show Answer

Q139) Activity-based costing is appropriate for a company that has high overhead costs that are not proportional to unit volumes of individual products. Show Answer

Q140) Activity cost pools are cost accumulations associated with a given activity. Show Answer

Q141) Activity cost pools are assigned to products, using factory overhead rates for each activity. Show Answer

Q142) Activity rates are computed by dividing the cost budgeted for each activity pool by the estimated activity base for that pool. Show Answer

Q143) Direct labour hours is not a cost pool that is regularly used in the activity-based costing method. Show Answer

Q144) Activity based costing is much easier to apply than single plant-wide factory overhead allocation. Show Answer

Q145) Activity Based Costing can be used to allocate period costs to various products that the company sells. Show Answer

Q146) Activity based costing can only be used to allocate manufacturing factory overhead. Show Answer

Q147) Traditionally, overhead is allocated based on direct labour cost or direct labour hours. Show Answer

Q148) Current trends in manufacturing include less direct labour and more overhead. Show Answer

Q149) The first step in activity-based costing is to assign overhead costs to products, using cost drivers. Show Answer

Q150) When overhead is properly assigned in ABC. it will usually decrease the unit cost of high-volume products. Show Answer

Q151) ABC leads to enhanced control over overhead costs. Show Answer

Q152) ABC usually results in less appropriate management decisions. Show Answer

Q153) ABC is generally more costly to implement than traditional costing. Show Answer

Q154) ABC eliminates all arbitrary cost allocations. Show Answer

Q155) ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity. Show Answer

Q156) ABC is particularly useful when overhead costs are an insignificant portion of total costs. Show Answer

Q157) Activity-based costing focuses on reducing costs and improving processes. Show Answer

Q158) Plant management is a batch-level activity. Show Answer

Q159) Painting is a product-level activity. Show Answer

Q160) A company that uses only volume-based measures will over cost its low-volume products. Show Answer

Q161) ABC will be most useful in estimating fixed costs. Show Answer

Q162) Volume-based measures will tend to over cost high volume products. Show Answer

Q163) Direct materials are normally considered as batch-level costs. Show Answer

Q164) Unit level costs occur once for each unit produced. Show Answer

Q165) Batch level costs occur once for each unit produced. Show Answer

Q166) Machine setup is normally considered a batch-level cost. Show Answer

Q167) Machine setup is normally considered a unit-level cost. Show Answer

Q168) Building depreciation is generally considered an organizational or facility cost. Show Answer

Q169) Building depreciation is generally considered an product or process level cost. Show Answer