ACC 406 Chapter Notes - Chapter 10: Corn Chip

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brownraccoon807

20 Apr 2016

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Chapter 10: standard costing: a managerial control tool. Budgets set standards that are used to control and evaluate managerial performance. Budgets identify the revenues and costs that an organization should experience if plans are executed as planned. By comparing the actual costs and actual revenues with the corresponding budgeted amounts at the same level of activity, a measure of managerial efficiency emerges. Quantity decision: amount of input that should be used per unit of output. Pricing decision: amount that should be paid for the quantity of the input to be used. Operations: determine the quality of inputs required. Purchasing: responsible for acquiring the labour and materials requested at the lowest price. Personnel: responsible for acquiring the labour and materials requested at the lowest price. Accounting: responsible for recording price standards and preparing reports that compare actual performance with the standard. Currently available standards: can be achieved under efficient operating conditions.

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1. What is standard cost?
A. The total number of units times the budgeted amount expected
B. Any amount that appears on a budget
C. The total amount that appears on the budget for product costs
D. The amount management thinks should be incurred to produce a good or service

2. A standard cost is
A. the average cost in an industry.
B. a predetermined cost.
C. the historical cost of producing a product last year
D. a cost which is paid for a group of similar products.

3. The difference between a budget and a standard is that
A. a budget expresses what costs were, while a standard expresses what costs should be.
B. a budget expresses a total amount, while a standard expresses a unit amount.
C. a budget expresses management's plans, while a standard reflects what actually happened.
D. standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system.

4. Standard costs may be used by
A. universities.
B. governmental agencies.
C. charitable organizations.
D. all of these answers are correct

5. The final decision as to what standard costs should be is the responsibility of
A. management.
B. the quality control engineer.
C. the purchasing agent.
D. the managerial accountants.

6. The most rigorous of all standards is the
A. normal standard.
B. realistic standard.
C. conceivable standard.
D. ideal standard.

7. An unfavorable materials quantity variance would occur if
A. more materials were purchased than were used.
B. actual pounds of materials used were greater than the standard pounds allowed
C. actual pounds of materials used were less than the standard pounds allowed
D. actual labor hours used were greater than the standard labor hours allowed

8. Which of the following statements is true?
A. Variances are the differences between total actual costs and total standard costs.
B. When actual costs exceed standard costs, the variance is favorable.
C. An unfavorable variance results when actual costs are decreasing but standards are not changed.
D. all of the above are true

10. Labor efficiency is measured by the
A. materials quantity variance.
B. labor quantity variance.
C. labor rate variance.
D. total labor variance.

tanpanda195

* Words banks for the above Q15 through Q21:Absorbed, Actual, Budgeted, Common cost, Controllable cost, Cost,Full, Market price, Negotiated transfer price, Profit, Standards,Transfer price, Variable, & Variance.

15.) When the amount assigned to a responsibility center issignificantly influenced by the actions of someone within theresponsibility center, the item of cost is a_____________________.

16. In a _____________ cost system,every unit of product moving along the production line bears thesame amount of overhead cost, regardless of how much time itactually takes to process a particular unit.

17. In _______________ costing, nofixed overhead costs are charged to individual units of product, sono overhead rate for the fixed component of overhead costs need beused in the cost accounting system.

18. A cost that is incurred to supporta number of costing objects but cannot be traced to themindividually is a ___________________.

19. _______________is often regardedas the best approach to the transfer pricing problem, particularlyif transfer price negotiations routinely become bogged down.

20. A _______________ is simply thedifference between a predetermined norm or standard and the____________ results. Management wants to know not only what theamounts of the differences were but also, and more important, whythese occurred to take corrective action.

21. A _______________ center is anybusiness segment whose manger has control over both cost andrevenue. However, it generally does not have control overinvestment funds.

* Words banks for theabove Q15 through Q21: Absorbed, Actual, Budgeted, Common cost,Controllable cost, Cost, Full, Market price, Negotiated transferprice, Profit, Standards, Transfer price, Variable, &Variance.

greycrocodile249

1.A time interest earned ratio of 0.90 to 1 means:

A. The time the firm will default on its interest payment.

B. That net income is less than the interest expense.

C. That the cash flow is less than the net income

D. That the cash floe exceed the net income

E. None of the answer are correct.

2. Statements in which all items are expressed only in relativeterms (percentages on base) are termed;

A. Vertical Statement

B. Horizontal statement

C. Funds Statements

D. Common-sized statements

E. None of the answer are correct

3. A manufacturing firm would begin preparation of its masterbudget by constructing a:

A. Sales budget

B. Product budget

C. Cash Budget

D. Capital Budget

E. Set of pro-forma financial statements.

4. For a company that uses responsibility center accounting,which of the following costs is least likely to appear on aperformance report of an assembly-line supervisor.

A. Direct material used

B. Departmental Supplies

C. Assembly-line labor

D. Repairs and maintenance

E. Assembly-line facilities depreciation

5. which of the folling methods ignores the fact thar someservice department provide service to other service department;

a. Direct Method

B. Indirect method

C. Step down method

D. Reciprocal method

E. Dual cost allocation method

6.A division's return on investment may be improved byincreasing:

A. Cost of goods sold

B. Sales margin and cost of capital

C. Sales revenue and cost of capital

D. Capital turnover or sale margin

E. Capital turnover or cost of capital

7.Which of the following ratios would generally be used toevaluate a firms overall liquidity position

A. Working Capital

B. Current Ratio

C. Acid test ratio

D. Cash ratio

E. Inventory turnover in days.

8.Flexiable budgets reflect a comapny's anticipated costs basedon variations in;

A. Activity levels

B. Inflation rates

C. managers

D. anticipated capital acquistions

E. standards

9.When the quantity of material purchased is not equal to thequantity of material used, most companies base the calculation ofthe material quantity variance on the :

A. quantity of direct material purchased

B. Quantity of direct material spoiled

C. quantity of direct material that should have been used inacheiving actual production

D quantity of direct material actual used.

10. Which of the following costs should be ignored choosingamong alternatives?

A. Opportunity costs

B. Sunk costs

C. Out of pocket costs

D. Differential costs

E. None of these.

11. Which of the foll should have the strongest casue and effectrelationship with overhead cost;

A. Cost followers

B. Non value added cost

C. Cost drivers

D. Value added cost

E. Unit of output

12. Equivalent unit calculation are necessary to allocatemanaufacturing cost between:

A. Units completed and ending work in process

B.Beginning work in process and units completed

C. Unit sold and eding work in process

D. Cost of goods manufactured and beginnining work inprocess

E. Cost of goods manufactured and cost of goods sold.

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ACC 406 Chapter Notes - Chapter 10: Corn Chip

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