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Quiz about Managerial and Cost Accounting
Quiz about Managerial and Cost Accounting

Managerial and Cost Accounting Quiz


One of the accountant's most challenging and engaging jobs is cost accounting in support of management decision making. This quiz asks a few questions about the basics.

A multiple-choice quiz by Jayman0755. Estimated time: 6 mins.
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Author
Jayman0755
Time
6 mins
Type
Multiple Choice
Quiz #
198,313
Updated
Dec 03 21
# Qns
10
Difficulty
Difficult
Avg Score
5 / 10
Plays
3218
- -
Question 1 of 10
1. A cost that changes with the number of units produced, but that can never be zero, is what kind of cost? Hint


Question 2 of 10
2. Manufacturing overhead is allocated as what kind of cost? Hint


Question 3 of 10
3. A cost that changes with the number of units produced and is zero when no units are produced is what kind of cost? Hint


Question 4 of 10
4. A cost that remains unchanged across the relevant range of units produced is what kind of cost? Hint


Question 5 of 10
5. A company has the following cost data for the month:
Beginning Raw Materials Inventory: $12,500
Raw Materials Purchases: $47,000
Ending Raw Materials Inventory: $8,200
Beginning Work in Process Inventory: $4,700
Ending Work in Process Inventory: $2,800
Beginning Finished Goods Inventory: $27,600
Ending Finished Goods Inventory: $29,200
Direct Labor Costs: $64,400
Manufacturing Overhead Costs: $14,500

What is the Cost of Goods Sold for the month?
Hint


Question 6 of 10
6. The costing system that tracks costs to a department or work group and assigns the cost to products produced by that department or work group is which kind of costing system? Hint


Question 7 of 10
7. A costing system that tracks costs to a specific lot of a product is which kind of costing system? Hint


Question 8 of 10
8. The costing system that initially assigns all costs to Cost of Goods Sold and then removes them to the appropriate inventory values is which kind of costing system? Hint


Question 9 of 10
9. In an Activity Based Costing (ABC) system, plant insurance is most likely to be which level of cost? Hint


Question 10 of 10
10. A company makes one product, which has variable manufacturing costs of $3.25 per unit and variable selling and administrative costs of $1.17 per unit. Fixed manufacturing costs are $42,300 per month, and fixed selling and administrative costs are $29,900 per month. The company wants to earn an average monthly profit if $15,000, and they expect to produce and sell an average of 40,000 units of the product per month. What is the minimum selling price management can be expected to set to meet their profitability goals? Hint



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Most Recent Scores
Sep 06 2024 : bernie73: 3/10
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quiz
Quiz Answer Key and Fun Facts
1. A cost that changes with the number of units produced, but that can never be zero, is what kind of cost?

Answer: Mixed cost

If the cost can never be zero, it has a fixed component. However, since it changes with the number of units produced, it also has a variable component. This is a mixed cost. Product and period costs refer to cost classifications rather than cost behaviors.
2. Manufacturing overhead is allocated as what kind of cost?

Answer: Product cost

While the behavior of manufacturing overhead is probably a mixture of fixed and variable costs, it is allocated to the product produced rather than the accounting period, making it a product cost.
3. A cost that changes with the number of units produced and is zero when no units are produced is what kind of cost?

Answer: Variable cost

Variable costs start at zero when no units are produced and change with the number of units produced.
4. A cost that remains unchanged across the relevant range of units produced is what kind of cost?

Answer: Fixed cost

A cost that remains the same (or, in practice, very nearly the same) across a range of units of product produced (the relevant range) is said to be a fixed cost. This is often the case for insurance premiums, executive compensation, and similar costs.
5. A company has the following cost data for the month: Beginning Raw Materials Inventory: $12,500 Raw Materials Purchases: $47,000 Ending Raw Materials Inventory: $8,200 Beginning Work in Process Inventory: $4,700 Ending Work in Process Inventory: $2,800 Beginning Finished Goods Inventory: $27,600 Ending Finished Goods Inventory: $29,200 Direct Labor Costs: $64,400 Manufacturing Overhead Costs: $14,500 What is the Cost of Goods Sold for the month?

Answer: $130,500

Adding the Raw Materials Purchases to the Beginning Raw Materials Inventory, then subtracting the Ending Raw Materials Inventory, gives the Raw Materials Put Into Production. Add that, the Direct Labor Costs, and the Manufacturing Overhead Costs to the Beginning Work in Process Inventory, then subtract the Ending Work in Process Inventory, and that gives the Cost of Goods Manufactured. Add Cost of Goods Manufactured to the Beginning Finished Goods Inventory, subtract the Ending Finished Goods Inventory, and you have the Cost of Goods Sold.
6. The costing system that tracks costs to a department or work group and assigns the cost to products produced by that department or work group is which kind of costing system?

Answer: Process costing system

Most costing systems today are activity based in that they attempt to assign costs to activities more precisely, rather than simply allocating them across product lines. However, when the system attempts to track costs to a specific department or work group and then assign it to their products, it is a process costing system.
7. A costing system that tracks costs to a specific lot of a product is which kind of costing system?

Answer: Job order costing system

A job order costing system tracks costs for each lot of the product by using "job order" production tickets where all direct inputs are measured for that lot. Indirect costs, unfortunately, still have to be allocated by whatever means makes the most sense to management.
8. The costing system that initially assigns all costs to Cost of Goods Sold and then removes them to the appropriate inventory values is which kind of costing system?

Answer: Backflush costing system

Proponents of backflush costing claim that it leaves a more accurate Cost of Goods Sold for the income statement, but it always seemed to me that it was just a good way to be lazy at the first of the month and then work like mad at the end of the month.

However, backflush costing can be very handy where ongoing inventory tracking is particularly difficult, such as with liquids, or where the same materials might go into several products that are made to order, such as certain oilfield chemicals.
9. In an Activity Based Costing (ABC) system, plant insurance is most likely to be which level of cost?

Answer: Facility-level cost

In ABC, a unit-level cost can be traced to a specific unit of the product. Batch-level costs can be traced to a lot of the product, and product-level costs can be traced to an individual product (ketchup or barbecue sauce, for example). Costs that apply to the plant, such as insurance and administration, can't be traced to any one product and so must be allocated to all products in some fashion.

These are the facility-level costs.
10. A company makes one product, which has variable manufacturing costs of $3.25 per unit and variable selling and administrative costs of $1.17 per unit. Fixed manufacturing costs are $42,300 per month, and fixed selling and administrative costs are $29,900 per month. The company wants to earn an average monthly profit if $15,000, and they expect to produce and sell an average of 40,000 units of the product per month. What is the minimum selling price management can be expected to set to meet their profitability goals?

Answer: $6.60

To meet profitability goals, management must set a price that can be reasonably expected to cover all fixed costs, all variable costs, and the desired profit. To get that price, add up all the fixed costs and the desired profit, divide by the number of units to be produced and sold, and then add the variable costs per unit.

This is a variation on break-even calculations, adding only the desired profit element, which is treated as a fixed cost.
Source: Author Jayman0755

This quiz was reviewed by FunTrivia editor Leau before going online.
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