cost accounting testbank_Ch14

1、Cost Accounting, 14e, Global Edition (Horngren/Datar/Rajan)Chapter 14 Cost Allocation, Customer-Profitability Analysis, and Sales-Variance AnalysisObjective 14.11) Costs which are NOT economically feasible to trace but which are related to a cost object are known as: A) fixed costs B) direct costs C

2、) indirect costs D) variable costs Answer: CDiff: 1Terms: cost allocationObjective: 1AACSB: Reflective thinking2) Any item for which a separate measurement of cost is desired is known as: A) cost allocation B) a cost object C) a direct cost D) an indirect cost Answer: BDiff: 1Terms: cost objectObjec

3、tive: 1AACSB: Reflective thinking3) Indirect costs: A) often comprise a large percentage of overall costs assigned to a cost object B) specifically exclude marketing costs C) cannot be used for external reporting D) are treated as period costs and not as product costs Answer: ADiff: 3Terms: indirect

4、 costsObjective: 1AACSB: Reflective thinking4) All of the following illustrate purposes for allocating costs to cost objects EXCEPT to: A) provide information for economic decisions B) motivate managers and employees C) determine a selling price the market will bear D) measure income and assets for

5、reporting to external parties Answer: CDiff: 2Terms: cost allocationObjective: 1AACSB: Reflective thinking5) Which of the following illustrates a purpose for allocating costs to cost objects?A) to motivate managers and employeesB) to provide information to customersC) to determine a selling price th

6、e market will bearD) to measure liabilitiesAnswer: ADiff: 2Terms: cost allocationObjective: 1AACSB: Reflective thinking6) The costs of all six value-chain functions should be included when determining: A) whether to add a new product line B) the selling price of a service C) whether to make or buy a

7、 component part from another manufacturer D) All of these answers are correct. Answer: DDiff: 3Terms: cost allocationObjective: 1AACSB: Reflective thinking7) R&D costs are used for which purpose of cost allocation? A) to provide information for economic decisions B) to report to external parties

8、 when using generally accepted accounting principles C) to calculate costs of a government contract D) All of these answers are correct. Answer: ADiff: 3Terms: cost allocationObjective: 1AACSB: Communication8) Which purpose of cost allocation is used to encourage sales representatives to push high-m

9、argin products or services? A) to provide information for economic decisions B) to motivate managers and other employees C) to justify costs or compute reimbursement D) to measure income and assets for reporting to external parties Answer: BDiff: 2Terms: cost allocationObjective: 1AACSB: Reflective

10、thinking9) Which purpose of cost allocation is used to decide on the selling price for a customized product or service? A) to provide information for economic decisions B) to motivate managers and other employees C) to justify costs or compute reimbursement D) to measure income and assets for report

11、ing to external parties Answer: ADiff: 2Terms: cost allocationObjective: 1AACSB: Reflective thinking10) Which purpose of cost allocation is used to cost products at a "fair" price?A) to provide information for economic decisionsB) to motivate managers and other employeesC) to justify costs

12、 or compute reimbursementD) to measure income and assets for reporting to external partiesAnswer: CDiff: 2Terms: cost allocationObjective: 1AACSB: Reflective thinking11) Which purpose of cost allocation is used to cost inventories for reporting to tax authorities?A) to provide information for econom

13、ic decisionsB) to motivate managers and other employeesC) to justify costs or compute reimbursementD) to measure income and assets for reporting to external partiesAnswer: DDiff: 2Terms: cost allocationObjective: 1AACSB: Reflective thinking12) Indirect costs are costs that CANNOT be traced to cost o

14、bjects in an economically feasible way. Answer: TRUEDiff: 1Terms: cost allocationObjective: 1AACSB: Reflective thinking13) To motivate engineers to design simpler products, costs for production, distribution, and customer service may be included in product-cost estimates. Answer: TRUEDiff: 2Terms: c

15、ost allocationObjective: 1AACSB: Reflective thinking14) One of the purposes of allocating direct costs is to justify costs or compute reimbursement amounts.Answer: TRUEExplanation: One of the purposes of allocating indirect costs is to justify costs or compute reimbursement amounts.Diff: 2Terms: cos

16、t allocationObjective: 1AACSB: Reflective thinking15) For external reporting, inventoriable costs under GAAP sometimes include R&D costs. Answer: FALSEExplanation: Under GAAP, inventoriable costs include only the costs of producing and sometimes the design costs of the product.Diff: 2Terms: cost

17、 allocationObjective: 1AACSB: Reflective thinking16) To allocate a cost, it is only necessary to satisfy one of the purposes for which costs are allocated.Answer: TRUEExplanation: To allocate a cost, it is only necessary to satisfy one of the purposes for which costs are allocated.Diff: 2Terms: cost

18、 allocationObjective: 1AACSB: Reflective thinking17) For each item listed select the appropriate purpose of cost allocation from the list below. A purpose may be used more than once.1.To cost a product at a fair price for government contracts2.To encourage simpler product design3.To decide on an app

19、ropriate selling price for a special-order product4.To cost inventories for reporting on a company's tax return5.To encourage the sales department to focus on high-margin products6.To evaluate a make or buy decision7.To cost inventories for the balance sheet8.To decide whether to add or delete a

20、 product linePurposes of cost allocation:a.To provide information for economic decisionsb.To motivate managers and other employeesc.To justify costs or compute reimbursement amountsd.To measure income and assetsAnswer: 1.c2.b3.a4.d5.b6.a7.d8.aDiff: 2Terms: cost allocationObjective: 1AACSB: Analytica

21、l skills18) A company might choose to allocate corporate costs to various divisions within the company for what four purposes? Give an example of each. Answer: 1.To provide information for economic decisions, for example, allocating costs from all six value-chain functions to decide on the selling p

22、rice of a customized product. 2.To motivate managers and employees, for example, allocating corporate costs such as accounting support to division managers to discourage requesting a multitude of unnecessary financial reports. 3.To justify costs or compute reimbursement, for example, to allocate fix

23、ed design and production costs when arriving at a fair price for a government contract. 4.To measure income and assets for reporting to external parties, for example, allocating manufacturing overhead when costing inventories for financial statements presented in the company's annual report. Not

24、e: Examples will vary. Diff: 2Terms: cost allocationObjective: 1AACSB: Reflective thinking19) An electronics manufacturer is trying to encourage its engineers to design simpler products so that overall costs are reduced. Required: Which of the value-chain function costs (R&D, design, production,

25、 marketing, distribution, customer service) should be included in product-cost estimates to achieve the above purpose? Why? Answer: All costs that are affected by the design should be included in the product cost estimate. These costs include the cost of design, production, distribution, and custome

26、r service. Diff: 1Terms: cost allocationObjective: 1AACSB: Reflective thinking20) Briefly describe the four criteria used to guide cost-allocation decisions.Answer: 1.Cause and effect - managers identify the variables that cause resources to be consumed.2.Benefits received - managers identify the be

27、neficiaries of the outputs of the cost object.3.Fairness or equity - establishing a selling price that is deemed fair by contracting parties.4.Ability to bear - advocates allocating costs in proportion to the cost object's ability to bear costs allocated to it.Diff: 1Terms: cost allocationObject

28、ive: 1AACSB: Reflective thinkingObjective 14.21) When the purpose of cost allocation is to provide information for economic decisions or to motivate managers and employees, the best criteria are:A) the cause-and-effect and the ability-to bear criteriaB) the cause-and-effect and the benefits-received

29、 criteriaC) the benefits-received and the fairness criteriaD) the fairness and the ability-to-bear criteriaAnswer: BDiff: 2Terms: cost allocationObjective: 2AACSB: Reflective thinking2) To guide cost allocation decisions, the cause-and-effect criterion: A) is used less frequently than the other crit

30、eria B) is the primary criterion used in activity-based costing C) is a difficult criterion on which to obtain agreement D) may allocate corporate salaries to divisions based on profits Answer: BDiff: 3Terms: cost allocationObjective: 2AACSB: Reflective thinking3) To guide cost allocation decisions,

31、 the benefits-received criterion:A) generally uses the cost driver as the cost allocation base B) results in subsidizing products that are not profitable C) is the primarily used criterion in activity-based costing D) may use an allocation base of division revenues to allocate advertising costs Answ

32、er: DDiff: 3Terms: cost allocationObjective: 2AACSB: Reflective thinking4) To guide cost allocation decisions, the fairness or equity criterion is: A) the criterion often cited in government contracts B) superior when the purpose of cost allocation is for economic decisions C) used more frequently t

33、han the other criteria D) the primary criterion used in activity-based costing Answer: ADiff: 3Terms: cost allocationObjective: 2AACSB: Ethical reasoning5) To guide cost allocation decisions, the ability to bear criterion: A) is likely to be the most credible to operating personnel B) allocates cost

34、s in proportion to the benefits received C) results in subsidizing products that are not profitable D) is the criterion often cited in government contracts Answer: CDiff: 3Terms: cost allocationObjective: 2AACSB: Reflective thinking6) Which cost-allocation criterion is appropriate when making an eco

35、nomic decision? A) the fairness or equity criterion B) the ability to bear criterion C) the cause-and-effect criterion D) All of these answers are correct. Answer: DDiff: 2Terms: cost allocationObjective: 2AACSB: Reflective thinking7) Which cost-allocation criterion is most likely to subsidize poor

36、performers at the expense of the best performers? A) the fairness or equity criterion B) the benefits-received criterion C) the ability to bear criterion D) the cause-and-effect criterion Answer: CDiff: 2Terms: cost allocationObjective: 2AACSB: Reflective thinking8) A challenge to using cost-benefit

37、 criteria for allocating costs is that: A) the costs of designing and implementing complex cost allocations are not readily apparent B) the benefits of making better-informed pricing decisions are difficult to measure C) cost systems are being simplified and fewer multiple cost-allocation bases are

38、being used D) the costs of collecting and processing information keep spiraling upward Answer: BDiff: 3Terms: cost allocationObjective: 2AACSB: Reflective thinking9) Today, companies are simplifying their cost systems and moving toward less-detailed and less-complex cost allocation bases. Answer: FA

39、LSEExplanation: Companies are moving toward more-detailed and more-complex cost allocations because today technology can capture these costs in a relatively inexpensive manner.Diff: 3Terms: cost allocationObjective: 2AACSB: Reflective thinking10) Using the fairness criterion, the costs are allocated

40、 among the beneficiaries in proportion to the benefits each receives.Answer: FALSEExplanation: Using the benefits received criterion, the costs are allocated among the beneficiaries in proportion to the benefits each receives.Diff: 3Terms: cost allocationObjective: 2AACSB: Reflective thinking11) Und

41、er the fairness criterion, cost allocation is NOT viewed as a reasonable means of establishing a selling price.Answer: FALSEExplanation: Cost allocation is viewed as a fair way to set a selling price between two contracting parties.Diff: 3Terms: cost allocationObjective: 2AACSB: Ethical reasoning12)

42、 When using the cause-and-effect criterion, cost drivers are selected as the cost allocation bases. Answer: TRUEDiff: 1Terms: cost allocationObjective: 2AACSB: Reflective thinking13) The ability-to-bear criterion is considered superior when the purpose of cost allocation is motivation. Answer: FALSE

43、Explanation: The cause-and-effect or benefits-received criteria is considered superior when the purpose of cost allocation is motivation.Diff: 2Terms: cost allocationObjective: 2AACSB: Reflective thinking14) The benefits of implementing a more-complex cost allocation system are relatively easy to qu

44、antify for application of the cost-benefit approach. Answer: FALSEExplanation: The benefits of implementing a more-complex cost allocation system are difficult to measure.Diff: 2Terms: cost allocationObjective: 2AACSB: Reflective thinkingObjective 14.31) Corporate overhead costs can be allocated: A)

45、 using a single cost pool B) to divisions using one cost pool and then reallocating costs to products using multiple cost pools C) using numerous individual corporate cost pools D) All of these answers are correct. Answer: DDiff: 2Terms: cost allocationObjective: 3AACSB: Reflective thinking2) The mo

46、st likely reason for allocating all corporate costs to divisions include that: A) division managers make decisions that ultimately control corporate costs B) divisions receive benefits from all corporate costs C) the hierarchy of costs promotes cost management D) it is best to use multiple cost obje

47、cts Answer: BDiff: 3Terms: cost allocationObjective: 3AACSB: Reflective thinking3) The most likely reason for NOT allocating corporate costs to divisions include that: A) these costs are not controllable by division managers B) these costs are incurred to support division activities, not corporate a

48、ctivities C) division resources are already used to attain corporate goals D) divisions receive no benefits from corporate costs Answer: ADiff: 3Terms: cost allocationObjective: 3AACSB: Reflective thinking4) Some companies only allocate corporate costs to divisions that are: A) planned and under the

49、 control of division managers B) output unit-level costs C) perceived as causally related to division activities D) direct costs Answer: CDiff: 2Terms: cost allocationObjective: 3AACSB: Reflective thinking5) Which is the preferred allocation method for performance evaluation?A) allocating all corpor

50、ate costsB) allocating only human resource costC) allocating controllable costsD) allocating uncontrollable costsAnswer: CDiff: 2Terms: cost allocationObjective: 3AACSB: Reflective thinking6) NOT allocating some corporate costs to divisions and products results in: A) an increase in overall corporat

51、e profitability B) the sum of individual product profitability being less than overall company profitability C) the sum of individual product profitability being greater than overall company profitability D) a decrease in overall corporate profitability Answer: CDiff: 3Terms: cost allocationObjectiv

52、e: 3AACSB: Reflective thinking7) The greater the degree of homogeneity, the:A) greater the number of needed cost pools B) fewer the number of needed cost pools C) less accurate the costs of a particular cost object D) greater the variety of cause-and-effect relationships with the cost driver Answer:

53、 BDiff: 2Terms: homogeneous cost poolObjective: 3AACSB: Reflective thinking8) When individual activities within a cost pool have a similar relationship with the cost driver, those costs: A) need to be reallocated B) need multiple cost drivers C) are considered a homogeneous cost pool D) are consider

54、ed an allocated cost pool Answer: CDiff: 2Terms: homogeneous cost poolObjective: 3AACSB: Reflective thinking9) Homogeneous cost pools lead to: A) more accurate costs of a given cost object B) more resources being assigned to that cost object C) the need for more cost drivers D) Both A and C are corr

55、ect. Answer: ADiff: 2Terms: homogeneous cost poolObjective: 3AACSB: Reflective thinking10) Identifying homogeneous cost pools: A) requires judgment and should be reevaluated on a regular basis B) should include the input of management C) should include a cost-benefit analysis D) All of these answers

56、 are correct. Answer: DDiff: 2Terms: homogeneous cost poolObjective: 3AACSB: Reflective thinking11) To allocate corporate costs to divisions, the allocation base used should: A) be an output unit-level base B) have the best cause-and-effect relationship with the costs C) combine administrative costs and human resource management costs D) alloca