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Which of the following costs are included in product or inventoriable costs in an absorption costing system? Direct material, direct labor, and:
All overhead costs are included in product or inventoriable costs in an absorption system along with direct material and labor costs.
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Many companies have made significant strides in reducing their inventories. Which of the following would be least likely to encourage managers to reduce inventory?
By using absorption costing managers have the least incentive to reduce the current amount of inventory.
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In situations when management must decide on accepting or rejecting one time only special orders, where there is sufficient idle capacity, which one of the following is not relevant to the decision?
Incremental costs are the only costs not relevant to the make or buy special order decision.
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A cost that bears an observable and known relationship to a quantifiable activity base is a:
An engineered cost bears an observable and known relationship to a quantifiable activity base.
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Costs are allocated to cost objectives in many ways and for many reason. Which of the following is a purpose of cost allocation?
Cost allocation is essential for measuring income and assets for external reporting.
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Which of the following is another name for Activity Based Costing?
When the cost driver is the number of transactions involved in a particular activity, ABC is referred to as transaction-based costing.
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Which of the following is true about activity-based costing?
ABC assumes that the resource-consuming activities that generate costs are activities and not outputs. ABC is appropriate for all types of cost accumulation systems, including both job order and process costing.
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Limitations of an activity-based costing system include which of the following?
Activity-based costs anticipate increased cost pools and increased allocation bases. The determination of the amounts that go in these pools and their related cost drivers will likely be more costly than in traditional systems.
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The basic assumption of activity-based costing is that:
ABC divides the production processes into activities where costs are accumulated. The production process assumes activities consume resources and that the outcome of the production process requires performance of the activities.
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For purposes of allocating joint costs to joint products, the sales price at point of sale, reduced by cost to complete after split-off, is assumed to be equal to the:
Sales price less the cost to complete is defined as the net sales value at split-off. In other words, this is the additional contribution to income generated by completing the product.
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Which of the following is not a basic approach to allocating costs for costing inventory in joint cost situations?
Flexible budget amounts are not a basic approach to allocating costs for costing inventory in joint cost situations.
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Which of the following parts of a manufacturing facility would be a cost center?
A cost center is where costs are grouped, assigned, or collected.
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The differences between standard hours at standard wage rates and actual hours at standard wage rates is referred to as which of the following types of variances
The difference between standard hours at standard wage rates and actual hours at standard rates is the labor usage/efficiency variance.
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Which of the following types of variances would a purchasing manager most likely influence?
The direct materials price variance could be used to monitor purchasing manager performance.
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Which of the following standard costing variances would be least controllable by a production supervisor?
The overhead volume variance is a function of the budgeted amount of overhead based on standard hours. The production supervisor has little control over established standard and budgeted amounts.
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The only sales variance listed below that does not use contribution margin to compute results is:
The sales price variance does not use contribution margin.
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The production volume variance is due to:
The production volume variance is due to the difference from the planned level of the based used for overhead allocation and the actual level achieved.
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The cost of goods manufactured would generally not include which of the following?
Selling costs are not relevant for the goods a firm manufactures, rather this would be relevant for the cost of goods sold.
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A company would most benefit from using an activity-based costing system as opposed to a traditional costing system under which of the following conditions?
When indirect costs are a high percentage of total costs, a company would benefit from an ABC system where costs can be broken out for further analysis.
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In joint product costing and analysis, which one of the following costs is relevant when deciding the point at which a product should be sold in order to maximize profits?
In order to maximize profits, separable costs after the split-off point are relevant under a joint product costing system.
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