1. T or F: Standards are set for units; budgets are expressed in total dollars.

2. T or F: The standard cost per unit is computed by multiplying the standard quantity or hours by the

standard price or rate.

3. T or F: When actual revenue is above budget or actual cost is below budget, a favorable variance

occurs.

4. T or F: An unfavorable cost variance occurs when actual cost is higher than budget cost.

5. T or F With a flexible budget a manager can determine what costs should have been attained at a

given level of activity.

6. T or F : In a standard costing system where the denominator activity for the predetermined

overhead rate is labor-hours, overhead costs are applied to work in process on the basis of

actual hours worked.

7. T or F: A volume variance and an efficiency variance are computed for fixed overhead costs.

8. T or F: The budget variance represents the difference between the actual fixed overhead cost

incurred during a period and the budgeted fixed overhead cost.

9. T or F: Under the absorption costing method, a company can increase profits by increasing

production rather than by increasing sales.

10. T or F: Profits move in the same direction as sales when variable costing is used if selling prices,

the sales mix, and the cost structure remain the same.

11. T or F: The salary of the CEO of Wal-Mart is a traceable fixed cost of the various WM stores.

12. T or F: Indirect cost is not traced directly to specific cost objects (products, jobs, or customers).

13. T or F: A cost that has already been incurred and therefore cannot be changed by any alternatives

is sunk cost.

14. T or F: Generally, a product line should be dropped when the fixed costs that can be avoided by dropping the product line are less than the contribution margin that will be lost.

15. When the amount assigned to a responsibility center is significantly influenced by the actions of someone within the responsibility center, the item of cost is a _____________________.

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

17. In _______________ costing, no fixed overhead costs are charged to individual units of product, so no overhead rate for the fixed component of overhead costs need be used in the cost accounting system.

18. A cost that is incurred to support a number of costing objects but cannot be traced to them individually is a ___________________.

19. _______________is often regarded as the best approach to the transfer pricing problem, particularly if transfer price negotiations routinely become bogged down.

20. A _______________ is simply the difference between a predetermined norm or standard and the ____________ results. Management wants to know not only what the amounts of the differences were but also, and more important, why these occurred to take corrective action.

21. A _______________ center is any business segment whose manger has control over both cost and revenue. However, it generally does not have control over investment funds.

* 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.