1.

Which of the following is TRUE about allocating overhead using a volume-based overhead rate?

A

You need to know the budgeted overhead and budgeted cost driver to compute the predetermined overhead rate.

B

You need to know the budgeted overhead and actual cost driver to compute the predetermined overhead rate.

C

You need to know the actual overhead and budgeted cost driver to compute the predetermined overhead rate.

D

You need to know the actual overhead and actual cost driver to compute the predetermined overhead rate.

2.

Where in the Master Budget do we NOT use absorption costing?

A

Cost of Goods Sold Budget

B

Ending Inventory Budget

C

Gross Margin version of the Budgeted Income Statement

D

Contribution Margin version of the Budgeted Income Statement

3.

When attempting to compute a single product cost amount, companies should NOT try to combine

A

Traditional Costing and Absorption Costing

B

Traditional Costing and Activity-Based Costing

C

Traditional Costing and Normal Costing

D

Traditional Costing and Job-Order Costing

4.

Which of the following is FALSE about allocating overhead using activity-based costing overhead rates?

A

You need to know the budgeted overhead amount for each activity pool to compute the predetermined overhead rate for that activity.

B

You need to know the budgeted cost driver amount for each activity to compute the predetermined overhead rate for that activity.

C

You need to know the actual overhead amount for each activity pool to allocate overhead to that activity.

D

You need to know the actual cost driver amount for each activity to allocate overhead to that activity.

5.

A good manager would NOT use budgets to

A

predict cash flow and profit.

B

align a companys mission with its financial operations.

C

increase companywide understanding of strategic goals.

D

tie incentives to performance measures that meet or beat short-term budget targets.

6.

Surfer Company builds custom surfboards. The actual amount of overhead incurred cannot be accurately measured until year end. Every surfboard consumes overhead activities in different proportions. Which of the following product costing methods do you recommend that Surfer Company use?

A

traditional costing

B

activity-based costing

C

all of the above

D

none of the above

7.

A company makes two products: tables and chairs. While performing a multi-product Cost-Volume-Profit Analysis for this company, you noticed that break-even sales INCREASED due to

A

a decrease in the total fixed cost.

B

a decrease in the variable cost per unit for tables.

C

a decrease in the selling price per unit for tables.

D

an increase in the selling price per unit for chairs.

8.

When attempting to compute a single product cost amount, companies should NOT try to combine

A

Variable Costing and Standard Costing

B

Variable Costing and Activity-Based Costing

C

Variable Costing and Normal Costing

D

Variable Costing and Absorption Costing

9.

A company makes two products: tables and chairs. While performing a multi-product Cost-Volume-Profit Analysis for this company, you noticed that break-even sales DECREASED due to

A

an increase in the total fixed cost.

B

an increase in the variable cost per unit for tables.

C

an increase in the variable cost per unit for chairs.

D

an increase in the contribution margin ratio.

10.

A company makes two products: tables and chairs. While performing a multi-product Cost-Volume-Profit Analysis for this company, you noticed that break-even units for chairs INCREASED due to

A

a decrease in the total fixed cost.

B

an increase in the variable cost per unit for tables.

C

a decrease in the variable cost per unit for chairs.

D

None of the above