MULTIPLE CHOICE: Circle the answer of the best response.

1) Which of the following does not represent the main focus of cost management information?

A. Strategic management.

B. Performance measurement.

C. Planning and decision making.

D. Preparation of financial statements.

E. Internal audit and control.

2) If a firm is following the cost leadership strategy, and overhead accounts are complex, then the:

A. The firm should use a process costing system.

B. Firms can use either a project or a job costing system.

C. Traditional volume-based job costing will not usually provide the needed cost accuracy.

D. The only recourse is to install a hybrid costing system.

E. The firm should attempt to collect only material and labor costs.

3) If a company is working on strategic positioning, what best describes what the company is considering?

A. How the firm is perceived by its external environment, its competitors, and its customers.

B. Where the firm's physical plants, buildings, and warehouses will be located.

C. The firm's position on important issues, such as the environment and government regulations.

D. Which competitive strategy the firm will use to achieve sustainable competitive advantage.

4) Which of the following is considered to be an advantage of using both nonfinancial and financial information in the balanced scorecard?

A. Nonfinancial information is most helpful in analyzing a company's past performance, while financial information is most useful in evaluating potential future performance.

B. Nonfinancial information provides a short-term perspective, while financial information provides a long-term perspective of performance.

C. Nonfinancial information reflects the company's current and potential competitive advantage, while financial information tends to focus on a firm's achieved financial performance.

D. Nonfinancial information should be included in financial information because it is more reliable than financial information.

5) RTP Corp. is developing a new computer processor to compete against Intel's successful product line. RTP has already determined the market price and the required profit margin on each processor sold to be successful. Which costing method will RTP most likely use to reduce costs and obtain the desired results?

A. Target costing.

B. Product costing.

C. Relevant costing.

D. Cost management.

E. Life cycle costing.

6) Certain workers are assigned the task of unpacking production materials received from suppliers. These workers place the material in a storage area pending subsequent use in the production process. The labor cost of such workers is normally classified as:

A. Direct labor.

B. Direct materials.

C. Indirect labor.

D. Indirect materials.

7) Both cost leadership and differentiation firms can improve on execution through:

A. Improved automation and a higher output of products.

B. Benchmarking and total quality improvement.

C. Cost-cutting and downsizing of personnel.

D. All of the above.

E. None of the above.

8) When a firm is determining its opportunities and threats, which of the following would not be mentioned?

A. An intense rivalry with a local competitor was beginning to start a price war.

B. The firm just received a patent on its main product.

C. The success of the firm's latest marketing campaign.

D. Despite its patent, there are several substitute products consumers could use.

E. Increased competition in some of its key product lines.

9 & 10) A Lot of Wine Company listed the following data for the current year:

Budgeted factory overhead $1,184,000

Budgeted direct labor hours 69,600

Budgeted machine hours 24,500

Actual factory overhead 1,157,400

Actual labor hours 72,600

Actual machine hours 23,900

If overhead is applied based on direct labor hours, the overapplied/underapplied overhead is over or under applied and by how much? ________________________________________:

11) How will the unit (average) cost of manufacturing (materials, labor, and overhead) usually change if the production level rises?

A. It will remain constant.

B. It will increase in direct proportion to the production increase.

C. It will increase, but inversely with the production increase.

D. It will decrease inversely and in direct proportion to the production increases.

E. It will decrease, but not in direct proportion to the production increase.

12) When production levels are expected to decline within a relevant range, what effects would be anticipated with respect to each of the following?

Fixed Costs Per Unit	Variable Costs Per Unit
A. Increase	No change
B. Increase	Increase
C. No change	No change
D. No change	Increase

Please use this information to answer questions 13, 14 & 15:

Assume the following information for SABRES Company: Prime Costs $485,000

Conversion Costs 575,000

Direct Materials Used 105,000

Beginning Work In Process 198,000

Ending Work In Process 81,000

13. Direct Labor used is calculated to be: $ ____________________________

14. Factory Overhead is calculated to be: $ ___________________________

15. Total all-in manufacturing cost for the period is calculated to be: $ _____________________

16. If the finished goods inventory has increased during the period, which of the following is always true?

A. The cost of goods sold is less than the cost of goods manufactured.

B. The cost of goods sold is more than the cost of goods manufactured.

C. The cost of goods manufactured is more than the total manufacturing costs.

D. The cost of goods manufactured is less than the total manufacturing costs.

17) As with any costing system, a firm should use activity-based costing (ABC) when the:

A. Currently used system does not seem to be working.

B. The benefits of such a system exceed the cost of implementation.

C. The firm wants more detailed information.

D. The firms production growth exceeds 20 percent per year.

E. The current system has been in use for a long time.

18) Activity-based costing (ABC) differs from other costing approaches in that it more accurately measures the cost of activities:

A. Not proportional to the volume of outputs produced.

B. Directly proportional to the volume of outputs produced.

C. Inversely proportional to the volume of outputs produced.

D. In every costing situation.

19) The two main advantages of using predetermined factory overhead rates are to provide more accurate unit cost information and to:

A. Simplify the accounting process.

B. Provide cost information on a timely basis.

C. Insure transmission of correct data.

D. Extend the useful life of the cost data.

E. Adjust for variances in data sources.

20) The range of the cost driver in which the actual value of the cost driver is expected to fall is called the:

A. Actual cost range.

B. Driver range.

C. Activity range.

D. Expected cost range.

E. Relevant range.

21) In job costing, the job might consist of: A. a single product.

B. a batch of identical products.

C. a batch of similar products.

D. a single, well-defined project.

E. a single product, a batch of products, or a single well-defined project.

22) The term relevant range as used in strategic accounting means the range over which:

A. Costs may fluctuate.

B. Cost relationships are approximately linear.

C. Production may vary.

D. Relevant costs are incurred.

23) In regard to selling activities, which one of the following would be a cost driver for selling expenses?

A. A number of invoices.

B. A number of sales calls.

C. A number of production runs.

D. A number of shipments. E. All the above.

24) A firm has many products, some produced in an automated production process, and some produced in a manual production process. Using direct labor hours to assign manufacturing overhead to a product manufactured with a highly automated process is likely to:

A. Overstate overhead of the product.

B. Understate overhead of the product.

C. Overapply overhead to the period.

D. Underapply overhead to the period.

E. Have no effect on the overhead of the product.

25) Which of the following factors is not involved in studying cost/volume/profit (CVP) relationships?

A. Desired profit, expressed on an after-tax basis.

B. Total fixed costs.

C. Variable cost per unit.

D. Product mix.

E. Actual sales volume.