Top 80+ Solved Strategic Cost Accounting MCQ Questions Answer
Q. Cooper and Kaplan recommend using which of the following as the basis, or denominator, when developing activity cost pool rates for activity based costing.
a. The maximum capacity for each activity.
b. The practical capacity for each activity.
c. The planned or budgeted for each activity.
d. The normal capacity for each activity.
Q. Which of the following is not an argument for using a separate stand alone system for activity based costing, i.e., rather than integrating ABC with the general ledger system used for GAAP?
a. GAAP product costs may be incorrect relative to ABC product costs
b. It is faster to develop.
c. It is less costly to develop.
d. Subjective information can be used that auditors might question.
Q. Which of the following arguments support integrating ABC with the general ledger systemused for GAAP, rather than using a separate stand alone ABC system?
a. Managers tend to prefer a single accounting system for product costing.
b. Two separate systems tend to be confusing for management.
c. Two separate systems tend to create redundant information and staff.
d. all of the above.
Q. Which of the following types of characteristics tend to cause too little overhead costs to be charged to the product using traditional cost allocations?
a. a relatively small product.
b. a relatively low volume product.
c. a relatively simple product.
d. a and b.
Q. Which audience was activity based costing originally designed to serve?
a. Users of external financial statements.
b. Front line managers who plan & control activities or processes on a daily basis.
c. Managers who make short term strategic decisions such as outsourcing.
d. Managers who make long term strategic decisions concerning investments.
Q. A company that uses a traditional two stage cost allocation approach is likely to do the following.
a. Overhead allocations to high volume products will tend to be overstated while overhead allocations to low volume products will tend to be understated.
b. Overhead allocations to high volume products will tend to be understated, while allocations to low volume products will tend to be overstated.
Q. The main difference (or differences) between how traditional costing and activity based costingtreat indirect manufacturing costs is (are) that
a. Traditional costing uses only production volume based drivers while activity based costing uses only non production volume based drivers.
b. Traditional costing treats only unit level costs as variable, while abc systems treat unit level, batch level and product level costs as variable.
c. Traditional cost allocations are usually based on a plant wide overhead rate, while abc systems use departmental overhead rates.
d. A and b.
Q. The Cooper/Kaplan "Rule of One" refers to the following:
a. Only one overhead rate should be used to allocate fixed costs.
b. If only one item is represented by an activity cost pool, then the cost can be classified as fixed.
c. If there is more than one activity cost pool, then one of the cost pools must be variable.
d. Traditional cost allocation systems will distort the allocations for at least one cost pool.
Q. Activity based cost systems would probably provide the greatest benefits for organizations that use
a. Job order costing.
b. Process costing.
c. Historical costing
d. Standard costing.
Q. When traditional production volume based overhead allocations are made, rather than activity based allocations,
a. The unit costs of high volume and large size products tend to be overstated, while the unit cost of low volume and small products tend to be understated.
b. The unit costs of high volume and large size products tend to be understated, while the unit cost of low volume and small products tend to be overstated.
Q. In order to compute equivalent units of production using the Weighted Average method ofprocess costing, the following equation should be used:
a. Equivalent units of beginning work in process + units completed and transferred out
b. Equivalent units of beginning work in process + equivalent units of ending work in process
c. Units completed and transferred out + equivalent units of ending work in process
d. Units completed and transferred out + equivalent units of beginning work in process
Q. One characteristic of products that are mass-produced in a continuous production processis that
a. The products are identical or very similar in nature.
b. They are grouped in batches.
Q. Conversion costs are the sum of:
a. Direct materials costs and direct labor costs
b. Indirect materials costs and indirect labor costs
c. Direct materials costs and overhead costs
d. Direct labor costs and overhead costs
Q. A production cost report
a. Used to record the costs chargeable to a specific job
b. Shows only cost data for a production department
c. Provides a basis for evaluating the productivity of a department
d. Combines process cost and job order costing systems costs