1. Which of the following is a fundamental characteristic of management accounting as compared to financial accounting?
   

   Is governed by regulatory agencies Uses generally accepted accounting principles Satisfies a competitive need Uses only financial data

2. Bookmark question for laterIf a cost increases as the sales volume increases, the cost is a:
   

   Direct cost Sunk cost Fixed cost Variable cost

3. Bookmark question for laterIf total cost stays the same, even though the production level has risen, the cost is a(n):
   

   Variable cost Out-of-pocket cost Indirect cost Fixed cost

4. Bookmark question for laterThe cost of milk used to manufacture ice cream would most likely be classified as a(n):
   

   Indirect cost Sunk cost Fixed cost Variable cost

5. Bookmark question for laterGlue used in the manufacture of chairs would most likely be classified as:
   

   Manufacturing overhead Direct materials Period cost Direct labor

6. Bookmark question for laterA nonmanufacturing cost is usually classified as:
   

   A product cost A period cost Direct materials Manufacturing overhead

7. Bookmark question for laterIn constructing a custom cabinet, an indirect material would be:
   

   Screws Wood Hinges Brass handles

8. Bookmark question for laterThe cost of milk for an ice cream manufacturer would be considered all of the following EXCEPT:
   

   Product cost Manufacturing cost Variable cost Indirect cost

9. Bookmark question for laterCosts that are specifically traceable to a unit of business are known as which of the following costs to that unit?
   

   Differential Indirect Direct Opportunity

10. Bookmark question for laterYou currently work as a school bus driver. Your salary is $28,000 per year. You are thinking about quitting your job and going back to college. It will take you two years to obtain your college degree. Tuition and other costs of the education will total $24,000. You also intend to keep your car by making the $250 per month payments out of your savings. How much is the opportunity cost of going to college?
    

    $28,000 $56,000 $52,000 $62,000

Submit Assessment

1. Activity-based costing systems assume that:
   

   Products consume overhead costs Activities consume overhead costs All of these are correct Overhead costs are insignificant

2. Bookmark question for laterWhich of the following is the correct sequence of the five steps of implementing and using an activity-based costing system?
   

   Identify measurable cost drivers, assign overhead, identify overhead cost activities, analyze individual overhead costs in terms of those cost activities, and use the cost data to make decisions Use the cost data to make decisions, analyze individual overhead costs in terms of those cost activities, identify measurable cost drivers, assign overhead, and identify overhead cost activities Identify overhead cost activities, identify measurable cost drivers, assign overhead, analyze individual overhead costs in terms of those cost activities, and use the cost data to make decisions Identify overhead cost activities, analyze individual overhead costs in terms of those cost activities, identify measurable cost drivers, assign overhead, and use the cost data to make decisions

3. Bookmark question for laterWhich of the following is a management philosophy on increasing profitability by improving the quality of products and processes?
   

   Balanced scorecard management Costs of quality measurement Total quality management Process management

4. Bookmark question for laterWhich of the following is the income statement formula for the absorption costing method?
   

   Sales Revenue – Variable Manufacturing Costs = Contribution Margin – Fixed Manufacturing Costs = Operating Income Sales Revenue – All Variable Costs = Contribution Margin – All Fixed Expenses = Operating Income Sales Revenue – Cost of Goods Sold = Gross Margin – Selling and Administrative Expenses = Operating Income Sales Revenue – Cost of Goods Sold = Gross Margin – All Fixed Expenses = Operating Income

5. Bookmark question for laterWhich of the following is the income statement formula for the variable costing method?
   

   Sales Revenue – Cost of Goods Sold = Gross Margin – Selling and Administrative Expenses = Operating Income Sales Revenue – All Variable Costs = Contribution Margin – All Fixed Expenses = Operating Income Sales Revenue – Cost of Goods Sold = Gross Margin – All Fixed Expenses = Operating Income Sales Revenue – Variable Manufacturing Costs = Contribution Margin – Fixed Manufacturing Costs = Operating Income

6. Bookmark question for laterExhibit 20-5Barron Company manufactured 150,000 units during the year but only sold 130,000 of these units. At the beginning of the year, Barron had no beginning finished goods inventory. The following unit costs were incurred during the year:
   

   Variable manufacturing cost	$3.00
   Variable selling cost	$0.50
   Fixed manufacturing cost	$4.00
   Fixed selling cost ($300,000 total)	$2.00

   Refer to Exhibit 20-5. Using absorption costing, what is the value of Barron's finished goods inventory at the end of the year?

   $120,000 $140,000 $80,000 $60,000

7. Bookmark question for laterRefer to Exhibit 20-5. Using variable costing, what is the value of Barron's finished goods inventory at the end of the year?
   

   $60,000 $80,000 $140,000 $120,000

8. Bookmark question for laterRefer to Exhibit 20-5. If Barron Company sold each unit for $13, what is Barron's net income for the year using absorption costing?
   

   $780,000 $335,000 $295,000 $415,000

9. Bookmark question for laterRefer to Exhibit 20-5. If Barron Company sold each unit for $13, what is Barron's net income for the year using variable costing?
   

   $780,000 $295,000 $335,000 $415,000

10. Bookmark question for laterLast year, Racine Company's income under absorption costing was $15,000 lower than its income under variable costing. The company had total production costs of $24 per unit, of which $14 was variable costs. No selling expenses were incurred this year. Racine sold 25,000 units during the year. How many units were produced during the year?
    

    24,000 25,000 23,500 26,500