Question 1

Indirect costs are incurred for the benefit of (one/multiple)_________________ cost object(s).

Accepted Answer

The answer of Indirect costs are incurred for the benefit...

Question 2

Compared to a high volume product,a low volume product

Accepted Answer

A)  is usually responsible for more indirect costs per unit.
B)  usually requires less special handling per unit
C)  requires relatively fewer machine set-ups costs per unit.
D)  requires the use of direct labour hours as the cost driver.

Question 3

To calculate the total cost of a cost object,________ costs need to be traced and indirect costs allocated.

Accepted Answer

The answer of To calculate the total cost of a...

Question 4

Manufacturing overhead costs are applied to each job

Accepted Answer

A)  only if the cost can be directly traced to the job.
B)  when the indirect cost is incurred.
C)  by using a predetermined overhead rate.
D)  at the end of the year when exact cost figures are known.

Question 5

Which of these is not usually one of the levels of the activity hierarchy in a typical manufacturing entity?

Accepted Answer

A)  Product level
B)  Unit level
C)  Facility level
D)  Building level

Question 6

The accuracy of cost information increases as the number of cost pools (increases/decreases)_________________.

Accepted Answer

increases

Question 7

The practice of setting different prices for different customers is known as price ________________.

Accepted Answer

The answer of The practice of setting different prices for...

Question 8

Which of these is  not\bold{not}not  a pricing method?

Accepted Answer

A)  Peak load pricing
B)  Price skimming
C)  Price discrimination
D)  Greedy pricing

Question 9

Any non-manufacturing costs incurred to support entity activities such as office salaries and other administration expenses are not permitted under Australian accounting standards to be included in the _________________ product cost.

Accepted Answer

The answer of Any non-manufacturing costs incurred to support entity...

Question 10

Which of the following statements regarding variances is true?

Accepted Answer

A)  All the statements are true
B)  Variance calculations need to be made when budgeted costs are used to allocate indirect costs.
C)  Variances arise when an entity over estimates the expenditure level of indirect costs assigned to the cost pool or the expected usage of the cost driver.
D)  Variances arise when an entity underestimates the expenditure level of indirect costs assigned to the cost pool or the expected usage of the cost driver.

Question 11

Period costs are costs that:

Accepted Answer

A)  are allocated over several accounting periods
B)  non-manufacturing costs for the current period
C)  manufacturing costs for the current period
D)  none of the options is correct

Question 12

Which of the following statements about indirect costs is true?

Accepted Answer

A)  All the statements about indirect costs are true.
B)  Indirect costs are incurred for the benefit of multiple cost objects.
C)  Cost drivers provide the link between indirect costs and cost objects.
D)  Because it is not economically feasible to trace indirect costs to specific cost objects,the costs need to be allocated.

Question 13

Labour hours,machine hours and units of output are examples of ______________ drivers that use a measure of output to assign indirect costs to cost objects.

Accepted Answer

The answer of Labour hours,machine hours and units of output...

Question 14

The first step from the list below in the process of allocating indirect costs is to:

Accepted Answer

A)  identify a cost driver that has a strong correlation to the cost pool.
B)  compute the indirect cost rate per cost driver.
C)  allocate the indirect costs to each cost object.
D)  decide on the number of indirect cost pools.

Question 15

If the cost object is the product,from the choices given,the cost driver that would be the most accurate means of allocating the overhead costs for the Ordering and Receiving department is:

Accepted Answer

A)  set-ups.
B)  purchase orders.
C)  machine hours.
D)  machine set-ups.

Question 16

Under Australia accounting standards,which of the following are inventoriable product costs?

Accepted Answer

A)  office salaries
B)  manufacturing costs
C)  depreciation of office equipment
D)  all the options are inventoriable product costs B

Question 17

Inventoriable product cost is the sum of direct and indirect _______________ costs.

Accepted Answer

The answer of Inventoriable product cost is the sum of...

Question 18

Overhead costs are:

Accepted Answer

A)  incurred for the benefit of multiple cost objects
B)  also known as indirect costs
C)  might be traceable to an individual cost object but it is not cost effective to do so.
D)  all the statements about overhead costs are true.

Question 19

The statement that is incorrect is:

Accepted Answer

A)  Inaccurate application of overheads to products can lead to the wrong conclusions about the profitability of products.
B)  An indirect cost benefits multiple cost objects.
C)  Direct labour is usually an accurate cost driver for most indirect costs.
D)  By allocating indirect costs an organisation is able to determine the full cost of a cost object.

Question 20

Costs drivers can be based on either volume or activity.Which of the following is a volume based cost driver?

Accepted Answer

A)  number of invoices processed.
B)  time taken to set up machines.
C)  number of inspections undertaken.
D)  machine hours. D

Exam 11: Costing and Pricing in an Entity

Indirect costs are incurred for the benefit of (one/multiple)_________________ cost object(s).

Correct AnswerverifiedShow Answer

Compared to a high volume product,a low volume product

Correct AnswerverifiedShow Answer

To calculate the total cost of a cost object,________ costs need to be traced and indirect costs allocated.

Correct AnswerverifiedShow Answer

Manufacturing overhead costs are applied to each job

Correct AnswerverifiedShow Answer

Which of these is not usually one of the levels of the activity hierarchy in a typical manufacturing entity?

Correct AnswerverifiedShow Answer

The accuracy of cost information increases as the number of cost pools (increases/decreases)_________________.

Correct Answerverifiedincreases

The practice of setting different prices for different customers is known as price ________________.

Correct AnswerverifiedShow Answer

Which of these is not\bold{not}not a pricing method?

Correct AnswerverifiedShow Answer

Any non-manufacturing costs incurred to support entity activities such as office salaries and other administration expenses are not permitted under Australian accounting standards to be included in the _________________ product cost.

Correct AnswerverifiedShow Answer

Which of the following statements regarding variances is true?

Correct AnswerverifiedShow Answer

Period costs are costs that:

Correct AnswerverifiedShow Answer

Which of the following statements about indirect costs is true?

Correct AnswerverifiedShow Answer

Labour hours,machine hours and units of output are examples of ______________ drivers that use a measure of output to assign indirect costs to cost objects.

Correct AnswerverifiedShow Answer

The first step from the list below in the process of allocating indirect costs is to:

Correct AnswerverifiedShow Answer

If the cost object is the product,from the choices given,the cost driver that would be the most accurate means of allocating the overhead costs for the Ordering and Receiving department is:

Correct AnswerverifiedShow Answer

Under Australia accounting standards,which of the following are inventoriable product costs?

Correct AnswerverifiedB

Inventoriable product cost is the sum of direct and indirect _______________ costs.

Correct AnswerverifiedShow Answer

Overhead costs are:

Correct AnswerverifiedShow Answer

The statement that is incorrect is:

Correct AnswerverifiedShow Answer

Costs drivers can be based on either volume or activity.Which of the following is a volume based cost driver?

Correct AnswerverifiedD

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Which of these is $\bold{not}$ a pricing method?

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B

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D