26 + Mcqs in Strategic Cost Accounting Page 1 McqOptions

1.	In the situation stated in the question above, the company s net income based on a production volume based system will tend to be ________ relative to net income based on an activity based costing system.
A.	Overstated.
B.	Understated.
C.	Overstated for the low volume product and understated for the high volume product.
D.	b and d.
Answer» E.

Discussion

2.	Which of the following arguments support integrating ABC with the general ledger system used 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.
Answer» E.

Discussion

3.	The main difference (or differences) between how traditional costing and activity based costing treat 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.
Answer» C. Traditional cost allocations are usually based on a plant wide overhead rate, while abc systems use departmental overhead rates.

Discussion

4.	Regardless of how long it takes to produce and sell inventory, inventory is always considered to be a?
A.	Current asset
B.	Current liability
C.	Long-term asset
D.	Stockholder's equity
Answer» B. Current liability

Discussion

5.	What is the principal criterion used to distinguish between tangible assets and inventories?
A.	The physical substance of the asset
B.	The acquisition cost of the asset
C.	The nature of the company s activity, which determines the purpose for which the asset is held
D.	The moment in the accounting period when the asset is acquired
Answer» B. The acquisition cost of the asset

Discussion

6.	The inventories are recorded at the latest price but the production cost is changed old cost price?
A.	FIFO
B.	Average
C.	Both A & B
D.	None
Answer» B. Average

Discussion

7.	Which type of inventory system requires updating the inventory balance at the end of the accounting period?
A.	Periodic inventory system
B.	LIFO
C.	Perpetual inventory system
D.	FIFO
Answer» B. LIFO

Discussion

8.	Which of the following method is suitable for calculating the cost of inventory when actual costs of individual units of merchandise can be determined from the accounting records?
A.	FIFO Method
B.	LIFO Method
C.	Specific Identification Method
D.	Average Method
Answer» D. Average Method

Discussion

9.	The average inventory costing method which results in a changed unit inventory cost after each successive purchase?
A.	Weighted average
B.	Moving average
C.	Specific cost
D.	Simple average
Answer» B. Moving average

Discussion

10.	Systematic evaluation of the trade-offs between product functionality and product cost while still satisfying customer needs is the definition of
A.	Activity based management
B.	Theory of constraints
C.	Total quality management
D.	Value engineering
Answer» E.

Discussion

11.	While preparing the cost of production report of a processing department, use per unit cost from producing department needs to be adjusted when the
A.	Normal loss is identified during the process.
B.	Normal loss is identified at the end of the process
C.	Abnormal loss is identified during the process
D.	Abnormal loss is identified at the end of the process.
Answer» B. Normal loss is identified at the end of the process

Discussion

12.	Which of the following system applies when standard goods are produced under a series of inter connected operations?
A.	Job order costing
B.	Process costing
C.	Standard costing
D.	All of the above
Answer» C. Standard costing

Discussion

13.	Kaizen is a method aimed at ______ reduction below standard level, but without negative effects on quality, staff, safety, etc.
A.	Cost
B.	Waste
C.	Non value activities
D.	Constraints
Answer» B. Waste

Discussion

14.	In order to compute equivalent units of production using the Weighted Average method of process 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
Answer» D. Units completed and transferred out + equivalent units of beginning work in process

Discussion

15.	The direct material costing Rs. 4000 has been used in mixing department. The correct journal entry would be
A.	Direct materials Dr. and work in process-mixing department CR
B.	Work-in process-mixing department Dr and Direct materials Cr
C.	Finished goods DR and Direct materials Cr
D.	Mixing department Dr and Direct material Cr
Answer» C. Finished goods DR and Direct materials Cr

Discussion

16.	If beginning work in process is 2,000 units, ending work in process is 1,000 units, and the units accounted for equals 5,000 units, what are the units completed and transferred out?
A.	7000
B.	6000
C.	4000
D.	2000
Answer» D. 2000

Discussion

17.	In a process costing system, the manufacturing overhead (or factory OH) is usually applied using
A.	Predetermined overhead rate
B.	An actual overhead rate
C.	A conversion overhead rate
D.	An indirect labor rate
Answer» B. An actual overhead rate

Discussion

18.	In process costing system, when partially completed units are expressed in terms of fully completed units they are known as
A.	Completed units
B.	Equivalent units
C.	Unfinished units
D.	Transferred units
Answer» C. Unfinished units

Discussion

19.	One characteristic of products that are mass-produced in a continuous production process is that
A.	The products are identical or very similar in nature.
B.	They are grouped in batches.
C.	They are produced at the time an order is receiv
Answer» B. They are grouped in batches.

Discussion

20.	The Theory of Constraints is an organizational change method that is focused on ___________ improvement.
A.	Profit
B.	Cost
C.	Product
D.	Economics
Answer» B. Cost

Discussion

21.	Lean management has been developed with the intention of reducing ________________ and maximizing the value of the product or the service to the customer.
A.	Cost
B.	Value Cost
C.	Process Waste
D.	Profit
Answer» D. Profit

Discussion

22.	Porter argues that the ability to perform particularactivities and to manage the linkages between these activities is a source of _______________ advantage.
A.	Cost
B.	Competitive
C.	Functional
D.	Profitability
Answer» C. Functional

Discussion

23.	A ______________ is the sequence of phases that a project goes through from its initiation to its closure.
A.	Product Management
B.	Project Management
C.	Project Sequencing
D.	ProjectLife Cycle
Answer» E.

Discussion

24.	____________ describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization.
A.	Value Chain Analysis
B.	Value Management
C.	Value Engineering
D.	Strategic Cost
Answer» B. Value Management

Discussion

25.	Target costing is a ___________ costing methodology, in which the selling price and the required profit margin are used to determine the allowable cost for manufacturing a new/existing product.
A.	Modern
B.	Reverse
C.	Product
D.	Process
Answer» C. Product

Discussion

26.	______________ is introduced as a technique that aims to manage product costs throughout the design stage.
A.	Process Costing
B.	Product Costing
C.	Target Costing
D.	Strategic Costing
Answer» D. Strategic Costing

Discussion

Explore topic-wise MCQs in Master of Commerce (MDotcom).

In the situation stated in the question above, the company s net income based on a production volume based system will tend to be ________ relative to net income based on an activity based costing system.

Which of the following arguments support integrating ABC with the general ledger system used for GAAP, rather than using a separate stand alone ABC system?

The main difference (or differences) between how traditional costing and activity based costing treat indirect manufacturing costs is (are) that

Regardless of how long it takes to produce and sell inventory, inventory is always considered to be a?

What is the principal criterion used to distinguish between tangible assets and inventories?

The inventories are recorded at the latest price but the production cost is changed old cost price?

Which type of inventory system requires updating the inventory balance at the end of the accounting period?

Which of the following method is suitable for calculating the cost of inventory when actual costs of individual units of merchandise can be determined from the accounting records?

The average inventory costing method which results in a changed unit inventory cost after each successive purchase?

Systematic evaluation of the trade-offs between product functionality and product cost while still satisfying customer needs is the definition of

While preparing the cost of production report of a processing department, use per unit cost from producing department needs to be adjusted when the

Which of the following system applies when standard goods are produced under a series of inter connected operations?

Kaizen is a method aimed at ______ reduction below standard level, but without negative effects on quality, staff, safety, etc.

In order to compute equivalent units of production using the Weighted Average method of process costing, the following equation should be used:

The direct material costing Rs. 4000 has been used in mixing department. The correct journal entry would be

If beginning work in process is 2,000 units, ending work in process is 1,000 units, and the units accounted for equals 5,000 units, what are the units completed and transferred out?

In a process costing system, the manufacturing overhead (or factory OH) is usually applied using

In process costing system, when partially completed units are expressed in terms of fully completed units they are known as

One characteristic of products that are mass-produced in a continuous production process is that

The Theory of Constraints is an organizational change method that is focused on ___________ improvement.

Lean management has been developed with the intention of reducing ________________ and maximizing the value of the product or the service to the customer.

Porter argues that the ability to perform particularactivities and to manage the linkages between these activities is a source of _______________ advantage.

A ______________ is the sequence of phases that a project goes through from its initiation to its closure.

____________ describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization.

Target costing is a ___________ costing methodology, in which the selling price and the required profit margin are used to determine the allowable cost for manufacturing a new/existing product.

______________ is introduced as a technique that aims to manage product costs throughout the design stage.