Question 1 In traditional costing systems, overhead segmented into major categor
ID: 2371726 • Letter: Q
Question
Question 1
In traditional costing systems, overhead segmented into major categories and is allocated based on several cost drivers
Answer True False
Question 2
If the management accountant does a better job of projecting cost, then management is able to make better decisions
Answer True False
Question 3
As long as we are in the relevant range variable costs will remain constant in total.
Answer True False
Question 4
Current trends in many organizations a higher degree of overhead/ indirect spending and a need for management accountants to properly assign these costs
Answer True False
Question 5
To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool
Answer True False
Question 6
The CVP income statement classifies costs as variable or fixed and computes a contribution margin.
Answer True False
Question 7
In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.
Answer True False
Question 8
The cost-volume-profit analysis approach provides a method to assess how many units and or sales dollars we need to achieve to make a desired profit
Answer True False
Question 9
If a management accountant provides costs that include significant excess capacity this is helpful to management in their pricing and profitability analysis
Answer True False
Question 10
TSox's are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs to run the operation are $300,000 per year.
How much profit (ignore taxes) will ABC make if it achieves the projections for the upcoming year?
Answer
150,000
200,000
250,000
0
Question 11
TSox's are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs to run the operation are $300,000 per year.
What is the break even point in units?
Answer
15,000
20,000
30,000
50,000
Question 12
TSox's are planning its upcoming year. It anticipates selling t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs to run the operation are $300,000 per year.
If the desired profit (ignoring taxes) is $400,000 how many t-shirts will they need to sell?
Answer
50,000
70,000
45,000
80,000
Question 13
TSox's are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10.
If prices drop by 20% and fixed cost increase as noted what is the new break even point?
The fixed costs have now increased to $420,000 per year.
Answer
50,000
60,000
30,000
70,000
Question 14
If an organization does not use ABC and as result does not properly assign the right costs to a cost object- what are some of the potential problems this may create?
Question 15
From the article Measure Cost Right, describe the major findings/ breakthroughs the authors provide vs. traditional costing systems? What do the authors mean when they refer to the death spiral?
Explanation / Answer
1) true 2) true 3) false 4) true 5) false 6) false 7) false 8) true 9) true 10) 150000 11) 30000 12) 70000 13) 60000 14) Activity-based costing is best explained by walking through its various steps. They are: Identify costs. The first step in ABC is to identify those costs that we want to allocate. This is the most critical step in the entire process, since we do not want to waste time with an excessively broad project scope. For example, if we want to determine the full cost of a distribution channel, we will identify advertising and warehousing costs related to that channel, but will ignore research costs, since they are related to products, not channels. Load secondary cost pools. Create cost pools for those costs incurred to provide services to other parts of the company, rather than directly supporting a company
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