Cost Management

Under absorption costing, which costs are included in product costs?

The difference between absorption costing and variable costing net income is caused by:

Activity-based costing (ABC) allocates overhead using:

A company produces 1,000 units. Total fixed costs are $50,000 and variable cost per unit is $30. What is the total cost per unit?

Joint costs are costs incurred:

The theory of constraints focuses on:

Target costing sets the target cost as:

In process costing, equivalent units of production represent:

A company uses backflush costing. This approach is most appropriate when:

Kaizen costing focuses on:

Under variable costing, which of the following costs is treated as a period expense rather than a product cost?

Which costing method assigns overhead to products based on the actual activities that cause overhead costs to be incurred?

In a job-order costing system, costs are accumulated by:

Which of the following is an example of a variable cost?

A cost that remains constant in total as the activity level changes is called a:

The direct material price variance is calculated as:

In process costing, the concept of equivalent units is used to:

Which of the following is NOT a component of product cost under absorption costing?

When production volume exceeds sales volume, absorption costing will report:

The high-low method uses which data points to estimate the variable cost per unit?

A step cost is best described as a cost that:

In the direct method of service department cost allocation, service department costs are allocated to:

Standard costing is primarily used to:

By-products are best described as:

Which variance measures the efficiency of direct labor usage?

Cost allocation is the process of:

A favorable direct materials quantity variance indicates that:

Life-cycle costing considers costs over:

In process costing, the weighted-average method combines:

Which of the following is a fixed cost that can be directly traced to a specific department?

The split-off point in joint costing is:

A predetermined overhead rate is calculated by dividing:

Which cost estimation method uses statistical techniques to fit a cost function to observed data?

When actual overhead incurred exceeds applied overhead, overhead is said to be:

The cost of goods manufactured includes all of the following EXCEPT:

A mixed cost contains:

In the step-down method of service department cost allocation, costs are allocated:

Throughput accounting focuses primarily on:

Which of the following best describes a cost driver?

Under the FIFO method of process costing, the cost per equivalent unit is based on:

A company produces 10,000 units. Under absorption costing, fixed manufacturing overhead is $200,000 and variable manufacturing cost per unit is $15. If 8,000 units are sold, what is the difference in operating income between absorption and variable costing?

A company uses ABC costing. The setup activity cost pool is $120,000 with 60 setups as the cost driver. Product A requires 15 setups and Product B requires 45 setups. How much setup cost is allocated to Product A?

Using the high-low method, a company has the following data: at 5,000 units, total cost is $75,000; at 12,000 units, total cost is $117,000. What is the estimated variable cost per unit?

A company uses standard costing. The standard allows 3 pounds of material per unit at $4 per pound. During the period, 10,000 units were produced using 31,500 pounds purchased at $4.20 per pound. What is the material price variance?

Using the same data (standard: 3 lbs per unit at $4/lb, 10,000 units produced, 31,500 lbs used), what is the material quantity variance?

The labor rate variance for a period is $3,600 favorable. If 1,200 actual direct labor hours were worked and the standard rate is $18 per hour, what was the actual rate paid?

A company allocates overhead using machine hours. Budgeted overhead is $500,000 and budgeted machine hours are 25,000. If actual machine hours were 24,000 and actual overhead was $490,000, what is the amount of over- or underapplied overhead?

A company's joint process produces Products X and Y. Joint costs total $180,000. Product X has sales value at split-off of $300,000 and Product Y has sales value of $200,000. Using the relative sales value method, how much joint cost is allocated to Product X?

In regression analysis for cost estimation, the R-squared value represents:

A company uses the reciprocal method for allocating service department costs. This method:

A company's standard allows 2 direct labor hours per unit at $16 per hour. Actual production was 5,000 units using 10,500 hours at a total labor cost of $173,250. What is the labor efficiency variance?

Under absorption costing, when inventory levels decrease during a period, the company will report:

A company has two service departments (S1 and S2) and two production departments (P1 and P2). S1 costs are $100,000. S1 provides 10% of its services to S2, 50% to P1, and 40% to P2. Using the direct method, how much of S1's cost is allocated to P1?

A company desires a target profit margin of 20% on a product with an estimated sales price of $80. The target cost per unit is:

A job cost sheet shows: direct materials $12,000, direct labor $8,000, and applied overhead (at 150% of direct labor cost). The total cost of the job is:

In the theory of constraints, which of the following actions should management take to maximize throughput?

A product requires $25 in direct materials, $15 in direct labor, $10 in variable overhead, and $8 in fixed overhead per unit. Under variable costing, the inventory cost per unit is:

A company's variable overhead efficiency variance was $2,400 unfavorable. The standard variable overhead rate is $6 per direct labor hour. How many more actual direct labor hours were used compared to the standard allowed?

Which of the following joint cost allocation methods considers the additional processing costs after the split-off point?

Using the high-low method, if the variable cost per unit is $6 and the total cost at the high activity level of 12,000 units is $117,000, what is the estimated fixed cost?

A company had a fixed overhead spending (budget) variance of $5,000 unfavorable. If budgeted fixed overhead was $300,000, what was actual fixed overhead?

The fixed overhead volume variance measures:

A company budgeted 40,000 machine hours and $320,000 of fixed overhead for the year. Actual production required 38,000 standard machine hours allowed. What is the fixed overhead volume variance?

In an ABC system, which of the following would most likely be the cost driver for the material handling activity?

Kaizen costing differs from standard costing in that kaizen costing:

In process costing with two departments, transferred-in costs from Department 1 are treated in Department 2 as:

A company's throughput contribution per unit is $45, and the product requires 3 minutes on the bottleneck resource. The throughput contribution per bottleneck minute is:

A company is deciding whether to process a joint product further. The additional revenue from further processing is $50,000 and additional costs are $35,000. The company should:

If regression analysis produces the equation Y = $25,000 + $8.50X, where X is machine hours, what is the estimated total cost at 6,000 machine hours?

A company manufactures 50,000 units. Variable costs are $20 per unit, and total fixed manufacturing overhead is $400,000. Under absorption costing, the total manufacturing cost per unit is:

An unfavorable variable overhead spending variance most likely results from:

In ABC costing, batch-level activities are those that are performed:

A company uses standard costing. The variable overhead rate is $5 per direct labor hour. Standard hours allowed are 4,000. Actual hours worked were 4,200, and actual variable overhead was $21,420. What is the variable overhead spending variance?

The physical units method of allocating joint costs allocates costs based on:

A company's beginning WIP contains $30,000 of costs. During the period, $120,000 of manufacturing costs were added. Ending WIP is $25,000. What is the cost of goods manufactured?

Life-cycle costing is most beneficial when:

A company has two products. Product A has a throughput of $30 per unit and uses 5 minutes of the bottleneck. Product B has a throughput of $20 per unit and uses 2 minutes of the bottleneck. Which product should be prioritized?

A company produces a single product using two raw materials. Standard cost: Material A (4 lbs at $3/lb = $12) and Material B (2 lbs at $5/lb = $10). Actual production of 2,000 units used 8,400 lbs of A at $3.10/lb and 4,200 lbs of B at $4.80/lb. What is the total material price variance for both materials?

A company applies overhead using a plantwide rate of $25 per machine hour. Job 101 used 120 machine hours and Job 102 used 80 machine hours. The total overhead applied to both jobs combined is:

A company's contribution margin per unit is $40. Fixed costs are $200,000. Using the contribution margin approach, the company needs to sell how many units to earn a target profit of $80,000?

A company produces three joint products from a single process. Joint costs total $500,000. Product A has NRV of $230,000, Product B has NRV of $320,000, and Product C has NRV of $150,000. Using the NRV method, how much joint cost is allocated to Product B?

A company uses the reciprocal method to allocate service department costs. Service Department S1 has costs of $100,000 and provides 20% of its services to S2. Service Department S2 has costs of $60,000 and provides 10% of its services to S1. After solving the simultaneous equations, what are the total allocated costs for S1?

A company's three-variance analysis for factory overhead shows: Spending variance $2,000 U, Efficiency variance $1,500 F, Volume variance $4,000 U. What is the total underapplied overhead?

A company uses standard costing with the following data: Standard fixed overhead rate = $8/DLH based on 15,000 normal DLH. Actual production required 14,200 standard DLH. Actual fixed overhead was $122,000. What are the fixed overhead spending and volume variances?

A company produces three products using a single bottleneck machine with 2,000 available hours per month. Product A (selling price $100, variable cost $60, 2 bottleneck hours), Product B (selling price $80, variable cost $35, 3 bottleneck hours), Product C (selling price $120, variable cost $75, 5 bottleneck hours). Maximum demand is 400 units each. What is the maximum monthly throughput?

A company is implementing target costing for a new product. Market research indicates a selling price of $150. The company requires a 25% return on sales. Current estimated cost is $125. The cost gap that must be closed is:

Under FIFO process costing, a department has beginning WIP of 5,000 units (70% complete for conversion, cost of $42,000). During the period 20,000 units are started, and ending WIP is 4,000 units (30% complete for conversion). Current period conversion costs are $252,000. What is the FIFO cost per equivalent unit for conversion?

A company uses ABC and identifies the following cost hierarchy: Unit-level ($5/unit), batch-level ($200/batch), product-level ($10,000/product), and facility-level ($500,000 total). Product Q involves 10,000 units in 50 batches. What is the total overhead allocated to Product Q excluding facility-level costs?

A company has two production departments. Department 1 is machine-intensive (budgeted: $300,000 OH, 20,000 MH). Department 2 is labor-intensive (budgeted: $200,000 OH, 25,000 DLH). A product requires 3 MH in Dept 1 and 1 DLH in Dept 2. What is the total overhead applied using departmental rates?

A company uses kaizen costing and targets a 2% monthly cost reduction from a base cost of $50 per unit. After 6 months of achieving exactly the target reductions (compounding), the cost per unit is approximately:

A company has actual overhead of $480,000 and applied overhead of $460,000. Ending balances are: WIP $100,000, Finished Goods $150,000, and COGS $750,000. If underapplied overhead is allocated proportionally, how much is allocated to COGS?

A company uses life-cycle costing and estimates: R&D costs $500,000, design costs $300,000, production costs $2,000,000, marketing costs $400,000, distribution costs $200,000, and disposal costs $100,000. With expected lifetime production of 100,000 units, the life-cycle cost per unit is:

A company allocates joint costs of $600,000 using the constant gross margin percentage method. Three products have final sales values of $400,000, $500,000, and $300,000, with separable costs of $50,000, $70,000, and $30,000 respectively. What amount of joint costs is allocated to the product with $500,000 in sales?

A company has three service departments (S1, S2, S3) and two production departments (P1, P2). Under the step-down method (allocating S1 first), S1's $80,000 is split: 15% to S2, 10% to S3, 45% to P1, and 30% to P2. How much of S1's cost goes to P1?

In process costing with normal spoilage of 5% of good units completed, a department processes 10,000 total units. 8,000 units are transferred out as good output. Ending WIP is 1,500 units. What are the normal and abnormal spoilage units?

A company uses a plantwide overhead rate based on machine hours. Total budgeted OH = $500,000, total budgeted MH = 25,000. An alternative ABC system identifies: Machining ($200,000, 25,000 MH), Setups ($120,000, 400 setups), Inspections ($100,000, 200 inspections), Packaging ($80,000, 10,000 units). Product Z uses 500 MH, 10 setups, 25 inspections, and 2,000 units. The total overhead allocated to Product Z under ABC is:

A company uses the step-down method with S1 allocated first. S1 costs = $150,000, allocated 20% to S2, 50% to P1, 30% to P2. S2 original costs = $80,000, allocated 60% to P1 and 40% to P2 (after excluding S1). What total overhead is allocated to P1 from both service departments?

In standard costing, the total manufacturing cost variance is $15,000 unfavorable. The material variances total $6,000 U, the labor variances total $4,500 U. What is the total overhead variance?

A company uses process costing (weighted-average method). Beginning WIP has 3,000 units (40% complete for conversion, total cost $18,000). During the period, 15,000 units are started, 14,000 units are completed and transferred out, and ending WIP is 4,000 units (25% complete for conversion). Current period conversion costs are $126,000. What is the cost per equivalent unit for conversion?

A company has the following cost function from regression analysis: Total cost = $50,000 + $12 per unit. The coefficient of determination (R-squared) is 0.92 and the standard error of the estimate is $3,500. At a production level of 8,000 units, the total cost predicted by the regression is: