Question TRUE/FALSE 1. Indirect costs are costs that cannot be traced to cost objects in an eco

TRUE/FALSE

1. Indirect costs are costs that cannot be traced to cost objects in an economically feasible way.

2. To motivate engineers to design simpler products, costs for production, distribution, and customer service may be included in product-cost estimates.

3. For external reporting, inventoriable costs under GAAP sometimes include R&D costs.

.

4. To allocate a cost, it must satisfy all four purposes for which costs are allocated.

5. Today, companies are simplifying their cost systems and moving toward less-detailed and less-complex cost allocation bases.

6. When using the cause-and-effect criterion, cost drivers are selected as the cost allocation bases.

7. The ability-to-bear criterion is considered superior when the purpose of cost allocation is motivation.

8. The benefits of implementing a more-complex cost allocation system are relatively easy to quantify for application of the cost-benefit approach.

9. Each company must decide which corporate cost categories should be included in the indirect costs of the divisions — all, only a subset, or none.

10. Full allocation of corporate costs to divisions is justified when the notion of controllability is applied.

11. When there is a lesser degree of homogeneity, fewer cost pools are required to accurately explain the use of company resources.

12. If a cost pool is homogeneous, the cost allocations using that pool will be the same as they would be if costs of each individual activity in that pool were allocated separately.

13. Facility-sustaining costs do not have a cause-and-effect relationship with individual products.

14. An individual cost item can be simultaneously a direct cost of one cost object and an indirect cost of another cost object.

15. A homogenous cost pool has costs that have similar cause-and-effect relationships with the cost-allocation base.

16. Once a cost pool has been established, it should not need to be revisited or revised.

17. All customers are equally important to a company and should receive equal levels of attention.

.

18. The purpose of price discounting is to encourage increases in customer purchases.

19. There are two elements that influence customer profitability — revenues and costs.

20. Companies that only record the invoice price can usually track the magnitude of price discounting.

21. A customer cost hierarchy categorizes costs related to customers into different cost pools on the basis of using only one cost driver.

22. An activity-based costing system may focus on customers rather than products.

23. A customer cost hierarchy may include distribution-channel costs.

24. The cost of visiting customers is an example of a customer output unit-level cost.

25. In general, distribution-channel costs are more easily influenced by customer actions than customer batch-level costs.

26. If one of four distribution channels is discontinued, corporate-sustaining costs such as general administration costs will most likely be reduced by 25%.

27. To more accurately assess customer profitability, corporate-sustaining costs should be allocated.

28. It is common to find that a small number of customers generate a high percentage of operating income.

29. Managers who utilize customer profitability charts should drop customers that generate a negative customer operating income, since dropping an unprofitable customer will automatically cause overall income to increase.

30. It is possible that the largest customer in terms of revenue is not the most profitable customer.

31. The static-budget variance is the difference between an actual result and a budgeted amount in the static budget.

32. The flexible-budget variance is the difference between an actual result and the flexible-budget amount based on the level of output actually achieved in the budget period.

33. Additional insight can be gained by dividing the sales-mix variance into the flexible-budget variance and the sales-volume variance.

34. A favorable sales-mix variance arises when the actual sales-mix percentage is less than the budgeted sales-mix percentage.

.

35. A composite unit is a hypothetical unit with weights based on the mix of individual units.

36. The sales-mix variance can be explained in terms of the budgeted contribution margin per composite unit of the sales mix.

37. The sales-quantity variance is favorable when budgeted unit sales exceed actual unit sales.

38. The sales mix variance is the difference between budgeted contribution margin for the actual sales mix and the budgeted contribution margin for the budgeted sales mix.

39. The sales quantity variance is the difference between budgeted contribution margin based on actual units sold of all products at the budgeted mix, and contribution margin in the flexible budget.

40. The market-share variance is caused solely by the actual market share being different than the budgeted market share.

41. A favorable market-size variance results with a decrease in market size.

42. The flexible-budget variance can be further divided into the sales-mix variance and the sales-quantity variance.

43. The market share variance is the difference in budgeted contribution margin for actual market size in units caused solely by the actual market share being different from the budgeted market share.

44. The market size variance is the difference in budgeted contribution margin at budgeted market share caused solely by actual market size in units being different from budgeted market size in units.

45. A difficulty with the market share and market size variances is that accurate measures of market share and market size often do not exist.

46. The direct materials mix variance is the sum of the direct materials mix variances for each input.

47. An unfavorable direct materials mix variance results when cheaper direct materials are substituted for more expensive direct materials.

48. A favorable direct materials yield variance results when less direct materials are used than planned.

MULTIPLE CHOICE

49. Costs which are not economically feasible to trace but which are related to a cost object are known as:

a. fixed costs

b. direct costs

c. indirect costs

d. variable costs

50. Any item for which a separate measurement of cost is desired is known as:

a. cost allocation

b. a cost object

c. a direct cost

d. an indirect cost

Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.