Which of the following statements regarding differential costs is (are) false?
(A). The full cost fallacy occurs when a decision-maker fails to include fixed manufacturingoverhead in the product’s cost.
(B). When deciding whether or not to accept a special order, a decision-maker should focus on differential costs instead of full costs. (Points : 1) only A.
only B.
neither A nor B is false.
both A and B are true.
Question 2. 2. Given the following information, compute the total number of units for the period.
Direct labor hours
12,000
Direct labor cost
$2.70 per hour
Direct materials cost
$75 per unit
Total manufacturing cost
$132,600
Fixed overhead cost
$36,000
Variable overhead cost
50% of total labor cost
(Points : 1)
360
432
640
840
Question 3. 3. The Shapely Company uses the high-low method to determine its cost equation. The following information was gathered for 2008:
Machine Hours
Direct Labor Costs
Busiest month (June)
14,000
$200,000
Slowest month (December)
6,000
$120,000
If Shapely expects to use 10,000 machine hours next month, what are the estimated direct labor costs? (Points : 1)
$160,000
$180,000
$175,000
$150,000
Question 4. 4. Which of the following costs are irrelevant for a special order that will allow an organization to utilize some of its present idle capacity? (Points : 1)
Direct materials
Indirect materials
Variable overhead
Unavoidable fixed overhead
Differential sales commission
Question 5. 5. Determining the fixed and the variable components of a mixed cost can be accomplished by several methods. The cost of each method varies in direct relation to its degree of accuracy. Which of the following methods finds the fixed portion of a mixed cost before calculating the variable portion? (Points : 1)
Scattergraph.
Highlow method.
Account analysis.
Linear regression.
Engineering approach.
Question 6. 6. The Cost Flow Diagram includes all of the following costs except: (Points : 1)
Selling expenses
Direct materials
Direct labor
Fixed manufacturing overhead
Variable manufacturing overhead
Question 7. 7. A company is considering the use of a single-stage cost allocation process. Under what conditions would this choice be justified? (Points : 1)
The company has many service departments but only one production department.
The company produces a few products with similar characteristics in a few departments.
The company has no service departments but many production departments.
The company produces a wide selection of products in a single production department.
Question 8. 8. The loan department of a financial corporation makes loans to businesses. The costs of processing these loans are often several thousand dollars. All loans are initially evaluated using the same financial analysis software, but some require outside services such as appraisals and legal services. Which is the most appropriate costing system for the loan department? (Points : 1)
job-order costing
process costing
operation costing
batch costing
Question 9. 9. The Wiscow Manufacturing Company recorded overhead costs of $14,182 at an activity level of 4,200 machine hours and $8,748 at 2,300 machine hours. The records also indicated that overhead of $9,730 was incurred at 2,600 machine hours. What is the total estimated cost for 2,600 machine hours using the high-low method to estimate the cost equation? (Points : 1)
$9,730
$9,606
$9,106
$8,788
Question 10. 10. Which of the following statements regarding the two-stage cost allocation process is (are) false?
(A) If a company has three cost pools, then it will also have three different cost allocation bases.
(B) The selection of an appropriate cost allocation base is more important for single-stage cost allocation systems than for two-stage cost allocation systems. (Points : 1)
Only A is false
Only B is false.
Both A and B are false.
Neither A nor B is false.
