Copyright 2014 Pearson Education, Inc.

1 Copyright © 2014 Pearson Education, Inc.Managerial Accounting: Making Decisions and Motivating Performance (Datar/Rajan) Chapter 2 An Introduction to Cost Terms and Purposes

Learning Objective 2-1

1) The cost incurred is:

• actual costs.
• budgeted costs.
• cost object.
• cost accumulation.
• cost allocation.

Answer: A

Diff: 1 Page Ref: 31

LO: 2-1

EOC: E2-1; E2-6

AACSB: Reflective Thinking Skills

Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

2) A ________ is usually measured as the amount of money that must be paid to acquire goods and services.

• time
• cost
• goal
• product
• prediction

Answer: B

Diff: 1 Page Ref: 30

LO: 2-1

EOC: E2-10; E2-11

AACSB: Reflective Thinking Skills

Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

3) Which of the following explains why managers compare the budgeted costs to actual costs?

• Managers only focus on the budgeted costs.
• Managers only learn how to make better decisions in the future.
• Managers know how well they did to control costs only.
• Managers evaluate how well they did to control costs and learn how to do better in the future.
• Managers never compare these costs.

Answer: D

Diff: 1 Page Ref: 30

LO: 2-1

EOC: E2-10; E2-11

AACSB: Reflective Thinking Skills

Learning Outcome: MA-2: Discuss the legal, ethical, and business concepts that affect managerial accounting.Managerial Accounting Decision Making and Motivating Performance 1st Edition Datar Test Bank Visit TestBankDeal.com to get complete for all chapters

2 Copyright © 2014 Pearson Education, Inc.

4) The cost object is:

• the cost incurred.
• a collection of cost data in some organized way by means of a cost object.
• a predicted, or forecasted, cost.
• anything for which a measurement of costs is desired.
• used to describe the assignment of indirect costs to a particular cost object.

Answer: C

Diff: 1 Page Ref: 30

LO: 2-1

EOC: E2-1

AACSB: Reflective Thinking Skills

Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

5) Budgeted costs include:

• the costs incurred this year.
• the costs incurred last year.
• the planned or forecasted costs.
• the cost of a competitor.
• the costs incurred two years ago.

Answer: C

Diff: 1 Page Ref: 30

LO: 2-1

EOC: E2-6

AACSB: Reflective Thinking Skills

Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

6) Cost accumulation:

• is the cost incurred.
• is a collection of cost data in an organized way by means of a cost object.
• predicts, or forecasts, costs.
• measures the desired costs.
• describes the assignment of indirect costs to a particular cost object.

Answer: B

Diff: 1 Page Ref: 30

LO: 2-1

EOC: E2-1

AACSB: Reflective Thinking Skills

Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

3 Copyright © 2014 Pearson Education, Inc.7) The two main ways managers use cost information are when they ________ decisions; and, ________ decisions.

• make; implement
• create; brainstorm
• control; create
• brainstorm; control
• control; accumulate

Answer: A

Diff: 2 Page Ref: 30

LO: 2-1

EOC: E2-11

AACSB: Reflective Thinking Skills

Learning Outcome: MA-2: Discuss the legal, ethical, and business concepts that affect managerial accounting.8) A/an ________ cost is the cost incurred; and they are distinguished from a ________ cost; which is a predicted, forecasted, or future cost.

• budget; object
• actual; budgeted
• accumulated; actual
• budgeted; actual
• cost object; actual

Answer: B

Diff: 3 Page Ref: 30

LO: 2-1

EOC: E2-10

AACSB: Analytic Skills

Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

9) The predicted, or forecasted costs, are:

• actual costs.
• budgeted costs.
• cost object.
• cost accumulation.
• cost allocation.

Answer: B

Diff: 1 Page Ref: 31

LO: 2-1

EOC: E2-1

AACSB: Reflective Thinking Skills

Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

4 Copyright © 2014 Pearson Education, Inc.10) Evans Manufacturing has three cost objects that it uses to accumulate costs for its manufacturing plant

in Virginia. They include:

Cost Object #1: The real estate dwelling(s) (physical buildings and equipment)

Cost Object #2: The use of buildings and equipment

Cost Object #3: The use and availability of manufacturing labor

The following manufacturing overhead cost categories are found in the accounting records:

• Depreciation on buildings and equipment
• Machine lubricants
• Insurance for property
• Supervisors salaries
• Fringe benefits
• Property taxes
• Utilities

Required:

Assign each of the above costs to the most appropriate cost object.

Answer:

Cost Object #1 includes categories a, c and f Cost Object #2 includes categories b and g Cost Object #3 includes categories d and e Diff: 2 Page Ref: 30

LO: 2-1

EOC: E2-14

AACSB: Analytic Skills

Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.

11) A BMW X6 sports activity coupe is an example of the ________ cost object at BMW.

• product
• service
• project
• customer
• activity

Answer: A

Diff: 1 Page Ref: 30

LO: 2-1

EOC: E2-1

AACSB: Reflective Thinking Skills

Learning Outcome: FA-2: Describe the components of and prepare the four basic financial statements.