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1 Copyright © 2015 Pearson Education, Inc.Cost Accounting, 15e (Horngren/Datar/Rajan) Chapter 2 An Introduction to Cost Terms and Purposes
Objective 2.1
1) An actual cost is ________.
- is the cost incurred
- is a predicted or forecasted cost
- is anything for which a cost measurement is desired
- is the collection of cost data in some organized way by means of an accounting system
Answer: A
Diff: 1
Objective: 1
AACSB: Analytical thinking
2) Comparing budgeted costs to actual costs helps managers to improve ________.
- coordination
- control
- implementation
- planning
Answer: B
Diff: 1
Objective: 1
AACSB: Analytical thinking
3) Budgeted costs are ________.
- the costs incurred this year
- the costs incurred last year
- planned or forecasted costs
- competitor's costs
Answer: C
Diff: 1
Objective: 1
AACSB: Analytical thinking
4) Cost assignment ________.
- includes future and arbitrary costs
- encompasses allocating indirect costs to a cost object
- is the same as cost accumulation
- is the difference between budgeted and actual costs
Answer: B
Diff: 1
Objective: 1
AACSB: Analytical thinking
Cost Accounting 15th Edition Horngren Test Bank Visit TestBankDeal.com to get complete for all chapters
2 Copyright © 2015 Pearson Education, Inc.5) A cost system determines the cost of a cost object by ________.
- accumulating and then assigning costs
- accumulating costs
- assigning and then accumulating costs
- assigning costs
Answer: A
Diff: 1
Objective: 1
AACSB: Analytical thinking
6) A cost object is anything for which a cost measurement is desired.
Answer: TRUE
Diff: 1
Objective: 1
AACSB: Analytical thinking
7) Costs are accounted for in two basic stages: assignment followed by accumulation.
Answer: FALSE
Explanation: Costs are accounted for in two basic stages: accumulation followed by assignment.
Diff: 1
Objective: 1
AACSB: Analytical thinking
8) An actual cost is the cost incurred–a historical or past cost.
Answer: TRUE
Diff: 1
Objective: 1
AACSB: Analytical thinking
9) Accountants define a cost as a resource to be sacrificed to achieve a specific objective.
Answer: TRUE
Diff: 1
Objective: 1
AACSB: Analytical thinking
10) A cost is a resource sacrificed or forgone to achieve a specific objective.
Answer: TRUE
Explanation: A cost object could be anything management wishes to determine the cost of, for example, a department.
Diff: 1
Objective: 1
AACSB: Analytical thinking
11) Managers use cost accumulation data to make decisions and implement them.
Answer: TRUE
Diff: 1
Objective: 1
AACSB: Analytical thinking
3 Copyright © 2015 Pearson Education, Inc.12) Lucas Manufacturing has three cost objects that it uses to accumulate costs for its manufacturing
plants. They are:
Cost object #1: The physical buildings and equipment
Cost object #2: The use of buildings and equipment
Cost object #3: The availability and use of manufacturing labor
The following manufacturing overhead cost categories are found in the accounting records:
- Depreciation on buildings and equipment
- Lubricants for machines
- Property insurance
- 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
Objective: 1
AACSB: Application of knowledge
4 Copyright © 2015 Pearson Education, Inc.Objective 2.2
1) Which of the following factors affect the direct/indirect classification of a cost?
- the level of budgeted profit for the next year
- the estimation of time required to complete the order
- the ability to execute an order in the most cost-efficient manner
- the design of the operation
Answer: D
Diff: 1
Objective: 2
AACSB: Analytical thinking
2) The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is ________.
- cost accumulation
- cost assignment
- cost tracing
- conversion costing
Answer: B
Diff: 1
Objective: 1
AACSB: Analytical thinking
3) Cost accumulation is ________.
- the collection of cost data in some organized way by means of an accounting system
- anything for which a cost measurement is desired
- anything for which a profit measurement is desired
- the collection of profit data in some organized way by means of an accounting system
Answer: A
Diff: 2
Objective: 1
AACSB: Analytical thinking
4) Which of the following statements about the direct/indirect cost classification is true?
- Indirect costs are always traced.
- Indirect costs are always allocated.
- The design of sales target affects the direct/indirect classification.
- The direct/indirect classification depends on the cost control measures.
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