1. What is the primary characteristic of job order costing?

a. Mass production
b. Homogeneous products
c. Unique products
d. Continuous production

2. In job order costing, costs are accumulated by:

a. Product
b. Department
c. Time period
d. Batch

3. When is job order costing typically used?

a. Continuous production
b. Customized production
c. Standardized production
d. Repetitive production

d. How does job order costing differ from process costing?

A. Batch size
B. Product customization
C. Production volume
D. Cost allocation method
e. In job order costing, direct labor costs are usually charged to:

A. Overhead
B. Finished goods
C. Work-in-progress
D. Cost of goods sold
Process Costing:
a. What is the key characteristic of process costing?

A. Unique products
B. Customized production
C. Mass production
D. Continuous production
b. In process costing, costs are allocated by:

A. Product
B. Department
C. Time period
D. Batch
c. When is process costing typically used?

A. Customized production
B. Standardized production
C. Repetitive production
D. Batch production
d. How does process costing differ from job order costing?

A. Batch size
B. Product customization
C. Production volume
D. Cost allocation method
e. In process costing, direct material costs are usually charged to:

A. Overhead
B. Finished goods
C. Work-in-progress
D. Cost of goods sold
Cost-Volume-Profit Relationships:
a. What does the break-even point represent?

A. Profitability
B. Revenue goals
C. Zero profit or loss
D. Total costs
b. The contribution margin is calculated as:

A. Sales minus fixed costs

B. Sales minus variable costs
C. Total costs minus variable costs
D. Fixed costs divided by sales
c. What is the formula for calculating the break-even point in units?

A. Fixed costs / Contribution margin per unit

B. Variable costs per unit / Contribution margin per unit
C. Total costs / Contribution margin ratio
D. Contribution margin ratio / Variable costs per unit
d. How does an increase in selling price affect the break-even point?

A. Decreases break-even point

B. Increases break-even point
C. No effect on break-even point
D. Changes variable costs
e. Which factor is NOT considered in the contribution margin ratio?

A. Variable costs
B. Fixed costs
C. Sales revenue
D. Total costs
Variable Costing and Segment Reporting:
a. In variable costing, fixed manufacturing costs are treated as:

A. Period costs
B. Product costs
C. Variable costs
D. Direct costs
b. What is a key advantage of variable costing for decision-making?

A. Simplicity
B. Accuracy
C. Consistency
D. Compliance
c. Segment reporting is useful for analyzing:

A. Total company performance

B. Individual product lines or divisions
C. Variable costs only
D. Fixed costs only
d. How does variable costing differ from absorption costing in relation to fixed overhead costs?

A. Treats fixed overhead as a product cost

B. Allocates fixed overhead to units produced
C. Considers fixed overhead as a period cost
D. Ignores fixed overhead costs
e. Which costing method is more aligned with the contribution margin income statement?

A. Absorption costing
B. Variable costing
C. Process costing
D. Job order costing
Activity-Based Costing:
a. What is the primary focus of activity-based costing (ABC)?

A. Direct labor costs

B. Overhead costs
C. Production volume
D. Cost drivers
b. In ABC, costs are allocated based on:

A. Direct labor hours

B. Machine hours
C. Activity drivers
D. Batch size
c. How does ABC improve cost allocation accuracy?

A. Allocates all costs to direct labor

B. Considers only variable costs
C. Identifies and assigns costs to specific activities
D. Ignores indirect costs
d. What type of organizations benefit most from ABC?
A. Service industries
B. Mass production industries
C. Small businesses
D. Retail businesses
e. What is the main drawback of traditional costing methods compared to ABC?

A. Complexity
B. Cost efficiency
C. Accuracy
D. Consistency
Profit Planning:
a. What is the primary purpose of profit planning?

A. Record keeping
B. Decision-making
C. Cost allocation
D. External reporting
b. The budgeted income statement is a key component of:

A. Financial statements
B. Internal controls
C. Cost accounting
D. Budgetary control
c. How does profit planning contribute to decision-making?

A. By focusing on historical data

B. By providing future financial goals
C. By emphasizing non-financial factors
D. By analyzing fixed costs only
d. Which budget focuses on the cash inflows and outflows of an organization?

A. Sales budget
B. Cash budget
C. Production budget
D. Flexible budget
e. What is the term for the process of comparing actual results with budgeted figures?

A. Budgetary control
B. Standard costing
C. Variance analysis
D. Performance measurement
Flexible Budgets and Performance Analysis:
a. What is the primary advantage of a flexible budget?

A. Simplicity
B. Precision
C. Historical accuracy
D. Fixed costs only
b. How does a flexible budget differ from a static budget?

A. Static budget is based on variable costs only

B. Flexible budget adjusts for changes in activity levels
C. Flexible budget remains constant regardless of activity
D. Static budget is more detailed
c. Performance analysis involves comparing:

A. Budgeted costs only

B. Actual costs only
C. Budgeted and actual costs
D. Variable costs only
d. What is the primary purpose of performance analysis?

A. Setting future budgets

B. Evaluating past performance
C. Allocating costs
D. Calculating variances
e. How does a favorable variance impact performance analysis?

A. Indicates poor performance

B. Suggests overachievement
C. Signals a need for cost-cutting
D. Has no impact on analysis
Standard Costs and Variances – Mark Jimwell:
a. What is the purpose of establishing standard costs?

A. To set maximum selling prices

B. To provide a benchmark for performance evaluation
C. To determine variable costs
D. To calculate break-even points
b. Mark Jimwell's variance analysis shows a favorable direct labor variance. What does this imply?

A. Actual labor costs are lower than budgeted

B. Actual labor costs are higher than budgeted
C. Actual production is higher than expected
D. Actual production is lower than expected
c. Which variance is calculated by comparing actual overhead costs with standard overhead costs?

A. Direct labor variance

B. Variable overhead variance
C. Fixed overhead variance
D. Total production variance
d. How does a negative material price variance impact cost control?

A. Indicates efficient cost control

B. Suggests cost overruns
C. Signals cost savings
D. Has no impact on cost control
e. Standard costs are based on:

A. Historical costs
B. Budgeted costs
C. Variable costs only
D. Actual costs
Performance Measurement in Decentralized Organizations:
a. In a decentralized organization, decision-making authority is:

A. Centralized at the top management level

B. Distributed to lower levels of management
C. Controlled by external auditors
D. Exclusively with the finance department
b. What is the primary advantage of decentralization?

A. Improved decision-making speed

B. Cost reduction
C. Centralized control
D. Reduced accountability
c. Performance measurement in decentralized organizations focuses on evaluating:

A. Individual departments or divisions

B. Overall company performance only
C. External factors
D. Fixed costs only
d. How does a responsibility center differ from a cost center?

A. Cost center focuses on revenue generation

B. Responsibility center is not concerned with costs
C. Cost center evaluates overall performance
D. Responsibility center can be a profit center
e. What type of performance measurement is essential for evaluating a manager's effectiveness in a
decentralized structure?

A. Financial performance only

B. Non-financial performance only
C. Both financial and non-financial performance
D. External benchmarks
Capital Budgeting Decisions:
a. What is the primary focus of capital budgeting decisions?

A. Short-term financial goals

B. Long-term investment projects
C. Monthly budgeting tasks
D. Routine operating expenses
b. The payback period is a measure of:
- A. Profitability
- B. Liquidity
- C. Time required to recover initial investment
- D. Depreciation

c. Which capital budgeting technique considers the time value of money?

- A. Payback period
- B. Accounting rate of return
- C. Net present value
- D. Internal rate of return

d. How does the net present value (NPV) guide investment decisions?
- A. Higher NPV indicates a less desirable project
- B. Positive NPV suggests a profitable project
- C. NPV is not a relevant factor in capital budgeting
- D. NPV ignores cash flows

e. What is the term for the rate of return at which the present value of cash inflows equals the present
value of cash outflows?
- A. Payback period
- B. Accounting rate of return
- C. Net present value
- D. Internal rate of return