Accounting Section 4 Exam

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1

A cost that requires a current and/or future outlay of cash, and is usually an incremental cost, is a(n)

Out-of-pocket cost

2

A department that incurs costs without directly generating revenue is a:

Cost Center

3

A difficult problem in calculating the total costs and expenses of a department is:

Assigning indirect expenses to the department.

4

The allocation bases for assigning indirect costs include:

Any appropriate and reasonable bases.

5

The most useful evaluation of a manager's cost performance is based on:

Controllable costs

6

Within a an organizational structure, the person most likely to be evaluated in terms of controllable costs would be:

A cost center manager.

7

A responsibility accounting performance report reports:
A) Only actual costs.
B) Only budgeted costs.
C) Both actual costs and budgeted costs.
D) Only direct costs.
E) Only indirect costs.

C) Both actual costs and budgeted costs.

8

An expense that does not require allocation between departments is a(n):

A) Common expense.

9

Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:

A) Direct expenses.

10

Departmental contribution to overhead is calculated as revenues of the department less:

C) Direct costs and expenses

11

A profit center:

Incurs costs and directly generates revenues.

12

Costs that the manager has the power to determine or at least strongly influence are called:

Controllable costs

13

A responsibility accounting system: A) Is designed to measure the performance of managers in terms of controllable costs.
B) Assigns responsibility for costs to the appropriate managerial level that controls those costs.
C) Should not hold a manager responsible for costs over which the manager has no influence.
D) Can be applied at any level of an organization.
E) All of the above.

E) All of the above.

14

Expenses that are not easily associated with a specific department, and which are incurred for the
benefit of more than one department, are:

B) Indirect expenses

15

The salaries of employees who spend all their time working in one department are:

Direct expenses.

16

A report that specifies the expected and actual costs under the control of a manager is a:

Responsibility accounting report

17

An accounting system that provides information that management can use to evaluate the
performance of a department's manager is called a:

Responsibility accounting system.

18

Which of the following would appear on a responsibility accounting performance report?
A) Actual costs for a period.
B) Variance from the budget.
C) Budgeted costs for a period.
D) Controllable costs.
E) All of the above.

Controllable costs.

19

A responsibility accounting report that compares actual costs and expenses for a department with the
budgeted amounts is called a(n):

...

20

Allocations of joint product costs can be based on the relative market values of the products:

...

21

A company is considering a new project that will cost $19,000. This project would result in additional
annual revenues of $6,000 for the next 5 years. The $19,000 cost is an example of a(n):

...

22

An additional cost incurred only if a particular action is taken is a(n):

...

23

To determine a product selling price based on the total cost method, management should include:

...