Question 1

In traditional costing systems, overhead segmented into major categories and is allocated based on several cost drivers

Answer True False

Question 2

If the management accountant does a better job of projecting cost, then management is able to make better decisions

Answer True False

Question 3

As long as we are in the relevant range variable costs will remain constant in total.

Answer True False

Question 4

Current trends in many organizations a higher degree of overhead/ indirect spending and a need for management accountants to properly assign these costs

Answer True False

Question 5

To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool

Answer True False

Question 6

The CVP income statement classifies costs as variable or fixed and computes a contribution margin.

Answer True False

Question 7

In CVP analysis, cost includes manufacturing costs but not selling and administrative expenses.

Answer True False

Question 8

The cost-volume-profit analysis approach provides a method to assess how many units and or sales dollars we need to achieve to make a desired profit

Answer True False

Question 9

If a management accountant provides costs that include significant excess capacity this is helpful to management in their pricing and profitability analysis

Answer True False

Question 10

TSox’s are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs
to run the operation are $300,000 per year.

How much profit (ignore taxes) will ABC make if it achieves the projections for the upcoming year?

Answer

150,000

200,000

250,000

0

Question 11

TSox’s are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs
to run the operation are $300,000 per year.

What is the break even point in units?

Answer

15,000

20,000

30,000

50,000

Question 12

TSox’s are planning its upcoming year. It anticipates selling t-shirts, with a price of $20 each. The variable cost per t-shirt is $10. The fixed costs to run
the operation are $300,000 per year.

If the desired profit (ignoring taxes) is $400,000 how many t-shirts will they need to sell?

Answer

50,000

70,000

45,000

80,000

Question 13

TSox’s are planning its upcoming year. It anticipates selling 50,000 t-shirts, with a price of $20 each. The variable cost per t-shirt is $10.

If prices drop by 20% and fixed cost increase as noted what is the new break even point?

The fixed costs have now increased to $420,000 per year.

Answer

50,000

60,000

30,000

70,000

Question 14

If an organization does not use ABC and as result does not properly assign the right costs to a cost object- what are some of the potential problems this may
create?

Question 15

From the article Measure Cost Right, describe the major findings/ breakthroughs the authors provide vs. traditional costing systems? What do the authors mean
when they refer to the death spiral?