ACCT 6302 Exam 1 Review

• Accounting
• Year 4

ACCT 6302 Exam 1 Review

Welcome to Exam 1 Review for ACCT 6302

Let's do amazing on this exam!!

- Prof Lizzy

Both cost-leading and differentiated firms can enhance their execution by

1. Cost cutting and downsizing of personnel 
2. Benchmarking and total quality management
3. Improved automation and a higher output of products 
4. Emphasis on research and product development 

Both cost-leading and differentiated firms can enhance their execution by

B. Benchmarking and total quality management: correct because

Benchmarking: This involves comparing your company’s performance with industry bests to identify areas for improvement. It helps both cost-leading firms (to reduce costs) and differentiated firms (to enhance quality and innovation).

Total Quality Management (TQM): TQM focuses on continuous improvement and maintaining high standards across all operations, which is crucial for both cost efficiency and product differentiation.

The term relevant range as used in cost accounting means the range over which:

1. Production may vary
2. Relevant costs are incurred
3. Costs may fluctuate
4. Cost relationships are approximately linear

The term relevant range as used in cost accounting means the range over which:

D. Cost relationships are approximately linear: correct because within the relevant range, cost behavior is predictable and linear. This means that fixed costs remain constant, and variable costs change proportionally with the level of activity. 

Revenue methods of by-product cost allocation are based on financial accounting principles of:

1. Revenue Realization and materiality
2. Materiality and Stable Dollar
3. Revenue Realization, materiality, and cost-benefit
4. Materiality and cost-benefit

Revenue methods of by-product cost allocation are based on financial accounting principles of:

C. Revenue Realization, materiality, and cost-benefit:

 correct because

Revenue realization: This principle states that revenue should be recognized when it is earned and realizable. In the context of by-product cost allocation, this means recognizing the revenue from by-products when they are sold.

Materiality: This principle involves considering the significance of financial information. By-products are often considered immaterial compared to the main product, but their revenue still needs to be accounted for accurately.

Cost-benefit: This principle ensures that the benefits of the information provided by the accounting process outweigh the costs of providing it. Allocating costs to by-products should be done in a way that provides useful information without incurring excessive costs

When production levels are expected to decline within a relevant range, what effects would be anticipated with respect to each of the following?

1. Fixed costs per unit stay the same. Variable costs per unit increase
2. Fixed costs per unit stay the same. Variable costs per unit decrease
3. Fixed costs per unit increase. Variable costs per unit no change
4. Fixed costs per unit increase. Variable costs per unit also increase

When production levels are expected to decline within a relevant range, what effects would be anticipated with respect to each of the following?

C. Fixed costs per unit increase. Variable costs per unit no change: correct because

Fixed costs per unit increase: Fixed costs (e.g., rent, salaries) remain constant in total, regardless of production levels. When production decreases, these fixed costs are spread over fewer units, causing the fixed cost per unit to increase.

Variable costs per unit no change: Variable costs (e.g., raw materials, direct labor) change in total with production levels but remain constant on a per-unit basis. Therefore, a decline in production does not affect the variable cost per unit.

What is the first step of value-chain analysis?

1. Identify opportunities for reduced cost
2. Identify opportunities for added value
3. Identify value-chain activities
4. Develop a competitive advantage

What is the first step of value-chain analysis? 

C. Identify value-chain activities: correct because the initial step in value-chain analysis involves identifying all the activities that contribute to creating a product or service. This includes both primary activities (like inbound logistics, operations, outbound logistics, marketing and sales, and service) and support activities (such as procurement, technology development, human resource management, and firm infrastructure). Understanding these activities is crucial for analyzing how value is created and where improvements can be made.

The sum of the beginning inventory units and the number of units started during the period determines the:

1. Units to account for
2. Units started during the period
3. Units accounted for
4. Units completed during the period

The sum of the beginning inventory units and the number of units started during the period determines the: 

A. Units to account for: correct because The term “units to account for” refers to the total number of units that need to be tracked within a specific period. This includes both the units that were already in inventory at the beginning of the period and the units that were started during the period. Essentially, it represents the total units that must be accounted for in the production process.

The sum of units transferred out and ending inventory unit, assuming no spoilage, determines the:

1. Units to account for
2. Units started during the period
3. Units to accounted for
4. Units completed during the period

The sum of units transferred out and ending inventory unit, assuming no spoilage, determines the: 

C. Units to accounted for: correct because because the term “units accounted for” refers to the total number of units that have been processed and tracked through the production stages. This includes both the units that have been transferred out (completed units) and the units that remain in ending inventory. This ensures that all units are accounted for in the production process.

Which of the following would likely not be considered part of the value chain in a service firm?

1. Customer service
2. Inspection of service
3. Employee training
4. Materials handling

Which of the following would likely not be considered part of the value chain in a service firm? 

D. Materials handling: correct because Materials handling involves the movement, protection, storage, and control of materials and products throughout manufacturing, warehousing, distribution, consumption, and disposal. This activity is more relevant to manufacturing and logistics industries rather than service firms, which typically do not deal with physical materials to the same extent. 

Which of the following industries is most likely to use process costing to account for production costs?

1. Printing shop
2. Steel mill
3. Accounting firm
4. Automobile repair shop

Which of the following industries is most likely to use process costing to account for production costs?

B. Steel Mill: correct because steel mills produce large quantities of identical or very similar products through a continuous production process. Process costing is ideal for such industries because it allows for the accumulation and allocation of costs over multiple production stages, making it easier to determine the cost per unit

Which of the following is not one of the four perspectives of the balanced scorecard?

1. Costs perspective
2. Financial perspective
3. Learning and Growth perspective
4. Customer perspective

Which of the following is not one of the four perspectives of the balanced scorecard? 

A. Costs perspective: correct because the balanced scorecard does not include a “costs perspective.” The four perspectives are financial, customer, internal process, and learning and growth. While costs are considered within these perspectives, there is no separate perspective solely focused on costs.

Which one of the following methods of allocating joint costs uses a measure of weight, size, or number of units to allocate joint costs to joint products?

1. Sales value at split-off method
2. Physical measure method
3. Net realizable value method
4. Cost measure method

Which one of the following methods of allocating joint costs uses a measure of weight, size, or number of units to allocate joint costs to joint products?

B. Physical measure method: correct because the physical measure method allocates joint costs based on the physical quantities of the products, such as weight, volume, or number of units. This method is straightforward and uses tangible measures to distribute costs proportionally among the joint products

Which of the following terms refers to the amount by which the applied factory overhead exceeds the actual factory overhead cost?

1. Underapplied overhead
2. Overapplied overhead
3. Factory overhead applied
4. Actual factory overhead

Which of the following terms refers to the amount by which the applied factory overhead exceeds the actual factory overhead cost?

B. Overapplied overhead: correct because overapplied overhead occurs when the overhead costs assigned to produced units are greater than the actual overhead costs incurred during the period. This typically happens when the estimated overhead rate used to apply costs is higher than the actual overhead costs

When deciding whether to sell or further process joint products or by-products, the allocation of common or joint costs is:

1. Essential
2. Useful
3. Useful depending on the method chosen
4. Irrelevant and should be ignored

The concepts of cost allocation that are used in manufacturing can also apply in:

1. Limited instances outside of manufacturing
2. Service industries
3. The concepts apply only in manufacturing
4. Service and not-for-profit industries

The concepts of cost allocation that are used in manufacturing can also apply in: 

D. Service and not-for-profit industries: correct because cost allocation principles are universally applicable across various sectors, including service and not-for-profit industries. These industries also need to allocate costs accurately to understand the true cost of their services or programs, manage budgets, and ensure financial accountability