Multiple Choice Answers

The overall objective of controlling the costs of quality is to eliminate:
appraisal costs.
costs of nonconformance.
costs of conformance.
the costs of quality.
In insurance company pays its employees a commission of 6 percent on each sale. What is the proper classification of the cost of sales commissions?
Constant cost
Variable cost
Mixed cost
Fixed cost

Which type of budgeting utilizes employees at all levels of the company?
Group budgeting
Selective budgeting
Target budgeting
Participative budgeting

Standard costs are useful for all but which of the following?
Determining actual costs
Preparing budgets and forecasts
Evaluating the performance of workers and management
Helping to develop appropriate selling prices

In example of a pricing objective is to:
ignore long-term pricing strategies in favor of short-term profits.
increase market share irrespective of the cost of a product.
maintain a price that is always under that of the competition.
maintain a minimum rate of return.

Which of the following is a characteristic of management accounting?
It must follow generally accepted accounting principles.
It is used primarily by internal users.
It is concerned primarily with reporting past performance.
It uses historical costs as the sole measurement unit.

An example of a period cost is:
advertising costs.
indirect materials.
product design costs.
direct materials.


Which of the following is not an objective of product costing systems?
To provide information for cost planning
To assist in the preparation of the income statement
To determine the optimal amount of products to manufacture
To provide information for product pricing

Which of the following entities probably would use a process costing system?
An oil refinery
A yacht builder
A custom furniture company
A custom screw manufacturer

Activity-based management includes all of the following except identifying:
customer satisfaction with a product or service.
the resources that are consumed by each activity.
activities as value-adding.
how resources are consumed by each activity.