Accounting Online Program Cost Accounting 2 — Questions and Answers
Question 1: A standard cost system differs from an actual cost system in that it:
- Only tracks direct labor, not materials
- Uses predetermined costs for materials, labor, and overhead (Correct answer)
- Is only used for service companies
- Eliminates the need for variance analysis
Correct answer: Uses predetermined costs for materials, labor, and overhead
A standard cost system uses pre-established costs for materials, labor, and overhead, and then compares these standards to actual costs to identify and analyze variances.
Question 2: Which variance measures the difference between the actual quantity of materials used and the standard quantity allowed, at standard price?
- Material price variance
- Material quantity (usage) variance (Correct answer)
- Labor rate variance
- Overhead efficiency variance
Correct answer: Material quantity (usage) variance
The material quantity variance isolates the efficiency of material usage by comparing actual quantity used vs. standard quantity allowed for actual output, both at standard price.
Question 3: What does the term 'cost of goods manufactured' represent?
- The cost of products sold to customers during the period
- Total manufacturing costs for goods completed and transferred to finished goods during the period (Correct answer)
- The beginning work-in-process inventory balance
- Overhead applied to production during the period
Correct answer: Total manufacturing costs for goods completed and transferred to finished goods during the period
Cost of goods manufactured is the total production cost of all units completed during the period and transferred from work-in-process to finished goods inventory.
Question 4: Throughput costing (super-variable costing) treats which costs as product costs?
- All variable and fixed manufacturing costs
- Only fixed manufacturing overhead
- Only direct materials (Correct answer)
- All selling and administrative expenses
Correct answer: Only direct materials
Throughput costing, associated with the theory of constraints, treats only direct materials as product (inventory) costs, expensing all other costs (including direct labor and overhead) immediately.
Question 5: Joint costs in cost accounting refer to:
- Costs shared equally by two partner companies
- Manufacturing costs incurred up to the split-off point that produce two or more products simultaneously (Correct answer)
- Overhead costs allocated to two departments
- Administrative costs allocated across multiple divisions
Correct answer: Manufacturing costs incurred up to the split-off point that produce two or more products simultaneously
Joint costs are incurred before the split-off point in a joint production process and result in two or more products (joint products or by-products) that cannot be separated until that point.
Question 6: The net realizable value (NRV) method for allocating joint costs uses:
- The physical weight or volume of each joint product
- The final selling price minus additional processing costs after split-off (Correct answer)
- The historical cost of each product in prior periods
- The market price at the split-off point for all products
Correct answer: The final selling price minus additional processing costs after split-off
The NRV method allocates joint costs based on each product's estimated NRV (final sales value minus further processing costs), reflecting economic value at the split-off point.
Accounting Online Program Cost Accounting 2
A standard cost system differs from an actual cost system in that it: