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Questions and Answers
What are the two broad strategies that organizations typically pursue?
What aspect does strategic cost management specifically focus on?
Which of the following is NOT a question management accounting information helps managers answer?
What does the term 'value' refer to in the context of customer experience?
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Which component is NOT part of the value chain?
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What is a primary objective of Customer Relationship Management (CRM)?
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In which part of the value chain does 'Design of Products and Processes' fall?
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Which of the following best describes the sequence of business functions that progressively add value to a product?
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What is the primary focus of financial accounting?
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How do management accountants assist firms in decision-making?
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What is one of the expected dimensions of performance that customers look for from companies?
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What does the five-step decision-making process in management accounting primarily involve?
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Which of these is NOT one of the guidelines management accountants follow to support managers?
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How is management accounting typically characterized in relation to GAAP?
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In the context of management accounting, the value chain includes which of the following functions?
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What role do professional ethics play for management accountants?
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Which skill is essential for a successful management accountant?
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What is NOT one of the four standards of ethical conduct proposed by the IMA for management accountants?
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The Sarbanes-Oxley Act was enacted primarily to improve which of the following?
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What characterizes a cost object?
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Which of the following costs is considered a direct cost?
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Fixed costs differ from variable costs in that fixed costs:
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What is an example of an inventoriable cost?
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Which is a characteristic of actual costs?
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Which classification of costs consists of costs that can be traced directly to a specific cost object and vary with the level of production?
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Which of the following is NOT a type of inventory held by manufacturing-sector companies?
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Why should managers be cautious when using unit costs for decisions?
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What is the primary function of manufacturing-sector companies?
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Which cost classification includes expenses that cannot be directly traced to a specific cost object and remain constant regardless of production levels?
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What best describes work-in-process (WIP) inventory?
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Which of the following combinations represents indirect costs that vary with production levels?
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In which type of sector do companies primarily sell tangible products without altering their form?
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What does prime cost include?
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Which of the following is considered part of indirect overhead costs?
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What is convergence cost a term for?
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Which of the following is NOT a reason why measuring costs requires judgment?
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For which of the following purposes are GAAP-driven product costs primarily used?
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Which feature of cost accounting aids in performance evaluation?
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What is the primary focus when making pricing and product-mix decisions?
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Idle time in manufacturing refers to wages paid for which situation?
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Study Notes
Introduction to Cost Terms and Purposes
- Cost is a resource sacrificed or forgone to achieve a specific objective.
- Actual cost is a cost that has already occurred.
- Budgeted cost is a predicted or planned cost.
- Cost object is anything for which a cost measurement is desired.
Direct Costs and Indirect Costs
- Direct costs can be easily and conveniently traced to a specific cost object.
- Indirect costs cannot be easily traced to a specific cost object.
Variable Costs and Fixed Costs
- Variable costs change in total in direct proportion to changes in activity levels.
- Fixed costs remain the same in total, regardless of changes in activity levels.
- Relevant range refers to the activity levels for which fixed costs remain fixed.
Unit Costs
- Unit cost is total cost divided by the number of units produced, but should be used with caution in decision-making.
Inventoriable costs and Period Costs
- Inventoriable costs are costs that are attached to inventory.
- Period costs are costs that are expensed in the period in which they are incurred.
- Prime cost refers to all direct manufacturing costs (materials and labor).
- Conversion cost refers to direct labor and indirect manufacturing costs.
Cost Accounting Frameworks
- Cost accounting helps managers make decisions by:
- Calculating the cost of products, services, and other cost objects.
- Obtaining information for planning, control, and performance evaluation.
- Analyzing relevant information for decision-making.
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Description
This quiz covers essential cost terminology including actual costs, budgeted costs, direct and indirect costs, and the distinction between variable and fixed costs. It also explores concepts like cost objects and unit costs, providing a foundational understanding for effective cost management. Test your knowledge on these crucial accounting concepts.
