ABC allocates overheads via: a Labour hours b Activities and cost drivers c Total production costs d Fixed over-heads 11.. Life-cycle costing considers: a Production costs only b All cos
Trang 1EXAM CHAPTER 15: ALTERNATIVE COST
ACCOUNTING
Duration: 90 minutes
Number of Questions: 50 Multiple Choice Questions
Name:
Student ID:
Note: Choose the most correct answer for each question Each correct answer is worth 1 point.
Trang 21 Part 1: Exam Questions
1 Which is a characteristic of ABC?
a) Manufacturing only b) Uses cost drivers c) Simpler than absorption costing d) Avoids overhead allocation
2 Benefits of ABC? (1) Reduces overhead costs (2) Avoids under/over absorption (3) Useful in
single product businesses
a) 1 only b) 1 and 2 c) 2 only d) 1 and 3
3 What describes target costing?
a) Long-run cost target b) Deduct profit from market price c) Match leaders costs d) Budgeted cost for variances
4 True about life-cycle costing? (1) Forecasts profitability (2) Total costs over life (3) Monthly
profit focus
a) 1 and 3 b) 1, 2, and 3 c) 1 and 2 d) 1 only
5 What describes TQM?
a) Guarantees highest quality b) Cost-saving exercise c) Continuous improvement d) Product quality only
6 ABC is most effective in:
a) Single-product firms b) Multi-product firms c) Service firms only d) Low-overhead firms
7 Target costing begins with:
a) Production costs b) Market price c) Competitors costs d) Budgeted costs
8 Life-cycle costing includes:
a) Production costs only b) Design to disposal c) Sales costs only d) Post-production costs
9 TQM primarily aims for:
a) Cost reduction b) Customer satisfaction c) Employee training d) Production speed
10 ABC allocates overheads via:
a) Labour hours b) Activities and cost drivers c) Total production costs d) Fixed over-heads
11 Benefit of target costing?
a) Higher costs b) Cost-effective design c) Increased overheads d) Reduced quality
12 Life-cycle costing helps with:
a) Short-term budgeting b) Long-term profitability c) Monthly cost control d) Overhead allocation
13 TQM involves:
a) One-time quality checks b) Ongoing process improvement c) Cost cutting only d) Product testing only
14 ABC cost driver example?
a) Total sales b) Machine setups c) Labour cost d) Fixed overheads
15 Target costing is ideal for:
a) Non-competitive markets b) Competitive markets c) Single-product firms d) Service firms only
16 Life-cycle costing considers:
a) Production costs only b) All costs over life c) Marketing costs only d) Fixed costs only
17 TQM seeks to reduce:
a) Production speed b) Defects and waste c) Employee involvement d) Customer feedback
18 ABC improves allocation by:
a) Single overhead rate b) Activity cost identification c) Ignoring overheads d) Simplifying calculations
19 Target costing involves:
Trang 3a) Post-production costing b) Designing to cost targets c) Ignoring market prices d) Fixed cost focus
20 Life-cycle costing aids:
a) Short-term pricing b) Long-term product decisions c) Daily operations d) Overhead absorption
21 TQM requires:
a) Minimal employee involvement b) Cross-functional teamwork c) High-cost processes d) External audits only
22 ABC is less effective when:
a) Overheads are high b) Activities are diverse c) Overheads are low d) Products are complex
23 Target costing ensures:
a) Higher costs b) Competitive pricing c) Reduced quality d) Fixed overheads
24 Life-cycle costing tracks:
a) Production phase only b) All product life phases c) Sales phase only d) Disposal phase only
25 TQM measures success by:
a) Cost savings only b) Customer satisfaction c) Production volume d) Employee hours
26 ABC traces costs to:
a) Departments b) Products via activities c) Labour hours d) Fixed assets
27 Target costing needs:
a) Ignoring customer needs b) Market research c) Fixed cost allocation d) Post-production analysis
28 Life-cycle costing supports:
a) Daily budgeting b) Environmental cost assessment c) Labour cost control d) Overhead absorption
29 TQM emphasizes:
a) Short-term fixes b) Long-term quality improvement c) Cost reduction only d) External certification
30 ABC cost drivers are based on:
a) Sales volume b) Activity cost causation c) Fixed cost percentage d) Labour intensity
31 Target costing is driven by:
a) Production capacity b) Market prices c) Internal cost targets d) Overhead rates
32 Life-cycle costing is key for:
a) Short-term projects b) Long-life products c) Single-period budgets d) Fixed cost anal-ysis
33 TQM includes:
a) Employee empowerment b) Cost cutting only c) One-time improvements d) Ignoring feedback
34 ABC benefits most:
a) Simple processes b) Complex, multi-activity processes c) Low-cost products d) Single-product firms
35 Target costing focuses on:
a) Post-production costs b) Pre-production cost control c) Fixed overheads d) Labour costs only
36 Life-cycle costing evaluates:
a) Short-term costs b) Total costs over product life c) Marketing costs only d) Fixed costs only
37 TQM promotes:
a) Cost-focused production b) Quality across all processes c) Speed over quality d) Ex-ternal audits only
Trang 438 ABC is suitable for:
a) Low-overhead firms b) High-overhead, complex firms c) Single-product firms d) Non-manufacturing firms only
39 Target costing aligns costs with:
a) Competitors standards b) Market-driven prices c) Internal budgets d) Production capacity
40 Life-cycle costing is used to:
a) Monitor daily expenses b) Assess long-term profitability c) Control labour costs d) Allocate overheads
41 TQM involves employees in:
a) Cost reduction only b) Quality improvement c) Production planning d) External re-porting
42 ABC uses cost pools for:
a) Fixed costs only b) Activity-based allocation c) Labour cost allocation d) Sales-based allocation
43 Target costing helps:
a) Increase production costs b) Design cost-effective products c) Raise overheads d) Lower quality standards
44 Life-cycle costing accounts for:
a) Production phase only b) Entire product life c) Sales phase only d) Disposal phase only
45 TQM reduces costs by:
a) Increasing defects b) Minimizing waste c) Reducing employee involvement d) Ignoring feedback
46 ABC is complex due to:
a) Single-rate allocation b) Multiple activity analysis c) Ignoring overheads d) Simplified costing
47 Target costing requires:
a) Post-production adjustments b) Market price analysis c) Fixed cost focus d) Internal cost setting
48 Life-cycle costing aids:
a) Short-term budgeting b) Product sustainability c) Daily operations d) Overhead con-trol
49 TQM success depends on:
a) Cost savings alone b) Customer-focused quality c) Production volume d) Employee hours
50 ABC enhances accuracy by:
a) Using labour hours only b) Linking costs to activities c) Ignoring cost drivers d) Simplifying overheads
2 Part 2: Answers and Explanations
1 Answer: b) ABC uses cost drivers (e.g., machine setups) to allocate overheads, unlike
single-rate absorption costing Its not limited to manufacturing, is more complex, and involves over-head allocation
2 Answer: b) 1 and 2 ABC reduces overheads by streamlining activities and avoids
under/over-absorption with accurate allocation Its less useful for single-product firms with simple cost structures
3 Answer: b) Target costing sets cost by subtracting profit from market price, ensuring
com-petitiveness, not just a performance target or variance calculation
4 Answer: c) 1 and 2 Life-cycle costing forecasts profitability and accounts for all costs (design
to disposal), not monthly profits, which are short-term focused
Trang 55 Answer: c) TQM focuses on continuous improvement of all processes to enhance quality, not
guaranteeing highest quality or focusing only on cost or products
6 Answer: b) ABC excels in multi-product firms with diverse activities, where overheads vary
significantly
7 Answer: b) Target costing starts with market price to derive target cost, not production or
competitor costs
8 Answer: b) Life-cycle costing includes all costs from design to disposal, unlike production-only
focus
9 Answer: b) TQM aims for customer satisfaction through quality improvements across
pro-cesses
10 Answer: b) ABC allocates overheads via activities and cost drivers, not just labour or total
costs
11 Answer: b) Target costing drives cost-effective product design to meet market-driven cost
targets
12 Answer: b) Life-cycle costing analyzes long-term profitability, not short-term budgets or
over-heads
13 Answer: b) TQM involves ongoing improvement of processes, not one-time checks or cost
focus
14 Answer: b) Machine setups are a typical ABC cost driver, reflecting activity costs accurately.
15 Answer: b) Target costing suits competitive markets to align costs with market prices.
16 Answer: b) Life-cycle costing considers all costs over a products life, from design to disposal.
17 Answer: b) TQM reduces defects and waste, improving quality and efficiency.
18 Answer: b) ABC improves allocation by identifying costs of specific activities, not single rates.
19 Answer: b) Target costing designs products to meet cost targets based on market prices.
20 Answer: b) Life-cycle costing supports long-term product decisions, not short-term operations.
21 Answer: b) TQM requires cross-functional teamwork to improve quality across departments.
22 Answer: c) ABC is less effective with low overheads, as benefits are minimal in simple settings.
23 Answer: b) Target costing ensures competitive pricing by aligning costs with market prices.
24 Answer: b) Life-cycle costing tracks costs across all phases, not just production or disposal.
25 Answer: b) TQM measures success through customer satisfaction, not just cost or volume.
26 Answer: b) ABC traces costs to products via activities, not departments or labour hours.
27 Answer: b) Target costing relies on market research to set competitive price-based costs.
28 Answer: b) Life-cycle costing assesses environmental costs over a products life cycle.
29 Answer: b) TQM emphasizes long-term quality improvements, not short-term fixes.
30 Answer: b) ABC cost drivers are chosen based on what causes activity costs, not sales or
labour
31 Answer: b) Target costing is driven by market prices to ensure competitive products.
32 Answer: b) Life-cycle costing is critical for long-life products with extended cost impacts.
33 Answer: a) TQM empowers employees to contribute to quality improvements.
34 Answer: b) ABC benefits complex processes with multiple activities and high overheads.
35 Answer: b) Target costing controls costs before production to meet market demands.
36 Answer: b) Life-cycle costing evaluates all costs over the products life for decision-making.
37 Answer: b) TQM promotes quality across all processes, not just cost or speed.
38 Answer: b) ABC suits high-overhead, complex firms with diverse activities.
39 Answer: b) Target costing aligns costs with market-driven prices, not internal budgets.
40 Answer: b) Life-cycle costing assesses long-term profitability for strategic planning.
Trang 641 Answer: b) TQM involves employees in quality improvement, not just cost or planning.
42 Answer: b) ABC uses cost pools for activity-based allocation, not labour or sales.
43 Answer: b) Target costing designs cost-effective products to meet market targets.
44 Answer: b) Life-cycle costing accounts for costs across the entire product life.
45 Answer: b) TQM reduces costs by minimizing waste, not increasing defects.
46 Answer: b) ABCs complexity comes from analyzing multiple activities, not single rates.
47 Answer: b) Target costing requires market price analysis to set cost targets.
48 Answer: b) Life-cycle costing aids sustainability by evaluating long-term costs.
49 Answer: b) TQM depends on customer-focused quality for success.
50 Answer: b) ABC enhances accuracy by linking costs to specific activities.