D196 ACTUAL EXAM TEST QUESTIONS AND
VERIFIED ANSWERS
1. Which budget should include all production costs other than those for direct materials
and direct labor?
A.Sales budget
B.Direct materials budget
C.Manufacturing overhead budget
D. Production budget - Answers - c
2. Which account is a common asset account?
A.Accounts payables
B.Equity
C.Accounts receivable
D. Utilities Expense - Answers - c
3 .On which financial statement would you see the valuation of a company's asset
accounts?
a.Statement of Cash Flows
b.Balance Sheet
c.Income Statement
d.Statement of Retained Earnings - Answers - B
4. What is the final step in the accounting cycle?
a.Summarize the effects of transactions
b.Analyze transactions
c.Prepare reports
d.Record the effects of transactions - Answers - c
5. Which of the following is not an example of a transaction?
a.Receive cash in payment of an invoice
b.Purchase an asset from a supplier
c.Sale on credit to a customer
d. Preparing financial statements - Answers - d
6. On which financial statement would you see cash flows from financing activities?
a.Statement of Cash Flows
b.Balance Sheet
c.Income Statement
d.Statement of Retained Earnings - Answers - d
7. Whose job is it to make sure that investors are provided with full and fair information
about publicly traded companies?
,FASB
AICPA
IASB
SEC - Answers - d
8. How does a classified balance sheet provide useful information to a decision maker?
a.It distinguishes between current and long-term assets
b.It provides data that are not publicly disclosed
c.It distinguishes liabilities from expenses
D. It provides data for a period of time instead of as a point in time - Answers - a
9. In some companies, the performance measures for profit center managers are
heavily influenced by cost allocations downward from organizational units (such as
company headquarters). Why is this a mistake?
a.Controllable costs should not be included in the performance evaluation measure of a
profit center manager
b.Revenues should not be included in the performance evaluation measure of a profit
center manager
c.Uncontrollable costs should not be included in the performance evaluation measure of
a profit center manager
d. Direct costs should not be included in the performance evaluation measure of a profit
center manager - Answers - c
10. Which is an example of a product cost?
a.Non-manufacturing personnel costs
b.Rent Expense
c.Office Supplies
d. Raw materials to make a product - Answers - d
11. Which label is given to the cost of wages for factory supervisors?
a. Direct labor
b.Direct materials
c. Manufacturing overhead
d. Administrative expenses - Answers - c
12. A company reports the following data: Price per unit = $20 Variable costs per unit =
$12 Fixed costs = $12,000 Given these data, what is the variable cost ratio?
a. 40%
b. 25%
c. 16%
d. 60% - Answers - d
13. If overhead is underapplied, which statement is true?
a.Actual costs exceed applied costs
b.Applied costs exceed actual costs
c.Costs will not be affected
, d. Budgeted and applied costs will be equal - Answers - a
14. Which of the following is not an example of a cost driver?
a.Miles driven
b.Selling costs
c.Machine hours
d. Number of customers - Answers - b
15. Which item is a period cost?
Manufacturing supplies
Overhead directly tied to the production facility
Raw materials
Marketing expense - Answers - d
16. Which overhead allocation method should be used for a trash bag manufacturer?
a. Product-line costing
b. Process costing
c. ABC costing
d . Job order costing - Answers - b
17. For relevant range, which costs are approximately linear within a certain range of
production?
a. Fixed costs
b. Variable costs
c. Stepped costs
d. Mixed costs - Answers - b
18. Which of the following focuses on how a company's activity levels impact profits?
Job order costing
Cost-Volume-Profit Analysis
Overhead cost allocation
Process costing - Answers - b
19. Which overhead allocation method should be used for a automobile repair shop?
a. Product-line costing
b. Process costing
c. ABC costing
d. Job order costing - Answers - d
20. What is an example of indirect labor?
a. Factory supervisors wages
b. Security guard wages
c. Maintenance staff wages
VERIFIED ANSWERS
1. Which budget should include all production costs other than those for direct materials
and direct labor?
A.Sales budget
B.Direct materials budget
C.Manufacturing overhead budget
D. Production budget - Answers - c
2. Which account is a common asset account?
A.Accounts payables
B.Equity
C.Accounts receivable
D. Utilities Expense - Answers - c
3 .On which financial statement would you see the valuation of a company's asset
accounts?
a.Statement of Cash Flows
b.Balance Sheet
c.Income Statement
d.Statement of Retained Earnings - Answers - B
4. What is the final step in the accounting cycle?
a.Summarize the effects of transactions
b.Analyze transactions
c.Prepare reports
d.Record the effects of transactions - Answers - c
5. Which of the following is not an example of a transaction?
a.Receive cash in payment of an invoice
b.Purchase an asset from a supplier
c.Sale on credit to a customer
d. Preparing financial statements - Answers - d
6. On which financial statement would you see cash flows from financing activities?
a.Statement of Cash Flows
b.Balance Sheet
c.Income Statement
d.Statement of Retained Earnings - Answers - d
7. Whose job is it to make sure that investors are provided with full and fair information
about publicly traded companies?
,FASB
AICPA
IASB
SEC - Answers - d
8. How does a classified balance sheet provide useful information to a decision maker?
a.It distinguishes between current and long-term assets
b.It provides data that are not publicly disclosed
c.It distinguishes liabilities from expenses
D. It provides data for a period of time instead of as a point in time - Answers - a
9. In some companies, the performance measures for profit center managers are
heavily influenced by cost allocations downward from organizational units (such as
company headquarters). Why is this a mistake?
a.Controllable costs should not be included in the performance evaluation measure of a
profit center manager
b.Revenues should not be included in the performance evaluation measure of a profit
center manager
c.Uncontrollable costs should not be included in the performance evaluation measure of
a profit center manager
d. Direct costs should not be included in the performance evaluation measure of a profit
center manager - Answers - c
10. Which is an example of a product cost?
a.Non-manufacturing personnel costs
b.Rent Expense
c.Office Supplies
d. Raw materials to make a product - Answers - d
11. Which label is given to the cost of wages for factory supervisors?
a. Direct labor
b.Direct materials
c. Manufacturing overhead
d. Administrative expenses - Answers - c
12. A company reports the following data: Price per unit = $20 Variable costs per unit =
$12 Fixed costs = $12,000 Given these data, what is the variable cost ratio?
a. 40%
b. 25%
c. 16%
d. 60% - Answers - d
13. If overhead is underapplied, which statement is true?
a.Actual costs exceed applied costs
b.Applied costs exceed actual costs
c.Costs will not be affected
, d. Budgeted and applied costs will be equal - Answers - a
14. Which of the following is not an example of a cost driver?
a.Miles driven
b.Selling costs
c.Machine hours
d. Number of customers - Answers - b
15. Which item is a period cost?
Manufacturing supplies
Overhead directly tied to the production facility
Raw materials
Marketing expense - Answers - d
16. Which overhead allocation method should be used for a trash bag manufacturer?
a. Product-line costing
b. Process costing
c. ABC costing
d . Job order costing - Answers - b
17. For relevant range, which costs are approximately linear within a certain range of
production?
a. Fixed costs
b. Variable costs
c. Stepped costs
d. Mixed costs - Answers - b
18. Which of the following focuses on how a company's activity levels impact profits?
Job order costing
Cost-Volume-Profit Analysis
Overhead cost allocation
Process costing - Answers - b
19. Which overhead allocation method should be used for a automobile repair shop?
a. Product-line costing
b. Process costing
c. ABC costing
d. Job order costing - Answers - d
20. What is an example of indirect labor?
a. Factory supervisors wages
b. Security guard wages
c. Maintenance staff wages
