,CHAPTER 1: INTRODUCTION TO COST ACCOUNTING
1. The business entity that converts purchased raw materials into finished goods by using labor, technology, and facilities
is a:
a. Manufacturer.
b. Merchandiser.
c. Service business.
d. Not-for-profit service agency.
ANSWER: a
RATIONALE: The business entity that converts purchased raw materials into finished goods by using labor,
technology, and facilities is a manufacturer.
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTI PRIN.EDWA.16.1 - Introduction
VES:
ACCREDITING STAN AACSB Analytic
DARDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Business Applications
OTHER: Bloom's: Remembering
2. The business entity that purchases finished goods for resale is a:
a. Manufacturer.
b. Merchandiser.
c. Service business.
d. Wholesaler.
ANSWER: b
RATIONALE: The business entity that purchases finished goods for resale is a merchandiser.
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES PRIN.EDWA.16.1 - Introduction
:
ACCREDITING STANDA AACSB Analytic
RDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Business Applications
OTHER: Bloom's: Remembering
3. The type of merchandiser who purchases goods from the producer and sells them to retailers that sell them to the
consumer is a:
a. Manufacturer.
b. Retailer.
c. Wholesaler.
d. Service business.
ANSWER: c
RATIONALE: A wholesaler purchases goods from the producer and sells them to the retailer.
POINTS: 1
DIFFICULTY: Easy
Cengage Learning Testing, Powered by Cognero Page 1
,CHAPTER 1: INTRODUCTION TO COST ACCOUNTING
LEARNING OBJECTIVES PRIN.EDWA.16.1 - Introduction
:
ACCREDITING STANDA AACSB Analytic
RDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Business Applications
OTHER: Bloom's: Remembering
4. Examples of service businesses include:
a. Airlines, accountants, and hair stylists.
b. Department stores, poster shops, and wholesalers.
c. Aircraft producers, home builders, and machine tool makers.
d. None of these are correct.
ANSWER: a
RATIONALE: Examples of service businesses include airlines, architects, and hair stylists.
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTI PRIN.EDWA.16.1 - Introduction
VES:
ACCREDITING STAN AACSB Reflective Thinking
DARDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.06 - Reflective Thinking
IMA-Business Applications
OTHER: Bloom's: Understanding
5. ISO 9000 is a set of international standards for:
a. determining the selling price of a product.
b. cost control.
c. quality management.
d. delivering product,
ANSWER: c
RATIONALE: ISO 9000 is a set of international standards for quality management.
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: PRIN.EDWA.16.1 - Introduction
ACCREDITING STANDAR AACSB Analytic
DS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Strategic Planning
OTHER: Bloom's: Remembering
6. Unit cost information is important for making all of the following marketing decisions except:
a. Determining the selling price of a product.
b. Bidding on contracts.
c. Determining the amount to spend on social media to promote the product.
Cengage Learning Testing, Powered by Cognero Page 2
, CHAPTER 1: INTRODUCTION TO COST ACCOUNTING
d. Determining the amount of profit that each product earns.
ANSWER: c
RATIONALE: Unit cost information is used in determining selling price, bidding on contracts and determining
product profitability, but would not have a bearing on determining how much the product would need
to be advertised.
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJEC PRIN.EDWA.16.2 - LO1: Explain the uses of cost accounting information
TIVES:
ACCREDITING ST AACSB Analytic
ANDARDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Strategic Marketing
TOPICS: Uses of Cost Accounting Information
OTHER: Bloom's: Remembering
7. The process of establishing objectives or goals for the firm and determining the means by which they will be met is:
a. controlling.
b. analyzing profitability.
c. planning.
d. assigning responsibility.
ANSWER: c
RATIONALE: The process of establishing goals and objectives for a firm is planning. Controlling, analyzing
profitability and assigning responsibility are functions that take place after the planning process to
determine whether or how successfully goals have been obtained.
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJEC PRIN.EDWA.16.2 - LO1: Explain the uses of cost accounting information
TIVES:
ACCREDITING ST AACSB Analytic
ANDARDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Budget Preparation
TOPICS: Uses of Cost Accounting Information
OTHER: Bloom's: Remembering
8. Effective control of a company's operations is achieved through all of the following except:
a. periodically measuring and comparing company results.
b. assigning responsibility for costs to employees responsible for those costs.
c. constantly monitoring employees to ensure they do exactly as they are told.
d. taking necessary corrective action when variances suggest it is needed.
ANSWER: c
RATIONALE: While periodically measuring and comparing company results, assigning responsibility for those
results to employees and taking necessary corrective action are all part of control; it does not include
constantly monitoring employees to make sure they are following directions.
POINTS: 1
Cengage Learning Testing, Powered by Cognero Page 3
1. The business entity that converts purchased raw materials into finished goods by using labor, technology, and facilities
is a:
a. Manufacturer.
b. Merchandiser.
c. Service business.
d. Not-for-profit service agency.
ANSWER: a
RATIONALE: The business entity that converts purchased raw materials into finished goods by using labor,
technology, and facilities is a manufacturer.
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTI PRIN.EDWA.16.1 - Introduction
VES:
ACCREDITING STAN AACSB Analytic
DARDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Business Applications
OTHER: Bloom's: Remembering
2. The business entity that purchases finished goods for resale is a:
a. Manufacturer.
b. Merchandiser.
c. Service business.
d. Wholesaler.
ANSWER: b
RATIONALE: The business entity that purchases finished goods for resale is a merchandiser.
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES PRIN.EDWA.16.1 - Introduction
:
ACCREDITING STANDA AACSB Analytic
RDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Business Applications
OTHER: Bloom's: Remembering
3. The type of merchandiser who purchases goods from the producer and sells them to retailers that sell them to the
consumer is a:
a. Manufacturer.
b. Retailer.
c. Wholesaler.
d. Service business.
ANSWER: c
RATIONALE: A wholesaler purchases goods from the producer and sells them to the retailer.
POINTS: 1
DIFFICULTY: Easy
Cengage Learning Testing, Powered by Cognero Page 1
,CHAPTER 1: INTRODUCTION TO COST ACCOUNTING
LEARNING OBJECTIVES PRIN.EDWA.16.1 - Introduction
:
ACCREDITING STANDA AACSB Analytic
RDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Business Applications
OTHER: Bloom's: Remembering
4. Examples of service businesses include:
a. Airlines, accountants, and hair stylists.
b. Department stores, poster shops, and wholesalers.
c. Aircraft producers, home builders, and machine tool makers.
d. None of these are correct.
ANSWER: a
RATIONALE: Examples of service businesses include airlines, architects, and hair stylists.
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTI PRIN.EDWA.16.1 - Introduction
VES:
ACCREDITING STAN AACSB Reflective Thinking
DARDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.06 - Reflective Thinking
IMA-Business Applications
OTHER: Bloom's: Understanding
5. ISO 9000 is a set of international standards for:
a. determining the selling price of a product.
b. cost control.
c. quality management.
d. delivering product,
ANSWER: c
RATIONALE: ISO 9000 is a set of international standards for quality management.
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: PRIN.EDWA.16.1 - Introduction
ACCREDITING STANDAR AACSB Analytic
DS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Strategic Planning
OTHER: Bloom's: Remembering
6. Unit cost information is important for making all of the following marketing decisions except:
a. Determining the selling price of a product.
b. Bidding on contracts.
c. Determining the amount to spend on social media to promote the product.
Cengage Learning Testing, Powered by Cognero Page 2
, CHAPTER 1: INTRODUCTION TO COST ACCOUNTING
d. Determining the amount of profit that each product earns.
ANSWER: c
RATIONALE: Unit cost information is used in determining selling price, bidding on contracts and determining
product profitability, but would not have a bearing on determining how much the product would need
to be advertised.
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJEC PRIN.EDWA.16.2 - LO1: Explain the uses of cost accounting information
TIVES:
ACCREDITING ST AACSB Analytic
ANDARDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Strategic Marketing
TOPICS: Uses of Cost Accounting Information
OTHER: Bloom's: Remembering
7. The process of establishing objectives or goals for the firm and determining the means by which they will be met is:
a. controlling.
b. analyzing profitability.
c. planning.
d. assigning responsibility.
ANSWER: c
RATIONALE: The process of establishing goals and objectives for a firm is planning. Controlling, analyzing
profitability and assigning responsibility are functions that take place after the planning process to
determine whether or how successfully goals have been obtained.
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJEC PRIN.EDWA.16.2 - LO1: Explain the uses of cost accounting information
TIVES:
ACCREDITING ST AACSB Analytic
ANDARDS: ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Budget Preparation
TOPICS: Uses of Cost Accounting Information
OTHER: Bloom's: Remembering
8. Effective control of a company's operations is achieved through all of the following except:
a. periodically measuring and comparing company results.
b. assigning responsibility for costs to employees responsible for those costs.
c. constantly monitoring employees to ensure they do exactly as they are told.
d. taking necessary corrective action when variances suggest it is needed.
ANSWER: c
RATIONALE: While periodically measuring and comparing company results, assigning responsibility for those
results to employees and taking necessary corrective action are all part of control; it does not include
constantly monitoring employees to make sure they are following directions.
POINTS: 1
Cengage Learning Testing, Powered by Cognero Page 3
