COST ACCOUNTING EXAM 1
1. Examples of information the management accountant can provide for each
strategic decision follow
Pedro phones is about to decide whether to launch production and sale of a cell phone
with standard features
Cost to manufacture and sell the cell phone. Productivity, eflciency, and cost advantages relative to competition. Prices of
competitive cell phones. Sensitivity of target customers to price and quality. The production capacity of Pedro phones and its
competitors. How the market for cell phones with standard features is growing
2. Examples of information the management accountant can provide for each
strategic decision follow
Flash computers is trying to decide whether to produce and sell a new home
computer software package that includes the ability to interface with a sewing
machine and vacuum cleaner. There is no such software currently on the market
Answer Cost to develop. produce, and sell new software. Premium price that customers would be willing to pay due to product
uniqueness. Price of basic software/ Price of closest competitive software/ Cash needed to develop, produce, and sell new
,software
3. Examples of information the management accountant can provide for each
strategic decision follow
Celine cosmetics has been asked to provide a "store brand" lip gloss that will be sold at a
discount retail stores
Answer Cost of producing the "store-brand" lip gloss. Productivity, eflciency, and cost advantages relative to
competition. Prices of competitive products, Sensitivity of target customers to price and quality. The production capacity of Celine
cosmetics and its competitors. How the market for lip gloss is growing
4. Examples of information the management accountant can provide for each
strategic decision follow
Nicholus Meats is considering developing a special line of gourmet bologna made
with sundried tomatoes, pine nuts, and artichoke hearts
Answer Cost to produce and sell new line of gourmet cologne. Premium price that customers would be willing to pay
due to product uniqueness. Price of basic meat product. Price of closest competitive product. Cash available to develop, produce,
and sell special line of gourmet bologna
5. Annual awards dinner for Teana suppliers
,Direct or indirect? Fixed or variable?
Answer Direct and fixed
6. Cost of lubricant used on the Teana assembly line
Answer Direct and variable
, 7. How to compute Cost of Goods Purchased
(Retail/merchandising)
Answer Purchases + freight-in - purchases returns and allowances - purchase discounts = CGP
8. How to compute Cost of Goods Sold?(Retail/merchandising)
Answer Beg inventory + cost of goods purchased = cost of goods available for sale - ending inventory = cost of goods
sold
9. (Retail/merchandising)
Income statement
Answer Revenue - CGS = Gross margin - operating costs = operating income
10. Merchandising company
Cost of direct materials
Answer Beg inv - DM + purchases - end inv - DM = direct materials used
11. Merchandising company
Total manufacturing costs
Answer DM + DML + MC = TMC
1. Examples of information the management accountant can provide for each
strategic decision follow
Pedro phones is about to decide whether to launch production and sale of a cell phone
with standard features
Cost to manufacture and sell the cell phone. Productivity, eflciency, and cost advantages relative to competition. Prices of
competitive cell phones. Sensitivity of target customers to price and quality. The production capacity of Pedro phones and its
competitors. How the market for cell phones with standard features is growing
2. Examples of information the management accountant can provide for each
strategic decision follow
Flash computers is trying to decide whether to produce and sell a new home
computer software package that includes the ability to interface with a sewing
machine and vacuum cleaner. There is no such software currently on the market
Answer Cost to develop. produce, and sell new software. Premium price that customers would be willing to pay due to product
uniqueness. Price of basic software/ Price of closest competitive software/ Cash needed to develop, produce, and sell new
,software
3. Examples of information the management accountant can provide for each
strategic decision follow
Celine cosmetics has been asked to provide a "store brand" lip gloss that will be sold at a
discount retail stores
Answer Cost of producing the "store-brand" lip gloss. Productivity, eflciency, and cost advantages relative to
competition. Prices of competitive products, Sensitivity of target customers to price and quality. The production capacity of Celine
cosmetics and its competitors. How the market for lip gloss is growing
4. Examples of information the management accountant can provide for each
strategic decision follow
Nicholus Meats is considering developing a special line of gourmet bologna made
with sundried tomatoes, pine nuts, and artichoke hearts
Answer Cost to produce and sell new line of gourmet cologne. Premium price that customers would be willing to pay
due to product uniqueness. Price of basic meat product. Price of closest competitive product. Cash available to develop, produce,
and sell special line of gourmet bologna
5. Annual awards dinner for Teana suppliers
,Direct or indirect? Fixed or variable?
Answer Direct and fixed
6. Cost of lubricant used on the Teana assembly line
Answer Direct and variable
, 7. How to compute Cost of Goods Purchased
(Retail/merchandising)
Answer Purchases + freight-in - purchases returns and allowances - purchase discounts = CGP
8. How to compute Cost of Goods Sold?(Retail/merchandising)
Answer Beg inventory + cost of goods purchased = cost of goods available for sale - ending inventory = cost of goods
sold
9. (Retail/merchandising)
Income statement
Answer Revenue - CGS = Gross margin - operating costs = operating income
10. Merchandising company
Cost of direct materials
Answer Beg inv - DM + purchases - end inv - DM = direct materials used
11. Merchandising company
Total manufacturing costs
Answer DM + DML + MC = TMC
