COST ACCOUNTING EXAM: BUS A200 | ANSWER KEY - latest summer 2026 -Indiana University, Bloomington.

COST ACCOUNTING EXAM: BUS A200 | ANSWER KEY What type of cost is hourly wages paid to production workers? Group of answer choices Period cost Fixed costs MOH cost Variable cost Flag question: Question 2 Question 2 1 pts What type of cost is rent on the factory? Group of answer choices Variable and Period Fixed and PeriodFixed and MOH Fixed and Variable Flag question: Question 3 Question 3 1 pts Costs that stay the same PER UNIT are Group of answer choices fixed costs variable costs mixed costs Flag question: Question 4 Question 4 1 ptsCosts that decrease per unit when the volume or activity level increases are Group of answer choices fixed costs variable costs Flag question: Question 5 Question 5 1 pts Variable costs.... Group of answer choices stay the same in total, even when production levels change can be either product or period costs change (increase) per unit when more units are produced are always product costsFlag question: Question 6 Question 6 1 pts Fixed costs.... Group of answer choices can be avoided at lower production levels are easy to change if production levels change. usually are unavoidable Flag question: Question 7 Question 7 1 pts Company Z has the following costs: Rent $1,000 per month, Materials and Labor cost $1 per unit. If the company produces 10 units this month, what is the cost per unit?Group of answer choices $100 per unit $1 per unit $110 per unit $101 per unit Flag question: Question 8 Question 8 1 pts Company Z has the following costs: Rent $1,000 per month, Materials and Labor cost $1 per unit. If the company produces 100 units this month, what is the cost per unit? Group of answer choices $11 $100 $1$101 Flag question: Question 9 Question 9 1 pts Company Z has the capacity to produce 10,000 units a month. The company recently expanded to a new sales area and now needs to produce 20,000 units a month. What just happened? Group of answer choices Company Z will need to expand their factory, meaning their fixed costs will increase. Company Z's variable cost PER UNIT will likely increase. Nothing, the company is still operating within its relevant range. Flag question: Question 10 Question 10 1 ptsHow is contribution margin calculated? Group of answer choices Revenue – Fixed costs Fixed costs – Variable costs Revenue – Product costs Revenue – Variable costs Flag question: Question 11 Question 11 1 pts The contribution margin income statement is used for Group of answer choices Financial statements only Managerial decision making onlyFinancial and managerial accounting Flag question: Question 12 Question 12 1 pts Cost of goods sold includes both variable and fixed costs. Group of answer choices True False Flag question: Question 13 Question 13 1 pts Cost of goods sold includes both product and period costs. Group of answer choicesTrue False Flag question: Question 14 Question 14 1 pts Variable costs can be either product or period costs. Group of answer choices True False Flag question: Question 15 Question 15 1 pts What is the formula to calculate contribution margin?Group of answer choices Sales revenue less all costs Selling price less cost of goods sold Sales revenue less variable costs Sales minus product costs Flag question: Question 16 Question 16 1 pts What is the formula to calculate the number of units that must be sold to break even? Group of answer choices Total fixed costs/Variable costs per unit Total fixed costs/Contribution margin per unit Contribution margin per unit/variable cost per unitSales revenue - fixed costs Flag question: Question 17 Question 17 1 pts Which of the following is true regarding "break even"? Group of answer choices Profit = the amount of net earnings expected at the relevant range Sales revenue - variable costs = zero When the total contribution margin is equal to total fixed costs Flag question: Question 18 Question 18 1 pts How many units must be sold for this company to break-even?Sales price $10/unit Variable costs $2/unit Total fixed costs $2,500 Round up your final answer if needed. Group of answer choices 250 209 313 some other amount Flag question: Question 19 Question 19 1 pts If the company sells ONE item more than the breakeven point, what is total profit?Sales price $10/unit Variable costs $2/unit Total fixed costs $320 Group of answer choices $2 $40 $8 $10 Flag question: Question 20 Question 20 1 pts Which of the following costs do not change IN TOTAL when the activity or output level changes? Group of answer choicesMixed costs Product costs Variable costs Fixed costs Flag question: Question 21 Question 21 1 pts Which of the following is a FIXED cost for a Halloween candy manufacturer? Group of answer choices Electricity and water used in the bakery Cost of the wages for employees in the melting room Rent on the bakery building Cost of the chocolateFlag question: Question 22 Question 22 1 pts Which of the following costs change in total, but not per unit, when the activity or output level changes? Group of answer choices Variable costs Period costs Fixed costs Flag question: Question 23 Question 23 1 pts What is gross margin? Group of answer choicesSales revenue - other expenses Sales revenue - variable costs The amount of sales revenue in excess of fixed costs The amount of sales revenue in excess of the cost of the items sold Flag question: Question 24 Question 24 1 pts Variable costs: Group of answer choices are always product costs like materials and factory rent can be any type of costs (product or admin) are only selling & admin costs Flag question: Question 25Question 25 1 pts If a company sells 100 items in January and 200 items in February, which of the following costs will be the same IN TOTAL? Group of answer choices commissions paid to salespersons direct labor factory rent all of these costs will be the same in total direct materials Flag question: Question 26 Question 26 1 pts True/False: Net income is the same amount when calculated using GAAP or CM (contribution margin) format.Group of answer choices True False Flag question: Question 27 Question 27 1 pts Which of the following is FALSE? Group of answer choices Per unit variable costs stay the same when activity levels change. Per unit fixed costs decrease when activity levels increase. Total variable costs stay the same when activity levels change. Total fixed costs stay the same when activity levels change. Flag question: Question 28Question 28 1 pts Which of the following actions would most likely INCREASE total profit? Assume the number of units sold does not change. Group of answer choices Decrease variable cost per unit Decrease total contribution margin Increase total fixed costs All of the other answers would increase profits Reduce selling price per unit Flag question: Question 29 Question 29 1 pts A mixed cost is a cost that Group of answer choicesStays the same in total even if activity levels change Decreases in total as activity increases, but not proportionately Contains elements of fixed and variable costs Is both a product and period cost Flag question: Question 30 Question 30 1 pts Which costs are riskier for companies that have large FLUCTUATIONS in activity levels? Group of answer choices Variable costs Fixed costs Flag question: Question 31 Question 311 pts Breakeven means Group of answer choices Total Sales Revenue = Fixed costs + Variable costs Fixed costs = variable costs Fixed costs + Variable costs = Total Costs Flag question: Question 32 Question 32 1 pts Breakeven means Group of answer choices Total contribution margin – profit = zero Total fixed costs – Total variable costs = zeroTotal contribution margin – fixed costs = zero Flag question: Question 33 Question 33 1 pts The formula used to calculate the breakeven point in units is: Group of answer choices Total FC divided by CM per unit Total VC divided by CM per unit (Total FC + Total VC) divided by CM per unit Flag question: Question 34 Question 34 1 pts Total contribution margin at the breakeven point equals:Group of answer choices Total variable costs Total contribution margin Total fixed costs Flag question: Question 35 Question 35 1 pts Which of the following is TRUE regarding operating leverage? Group of answer choices Small loans can result in large increases in cash for the company. Small changes in revenues can produce large changes in profitability. Shifting from relying on fixed costs to variable costs increases operating leverage. Variable costs increase the benefits of operating leverage.Flag question: Question 36 Question 36 1 pts Which of the following is TRUE? Group of answer choices Variable cost per unit decreases when more items are produced. Period costs are always fixed costs. Fixed cost per unit decreases when more items are produced. Product costs are always variable costs. Mixed costs are mostly fixed costs and just a little variable cost. Flag question: Question 37 Question 37 1 ptsA bakery has the capacity to produce up to 1000 cupcakes each day. Which of the following production levels is OUTSIDE of the relevant range? Group of answer choices 0 cupcakes 1100 cupcakes 900 cupcakes 50 cupcakes more than one of the above answers is correct Flag question: Question 38 Question 38 1 pts Why is it important to know a company's relevant range? Group of answer choices Costs that are fixed may change when the company is operating above the relevant rangeCosts that are variable may change when the company operates at less than the relevant range Flag question: Question 39 Question 39 1 pts True or False: Depreciation of long term assets can be classified as either a product or period cost. The classification depends on where the long term asset is being used (for example in the factory or the corporate offices). Group of answer choices False True Flag question: Question 40 Question 40 1 pts A relevant cost is one thatGroup of answer choices is the same for both choices or alternatives is different for each choice or alternative Flag question: Question 41 Question 41 1 pts A relevant cost is one that Group of answer choices has already happened (been incurred) has not yet happened (will happen in the future) Flag question: Question 42 Question 42 1 ptsT/F information considered "relevant" is the SAME when comparing different alternatives/choices. Group of answer choices False True Flag question: Question 43 Question 43 1 pts T/F The cost of direct materials needed to make cheese pizza or pepperoni pizza is relevant when comparing the cost of the two products. Group of answer choices False - because the cost to make pizza and autos are very different True - because the cost to make pizza and autos are very different Flag question: Question 44Question 44 1 pts T/F If the bakery manager supervises both cupcake and pizza orders, the manager's salary is a relevant cost when deciding how much of each product to produce. Group of answer choices False True Flag question: Question 45 Question 45 1 pts Customers comment on how good the pizza tastes. This is a ________ characteristic when deciding whether to make pizza or eliminate that product. Group of answer choices qualitativequantitative Flag question: Question 46 Question 46 1 pts T/F A restaurant purchased a new pizza oven last fall. When deciding whether to continue operating the restaurant the cost of the oven is a ________ cost. Group of answer choices sunk opportunity Flag question: Question 47 Question 47 1 pts The decision to drive or fly to Florida is made using: Group of answer choicesonly variable costs only quantitative information quantitative and qualitative information only non-relevant information Flag question: Question 48 Question 48 1 pts The cost to park your car at the airport (if you choose to fly to Florida, instead of drive) is an example of: Group of answer choices a sunk cost a non-relevant cost an opportunity cost a relevant cost (also called an avoidable cost)Flag question: Question 49 Question 49 1 pts The cost of suntan lotion purchased while in Florida is a relevant or irrelevant cost in the the decision to drive or fly to Florida? Group of answer choices relevant because otherwise you might get sunburn irrelevant because you should buy sunscreen whether you drive or fly relevant because it is a sunk cost irrelevant because it is an opportunity cost Flag question: Question 50 Question 50 1 pts A relevant cost is one that Group of answer choicesis the same for both choices or alternatives is different for each choice or alternative Flag question: Question 51 Question 51 1 pts A relevant cost is one that Group of answer choices has not yet happened (will happen in the future) has already happened (been incurred) Flag question: Question 52 Question 52 1 pts The cost and depreciation expense of machinery purchased in a previous period is aGroup of answer choices sunk cost and therefore relevant to decisions product cost and therefore always relevant to decisions sunk cost and therefore not relevant to decisions Flag question: Question 53 Question 53 1 pts Product inspection costs Group of answer choices are always product level costs are always unit level costs can be either unit level or facility level costs (depending on the type of product being produced) can be either unit level or batch level costs (depending on the type of product being produced)Flag question: Question 54 Question 54 1 pts Direct materials and direct labor are always Group of answer choices relevant costs in a make v. buy (outsource) decision not relevant costs in a make v. buy (outsource) decision Flag question: Question 55 Question 55 1 pts Kit Kat is introducing a new flavor: Chocolate Frosted Donut. The flavor was developed by the design team. Costs associated with the design process are: Group of answer choicesFacility level costs Product level costs Unit level costs Batch level costs Flag question: Question 56 Question 56 1 pts Opportunity cost is Group of answer choices lost revenue given up if the company chooses one option over another a cost the company has to pay if they choose one option over another the same as avoidable costs Flag question: Question 57Question 57 1 pts Outsourcing is all of the following EXCEPT: Group of answer choices The "buy" in a Make versus Buy decision When a company buys an item or product from another company. When a company subcontracts manufacturing to another company. When a company makes a product in its own factory. Flag question: Question 58 Question 58 1 pts Special order requests are when Group of answer choicesthe customer requests a purchase price greater than the normal selling price the customer requests a purchase price less than the normal selling price the customer has a special request unrelated to the selling price Flag question: Question 59 Question 59 1 pts Special orders should be accepted when Group of answer choices there is adequate capacity and the TOTAL revenue exceeds the TOTAL cost there is inadequate capacity and the TOTAL revenue exceeds the TOTAL cost there is adequate capacity and the RELEVANT revenue exceeds the RELEVANT cost there is inadequate capacity and the RELEVANT revenue exceeds the RELEVANT costFlag question: Question 60 Question 60 1 pts True/False: Facility level costs are ignored (not relevant) when making special order decisions. Group of answer choices False True Flag question: Question 61 Question 61 1 pts True/False: Unit and Batch level costs are relevant to special order decisions because these costs are different in total if the special order is accepted versus rejected. Group of answer choices FalseTrue Flag question: Question 62 Question 62 1 pts What is another term for outsourcing? Group of answer choices make v buy asset replacement MOH special order Flag question: Question 63 Question 63 1 ptsWhat is the outsourcing decision? Group of answer choices Whether to sell a product you have made or purchased. Whether to produce the product or purchase it from another company. Whether to make one product or another product. Flag question: Question 64 Question 64 1 pts What costs should be evaluated in the outsourcing decision? Group of answer choices All costs. All fixed costs. All variable costs.All relevant costs. Flag question: Question 65 Question 65 1 pts Company A has the option to rent unused space in their factory for $20,000 a year if they choose to outsource the production of one of their products. This represents an opportunity cost when evaluating the "make versus buy" decision. In the decision, the $20,000 is ADDED to the cost of: Group of answer choices the relevant costs to manufacture the product in the company's factory the relevant costs to outsource the product to another company to manufacture Flag question: Question 66 Question 66 1 pts Buying new equipment is always more expensive than keeping older equipment.Group of answer choices True False Flag question: Question 67 Question 67 1 pts Depreciation of existing (old) equipment is not relevant to asset replacement decisions. Group of answer choices False - it is like any other cost that should be considered True - it is a sunk cost (unavoidable) Flag question: Question 68 Question 681 pts An opportunity cost is a COST PAID by the company. Group of answer choices True - for asset replacement decisions it is the amount paid to purchase new equipment. False - it is revenue that cannot be earned (or is lost) such as money that could be earned by renting out unused space or equipment. Flag question: Question 69 Question 69 1 pts T/F When making an asset replacement decision, compare the cost for just one year (not the life of the equipment). Group of answer choices True FalseFlag question: Question 70 Question 70 1 pts The cost to purchase new equipment is relevant to asset replacement decisions. Group of answer choices False True Flag question: Question 71 Question 71 1 pts The salvage value of the old (existing) equipment is _____________ ______ the market value (selling price) to determine the opportunity cost of keeping the machine. Group of answer choicessubtracted from added to Flag question: Question 72 Question 72 1 pts The salvage value of the new equipment (in an asset replacement decision) should be ________ _____ the cost of the new equipment when determining the relevant costs. Group of answer choices added to subtracted from Flag question: Question 73 Question 73 1 pts Outsourcing decisions are also called:Group of answer choices Cost accounting Make versus buy Special manufacturing Replacement accounting Flag question: Question 74 Question 74 1 pts Special Orders are Group of answer choices orders for products only near or after the expiration date. orders where the selling price includes shipping and other perks. the sale of unique or customized products. orders with selling prices that are lower than the normal selling prices.Flag question: Question 75 Question 75 1 pts Which of the following is an example of an asset replacement decision? Group of answer choices The decision to sell an asset for its salvage value. The decision to replace an asset with another, usually newer, asset. The decision to finance an asset with cash or a long term note payable. The decision to purchase an asset with cash or on account. Flag question: Question 76 Question 76 1 pts Opportunity cost in an asset replacement decision should be:Group of answer choices Added to the cost of the new asset. Added to the cost of the existing "old" asset. Flag question: Question 77 Question 77 1 pts Which of the following is a "sunk" cost in an asset replacement decision? Group of answer choices Cost of the new asset. The original purchase cost of the old asset. The sales value of the old asset. Salvage value of the new asset. Flag question: Question 78Question 78 1 pts Which of the following is a relevant cost in an outsourcing decision? Group of answer choices The cost of the machines currently in use in the factory. The cost of allocated factory overhead. The cost to purchase inventory from an outside vendor. The cost of the president's salary for the company. Flag question: Question 79 Question 79 1 pts Which subtotal is on a GAAP income statement? Group of answer choicesContribution margin Gross margin (gross profit) Flag question: Question 80 Question 80 1 pts Breakeven is when Group of answer choices The company is making just enough profit to stay in business. Net income is zero. The company is not producing any revenues. Flag question: Question 81 Question 81 1 ptsWhich of the following costs should be recorded immediately as an EXPENSE when incurred on a GAAP income statement? Group of answer choices Advertising costs Production machine depreciation Salaries of machine maintenance workers Factory production workers' wages Flag question: Question 82 Question 82 1 pts Which of the following is an ACCOUNT listed on an income statement prepared using GAAP? Group of answer choices total fixed costs inventorynet income more than one of these are accounts on the income statement cost of goods sold Flag question: Question 83 Question 83 1 pts Weekly machine cleaning costs in a T-shirt factory are considered what level of costs? Group of answer choices Product level costs Batch level costs Unit level costs Facility level costs Flag question: Question 84Question 84 1 pts The cost of the factory manager's salary allocated to a product in the factory is considered a Group of answer choices not relevant cost for special order decisions relevant cost for special order decisions Flag question: Question 85 Question 85 1 pts For special order decisions, WHY do we include the cost of the T shirt material? Group of answer choices Because the company will need to use more material if they accept the special orderBecause the material is a product cost Because the t-shirt material is expensive Flag question: Question 86 Question 86 1 pts If the relevant cost to make extra t-shirts for a special order is MORE than the potential customer's special order offer price, the company should: Group of answer choices Accept the special order Reject the special order Flag question: Question 87 Question 87 1 ptsIf a company chooses to outsource production it can free up space in the building or machinery that can be rented out to another company. The rent revenue is called: Group of answer choices sunk cost and is added to the cost of keeping production in house opportunity cost and is added to the cost of keeping production in house opportunity cost and is added to the cost of outsourcing production sunk cost and is added to the cost of outsourcing production Flag question: Question 88 Question 88 1 pts A qualitative CONCERN with outsourcing is: Group of answer choices the cost of purchasing the outsourced product may exceed the cost to produce the productquality of products made elsewhere may have a higher quality than those made in the factory the community may suffer from lost jobs if the manufacturing is moved to another company and location the supplier may be reliable and meet all expectations Flag question: Question 89 Question 89 1 pts T/F Direct materials and direct labor are always relevant costs in outsourcing decisions. Group of answer choices False True Flag question: Question 90 Question 901 pts T/F Avoidable costs are relevant costs. Group of answer choices False True Flag question: Question 91 Question 91 1 pts Thursday Inc. manufactures toys. The factory has a capacity of 10,000 toys a month and is currently producing 6,000 a month. The normal selling price for the toys is $30 each. The cost to produce the toys include: - Direct materials, direct labor, and other manufacturing variable costs totaling $15 per toy plus - Sales commissions paid on every toy sale of $1 per toy - Allocated overhead costs $30,000. The company received a one-time special-order request from a new customer asking to purchase 1,000 toys at a special price of $20 each. Should Cooper Inc. accept this special order?Group of answer choices Yes, Thursday Inc. would make an extra $5 per toy Yes, Thursday Inc. would make an extra $4 per toy No, the sales price is $10 less than the regular price Yes, Thursday Inc. would make an extra $20 per toy No, Thursday Inc. doesn't have adequate capacity to accept this order Flag question: Question 92 Question 92 1 pts Friday Inc. is considering outsourcing its production of one part of their products. They received a bid from another company who will manufacture and sell Friday Inc. the part for $18 each. If Friday chooses to outsource the company can rent out the unused factory space for $100,000 per year. The current costs to produce 15,000 items a year is: materials and labor $10 per item, allocation of the president salary $50,000 per year. Should Friday Inc. choose to outsource or not?Group of answer choices No answer text provided. Yes - the relevant cost to manufacture is more than the relevant cost to outsource No - the relevant cost to outsource is more than the relevant cost to manufacture Doesn't matter - the relevant costs are the same to outsource or manufacture Flag question: Question 93 Question 93 1 pts Saturday Inc. is trying to decide whether to replace its delivery truck or not. The currently owned truck cost $50,000, has a $40,000 net book value, and was purchased 2 years ago. The truck costs $8,000 a year to operate and could be sold for $37,000 if a new truck is purchased. There is no salvage value on this truck and it is expected to last 4 more years. A new truck costs $69,000, costs $3,000 a year to operate, has a salvage value of $5,000 and should last 4 years. Which option is the least cost for the company?Group of answer choices Buy the new truck, the relevant costs are $7,000 less than the old truck Keep the old truck, the relevant costs are $22,000 less than the new truck Keep the old truck, the relevant costs are $7,000 less than the new truck Buy the new truck, the relevant costs are $22,000 less than the old truck Flag question: Question 94 Question 94 1 pts Sunday Inc. sells toys for $40 each. The variable costs are $10 each and the fixed costs are $30,000. How many toys must the company sell to make a $6,000 profit? Group of answer choices some other amount 1,200 1,000200 No new data to save. Last checked at 4:43pm