AACE CCT PRIMER UPDATED EXAM SCRIPT QUESTIONS
AND ANSWERS GRADED A+
✔✔This manufacturing operation runs almost continuously making the same thing.
Examples are refining and chemical plants, and very long run assembly operations. -
✔✔Process
✔✔A ______ characterized by setting up for one product, producing a set quantity of
product, and then shutting down to change over to producing another product. -
✔✔Batch Run
✔✔A _______ Similar to a batch run operation, except that you only produce 1 of the
item. Each job results in a customized product. Examples are metal fabrication,
prototype, fabrication. - ✔✔job shop
✔✔Roles such as executive/senior management, legal, HR, business development, etc.
These roles are the farthest removed from the actual production of discrete product at
the various facilities. They are shared across many production locations and considered
______. - ✔✔overhead
✔✔______ are field/plant support personnel, located at the site. These resources help
the operation run smoothly. These are people like local payroll, facility maintenance, site
project controls, site senior (office-based) supervisors and management who are shared
across the various products the particular location produces. - ✔✔Indirects
✔✔_______are the remote location people directly involved in producing the product.
These are the easiest to correlate their effort to a particular product. First line
supervisors are also normally considered ______. - ✔✔Directs
✔✔The owner approaches cost from a _____ point of view. Owners not only consider
the cost of the construction, or process, but ______ supervision
and overhead, implementation costs, cost of money, furniture, fixtures, equipment( FFE)
and other considerations - ✔✔holistic, internal
✔✔Contractors, subcontractors, suppliers only consider their part of the _______ and
are responsible for that alone. - ✔✔Project costs
✔✔Appraising or estimating the worth of something having economic or monetary value
is the general description of ________. - ✔✔valuation
✔✔Valuation in _______ is the determination of the worth of the asset or that which has
been damaged or lost - ✔✔insurance, insured
,✔✔Valuation in ________ is the determination of the dutiable value of imports by the
customs authorities. - ✔✔International Trade
✔✔A(n) _________ represents the foregone benefit by choosing one alternative over
another - ✔✔Opportunity cost
✔✔There is a relationship between time and the opportunity to influence a projects cost.
The more time that has elapsed, the ____ the chance to alter the cost. It is important to
make the cost effective decisions ______ in a project or process to have the most
influence on cost. - ✔✔less, early
✔✔________focuses on external reporting. Maintain the balance sheet (assets and
liabilities) and generate income (revenues less expenses) and tax statements for the
organization _________. Only look at indirects costs as a whole, not broken out to
individual products or departments. - ✔✔Managerial Accounting, as a whole
✔✔In cost accounting the focus is on ___________, and their product is often
proprietary. Determine how much it is costing the organization to produce a particular
product. Looks at appropriate allocation of overhead and indirect costs to only include
those ______ to the product. - ✔✔internal reporting, directly applicable
✔✔Impact of "One Size Fits All" Allocation - ✔✔Easy to come up with and ensure 100%
allocation of the overhead costs, usually don't reflect what is truly needed to produce
that organizational deliverable. In the "one size fits all" approach, overhead and indirect
costs and forced DOWN onto the product.
✔✔Activity Based Costing - ✔✔A production process is broken down into ACTIVITIES.
Typical nomenclature is an "action verb-adjective-noun" grammar convention(inspect
defective products, open new customer accounts).
✔✔Operating Costs - ✔✔Expenses incurred during the normal operation of a facility
including labor, materials, utilities, and other related costs. Examples: fuel, lubricants,
scheduled part changes, building maintenance, cleaning services, taxes
✔✔Manufacturing Costs - ✔✔Variable & fixed, direct & indirect costs chargeable to the
production of a given product, usually expressed in cents or dollars per unit of
production, or dollars per year
✔✔Maintenance Costs - ✔✔Labor, material, & other related costs incurred in
conducting corrective and preventative maintenance and repair on a facility
✔✔Fixed Capital - ✔✔Includes plant equipment, building, furniture and fixtures,and
transportation equipment used directly in the production of a product or service
, ✔✔Depreciation - ✔✔Form of capital recovery for property with a life span of more than
1 year; a portion of the asset's value is periodically charged to current operations.
Decreases book value on the balance sheet, added depreciation expense to income
statement. Managerial rather than cost accounting concern.
✔✔Amortization - ✔✔form of capital recovery for property with indefinite life; distribution
of the initial cost by periodic charges to operations as in depreciation
✔✔Accrual - ✔✔Accounting method that records revenues and expenses when they
are incurred, regardless of when cash is exchanged
✔✔Expense - ✔✔Expenditures of short-term value, including depreciation, as opposed
to land and other fixed capital
✔✔Fixed Cost - ✔✔Costs that must be provided independent of short term variations
volume of work activity. These can be either direct or indirect costs
✔✔Variable Cost - ✔✔costs that are a function of production, e.g., raw materials
costs, by-product credits, and those processing costs that vary with plant output (such
as raw materials, utilities, catalysts and chemical, packaging, and labor for batch
operations)
✔✔Unit Cost - ✔✔= [(fixed costs) + (qty * variable cost)] / (qty)
✔✔Incremental (or marginal) Cost - ✔✔How much the total cost increases if you
increase production by one more unit. As the fixed costs have been recouped in the
original production run pricing, the incremental cost is usually just the variable cost.
✔✔Order-specific costing technique - ✔✔used in situations where each job is different
and is performed to the customer's specifications. Job costing involves keeping an
account of direct costs (labor, machine time, raw materials) and indirect costs
(overheads)
✔✔Material Types - ✔✔Raw, Bulk, Fabricated, Engineered, Consumables
✔✔Materials - Raw - ✔✔Raw materials are those materials used in a production or
fabrication process that require a minimum amount of processing to be useful [S&K 5th
Ed., 3.2].
✔✔Materials - Bulk - ✔✔Material bought in lots. These items can be purchased from a
standard catalog description and are bought in quantity for distribution as required.
Examples are pipe, conduit, fittings and wire [RP 10S-90].
AND ANSWERS GRADED A+
✔✔This manufacturing operation runs almost continuously making the same thing.
Examples are refining and chemical plants, and very long run assembly operations. -
✔✔Process
✔✔A ______ characterized by setting up for one product, producing a set quantity of
product, and then shutting down to change over to producing another product. -
✔✔Batch Run
✔✔A _______ Similar to a batch run operation, except that you only produce 1 of the
item. Each job results in a customized product. Examples are metal fabrication,
prototype, fabrication. - ✔✔job shop
✔✔Roles such as executive/senior management, legal, HR, business development, etc.
These roles are the farthest removed from the actual production of discrete product at
the various facilities. They are shared across many production locations and considered
______. - ✔✔overhead
✔✔______ are field/plant support personnel, located at the site. These resources help
the operation run smoothly. These are people like local payroll, facility maintenance, site
project controls, site senior (office-based) supervisors and management who are shared
across the various products the particular location produces. - ✔✔Indirects
✔✔_______are the remote location people directly involved in producing the product.
These are the easiest to correlate their effort to a particular product. First line
supervisors are also normally considered ______. - ✔✔Directs
✔✔The owner approaches cost from a _____ point of view. Owners not only consider
the cost of the construction, or process, but ______ supervision
and overhead, implementation costs, cost of money, furniture, fixtures, equipment( FFE)
and other considerations - ✔✔holistic, internal
✔✔Contractors, subcontractors, suppliers only consider their part of the _______ and
are responsible for that alone. - ✔✔Project costs
✔✔Appraising or estimating the worth of something having economic or monetary value
is the general description of ________. - ✔✔valuation
✔✔Valuation in _______ is the determination of the worth of the asset or that which has
been damaged or lost - ✔✔insurance, insured
,✔✔Valuation in ________ is the determination of the dutiable value of imports by the
customs authorities. - ✔✔International Trade
✔✔A(n) _________ represents the foregone benefit by choosing one alternative over
another - ✔✔Opportunity cost
✔✔There is a relationship between time and the opportunity to influence a projects cost.
The more time that has elapsed, the ____ the chance to alter the cost. It is important to
make the cost effective decisions ______ in a project or process to have the most
influence on cost. - ✔✔less, early
✔✔________focuses on external reporting. Maintain the balance sheet (assets and
liabilities) and generate income (revenues less expenses) and tax statements for the
organization _________. Only look at indirects costs as a whole, not broken out to
individual products or departments. - ✔✔Managerial Accounting, as a whole
✔✔In cost accounting the focus is on ___________, and their product is often
proprietary. Determine how much it is costing the organization to produce a particular
product. Looks at appropriate allocation of overhead and indirect costs to only include
those ______ to the product. - ✔✔internal reporting, directly applicable
✔✔Impact of "One Size Fits All" Allocation - ✔✔Easy to come up with and ensure 100%
allocation of the overhead costs, usually don't reflect what is truly needed to produce
that organizational deliverable. In the "one size fits all" approach, overhead and indirect
costs and forced DOWN onto the product.
✔✔Activity Based Costing - ✔✔A production process is broken down into ACTIVITIES.
Typical nomenclature is an "action verb-adjective-noun" grammar convention(inspect
defective products, open new customer accounts).
✔✔Operating Costs - ✔✔Expenses incurred during the normal operation of a facility
including labor, materials, utilities, and other related costs. Examples: fuel, lubricants,
scheduled part changes, building maintenance, cleaning services, taxes
✔✔Manufacturing Costs - ✔✔Variable & fixed, direct & indirect costs chargeable to the
production of a given product, usually expressed in cents or dollars per unit of
production, or dollars per year
✔✔Maintenance Costs - ✔✔Labor, material, & other related costs incurred in
conducting corrective and preventative maintenance and repair on a facility
✔✔Fixed Capital - ✔✔Includes plant equipment, building, furniture and fixtures,and
transportation equipment used directly in the production of a product or service
, ✔✔Depreciation - ✔✔Form of capital recovery for property with a life span of more than
1 year; a portion of the asset's value is periodically charged to current operations.
Decreases book value on the balance sheet, added depreciation expense to income
statement. Managerial rather than cost accounting concern.
✔✔Amortization - ✔✔form of capital recovery for property with indefinite life; distribution
of the initial cost by periodic charges to operations as in depreciation
✔✔Accrual - ✔✔Accounting method that records revenues and expenses when they
are incurred, regardless of when cash is exchanged
✔✔Expense - ✔✔Expenditures of short-term value, including depreciation, as opposed
to land and other fixed capital
✔✔Fixed Cost - ✔✔Costs that must be provided independent of short term variations
volume of work activity. These can be either direct or indirect costs
✔✔Variable Cost - ✔✔costs that are a function of production, e.g., raw materials
costs, by-product credits, and those processing costs that vary with plant output (such
as raw materials, utilities, catalysts and chemical, packaging, and labor for batch
operations)
✔✔Unit Cost - ✔✔= [(fixed costs) + (qty * variable cost)] / (qty)
✔✔Incremental (or marginal) Cost - ✔✔How much the total cost increases if you
increase production by one more unit. As the fixed costs have been recouped in the
original production run pricing, the incremental cost is usually just the variable cost.
✔✔Order-specific costing technique - ✔✔used in situations where each job is different
and is performed to the customer's specifications. Job costing involves keeping an
account of direct costs (labor, machine time, raw materials) and indirect costs
(overheads)
✔✔Material Types - ✔✔Raw, Bulk, Fabricated, Engineered, Consumables
✔✔Materials - Raw - ✔✔Raw materials are those materials used in a production or
fabrication process that require a minimum amount of processing to be useful [S&K 5th
Ed., 3.2].
✔✔Materials - Bulk - ✔✔Material bought in lots. These items can be purchased from a
standard catalog description and are bought in quantity for distribution as required.
Examples are pipe, conduit, fittings and wire [RP 10S-90].
