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Exam 1 - NAU ACC 256- Questions and Answers
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Exam 1 - NAU ACC 256- Questions and Answers
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Exam 1 - NAU ACC 256- Questions and Answersvariable costs Correct Ans-Change in total in direct proportion to changes in volume (direct
materials, direct labor for hourly employees)
Product Costs Correct Ans-Incurred by manufacturers to produce their products or by
merchandisers to purchase their products (costs are incurred in the production or purchases
function of the value chain)
Period costs: Correct Ans-Do not relate to manufacturing or purchasing a product; includes
any cost not treated as inventory; incurred in all other functions of the value chain including
R&D, design, customer service, marketing, distribution, sales commissions, operating / SGA
(selling, general & administrative) expenses
Differential costs Correct Ans-Difference between two alternative courses of action
Relevant costs: Correct Ans-Pricing plus additional considerations
Irrelevant costs: Costs that would not be affected by a management decision
Sunk costs: Correct Ans-Costs already incurred (should be ignored and are always irrelevant)
Process costing Correct Ans-Used for similar products that are produced in large batches
(bottled water, salsa, bags of chips)
, Job Costing Correct Ans-Used for unique, custom items produced in small batches (airplanes,
furniture, individual chalets)
Unit-level activities Correct Ans-Activities and costs incurred for every unit (inspecting and
packaging each unit produced)
Batch-level activities Correct Ans-Activities and costs incurred for every batch, regardless of
number of units (machine set-up)
Product-level activities Correct Ans-Activities and costs incurred for a particular product,
regardless of number of units or batches (lease payments on equipment for manufacturing a
particular product)
Facility-level activities Correct Ans-Activities and costs incurred no matter how many units,
batches, or products are produced (depreciation, insurance, property tax, plant maintenance)
Prevention Costs: Correct Ans-Costs incurred to avoid producing poor-quality goods or
services
Appraisal Costs: Correct Ans-Costs incurred to detect poor-quality goods or services
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