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costaccounting,echarlesthorngrenchapter

Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 14 Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis Objective 14.1 1) Costs which are NOT economically feasible to trace but which are related to a cost object are known as: A) fixed costs B) direct costs C) indirect costs D) variable costs Answer: C Diff: 1 Terms: cost allocation Objective: 1 AACSB: Reflective thinking 2) Any item for which a separate measurement of cost is desired is known as: A) cost allocation B) a cost object C) a direct cost D) an indirect cost Answer: B Diff: 1 Terms: cost object Objective: 1 AACSB: Reflective thinking 3) Indirect costs: A) often comprise a large percentage of overall costs assigned to a cost object B) specifically exclude marketing costs C) cannot be used for external reporting D) are treated as period costs and not as product costs Answer: A Diff: 3 Terms: indirect costs Objective: 1 AACSB: Reflective thinking 4) All of the following illustrate purposes for allocating costs to cost objects EXCEPT to: A) provide information for economic decisions B) motivate managers and employees C) determine a selling price the market will bear D) measure income and assets for reporting to external parties Answer: C Diff: 2 Terms: cost allocation Objective: 1 AACSB: Reflective thinking 5) Which of the following illustrates a purpose for allocating costs to cost objects? A) to motivate managers and employees B) to provide information to customers C) to determine a selling price the market will bear D) to measure liabilities Answer: A Diff: 2 Terms: cost allocation Objective: 1 AACSB: Reflective thinking 6) The costs of all six value-chain functions should be included when determining: A) whether to add a new product line B) the selling price of a service C) whether to make or buy a component part from another manufacturer D) All of these answers are correct. Answer: D Diff: 3 Terms: cost allocation O

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