Question 1
It is an online data entry or a source document that the production department uses to request
materials for production.
Response: Materials requisition
Correct answer: Materials requisition
Score: 2 out of 2
Question 2
In no more than five (5) sentences, explain the strategic role of costing. Cite an example.
Response: In the strategic role of costing the firms need accurate cost information, regardless of their
competitive strategies. This is even more likely to be true for cost leadership firms that rely on a high
level of manufacturing efficiency and quality to succeed. Effective management of manufacturing costs
requires timely and accurate cost information. Getting this information requires that the firm choose a
cost system that is a good match for its competitive strategy. For example, a cost leadership firm that
produces a commodity product is also likely to be in a process industry, such as food or chemical
processing, or assembly-line manufacturing. Thus, process costing systems are likely to be a good fit.
Because accurate costs are important, such firms are likely to use activity-based costing, which is more
accurate than the volume-based method for overhead assignment.
Correct answer:
Take note that students’ answers may vary.
To compete successfully, firms need accurate and timely cost information, regardless of their
competitive strategies. Getting this information requires that the firm choose a cost system that is a
good match for its competitive strategy. For example, a cost leadership firm that produces a commodity
product is also likely to be in a process industry, such as food or chemical processing, or assembly-line
manufacturing. Thus, process costing systems are likely to be a good fit.
Regardless of competitive strategies, companies require accurate and efficient cost data. In order to
obtain this data, the company must first select a cost system that is compatible with its competitive
strategy. A cost leadership that makes a commodity product, for example, is likely to work in a process
industry like food or chemical processing, or assembly-line manufacturing. As a result, process costing
systems are likely to work well.
Score: 10 out of 10
Question 3
It is an estimated value used to apply factory overhead cost to a specific cost object or job.
Response: Predetermined factory overhead rate
Correct answer: Predetermined factory overhead rate
Score: 2 out of 2
Question 4
Match each item to a choice.
Response: This costing system is appropriate when incurred costs can be readily identified with a
specific product, batch of products, customer order, contract, or project. => Job costing
Response: This costing system is often used by firms that primarily produces homogenous products
and/or services. => Process costing
Response: This costing system relies heavily on the assumption that each product uses the same
amounts of overhead, as each product is charged with the same value. => Volume-based product costing
Response: This costing system allocates factory overhead costs to products using cause-and-effect
criteria with multiple cost drivers. => Activity-based costing (ABC)
Response: This costing system uses actual costs for direct materials and direct labor, and normal costs
for factory overhead. => Normal costing
Correct answer: This costing system is appropriate when incurred costs can be readily identified with a
specific product, batch of products, customer order, contract, or project. => Job costing, This costing
system is often used by firms that primarily produces homogenous products and/or services. => Process
costing, This costing system relies heavily on the assumption that each product uses the same amounts
of overhead, as each product is charged with the same value. => Volume-based product costing, This
costing system allocates factory overhead costs to products using cause-and-effect criteria with multiple
cost drivers. => Activity-based costing (ABC), This costing system uses actual costs for direct materials
and direct labor, and normal costs for factory overhead. => Normal costing
Score: 10 out of 10
Question 5
It is an online data entry or source document used to record direct labor costs for each employee.
Response: Time ticket
Correct answer: Time ticket
Score: 2 out of 2
Question 6
It records and summarizes the costs of direct materials, direct labor, and factory overhead for a
particular job.
Response: Job cost sheet
Correct answer: Job cost sheet
Score: 2 out of 2
Question 7
Which of the following is NOT a cost measurement method?
Response: Volume-based
Correct answer: Volume-based
Score: 2 out of 2
