Han Rui Fam (Kelyn) (She_Her)'s Quiz History_ Week 2_ Test Your Knowledge (TYK)

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3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 1/11 Week 2: Test Your Knowledge (TYK) Results for Han Rui Fam (Kelyn) (She/Her) Score for this attempt: 18.75 out of 20 Submitted Mar 4 at 12:38am This attempt took 21 minutes.  Question 1 1 / 1 pts A cost that bears an observable and known relationship to a quantifiable activity based is known as an engineered cos. A cost that will be unaffected by current managerial decisions. A cost that may be eliminated by not engaging in a project/business activity or by performing it more efficiently. Correct! The additional cost inherent to a given decision. Incremental cost is the additional cost inherent to a given decision. An incremental cost is defined as the additional total cost incurred for an activity (i.e., it is the additional cost incurred in producing one more unit).  Question 2 1 / 1 pts A cost that is governed mainly by past decisions that established the present levels of operating and organizational capacity and that only change slowly in response to small changes in capacity. The additional cost inherent to a given decision. Correct! The difference in total cost between two decisions. In project finance, an incremental cost is In project finance, differential cost is

3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 2/11 The difference between total fixed costs and total variable costs. Differential cost is the difference in total cost between two alternatives. Example: A company must choose between introducing two product lines. The incremental choice of the first option is the initial investment of $2 million. The incremental choice of the second option is the initial investment of $2.5 million. The differential cost of the two choices is $ 500,000. In practice, incremental cost and differential cost are often used interchangeably.  Question 3 1 / 1 pts $105,000 Correct! $160,000 $65,000 $165,000 Traceable costs are those costs that can be specifically assigned to a cost object in an economically feasible way. These types of costs are called direct costs. In this case, the amount of traceable costs is $160,000 ($60,000 + $100,000). Because factory overhead is not a direct product costs, it must be allocated to all products using a pre-defined basis, such machine hours, number of employees, space occupied, etc.  Question 4 1 / 1 pts Chenco’s production costs for May 20XX are as follows: Direct materials $60,000 Direct labor 100,000 Factory overhead 5,000 What is the amount of costs traceable to specific products?

3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 3/11 The corporate president’s salary of the sponsor organization. Correct! Cost of raw materials. Interest charges. Property taxes Variable costs vary directly with the level of production. As production increases or decreases, material cost increases or decreases, usually in a direct relationship. Interest charges are independent of production levels.  Question 5 1 / 1 pts Correct! Engineered cost Indirect cost Sunk cost Target cost A cost that bears an observable and known relationship to a quantifiable activity base is known as an engineered cost. Engineered costs have a clear relationship to output. Direct materials would be an example of an engineered cost. Engineered costs result from a cause-and-effect relationship between output (the cost driver) and (direct or indirect) resources used to produce the output.  Question 6 1 / 1 pts Which of the following is the best example of a variable cost? In project finance, a cost that bears an observable and known relationship to a quantifiable activity base is known as a (an) In BOT projects, the primary responsibility of a project manager is to complete the project both effectively and efficiently. When managing tangible projects, a project manager examines four material efficiency indicators: spoilage, rework, scrap, and waste. In this regard, normal spoilage

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3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 4/11 Correct! Is the spoilage that occurs under standard operating conditions. It is essentially uncontrollable in the short-term. Consists of raw material left over from production but still usable for other purposes than those for which it was originally intended. Is the spoilage that is not expected under standard, efficient operating conditions. Consists of end products that do not meet standards but can be brought to standards with additional effort. Normal spoilage is the spoilage that occurs under standard/normal operating conditions. It is essentially uncontrollable in the short-term. Since normal spoilage is expected under efficient operations, it is treated as a product cost; that is, it is absorbed into the cost of the good output. Abnormal spoilage is the spoilage that is NOT expected under standard/normal, efficient operating conditions. The cost of abnormal spoilage should be separately identified as reported to management. Abnormal spoilage is typically treated as a period cost (loss) because of its unusual nature.  Question 7 1 / 1 pts Is the spoilage that occurs under standard operating conditions. It is essentially uncontrollable in the short-term. Consists of raw material left over from production but still usable for other purposes than those for which it was originally intended. Is the spoilage that is not expected under standard, efficient operating conditions. Correct! Consists of end products that do not meet standards but can be brought to standards with additional effort. Rework consists of end products that not meet standards of salability but can be brought to salable condition with additional effort. The decision to rework or discard is based on whether the marginal revenue to be gained from selling the reworked units exceeds the marginal cost of performing the rework. In BOT projects, the primary responsibility of a project manager is to complete the project both effectively and efficiently. When managing tangible projects, a project manager examines four material efficiency indicators: spoilage, rework, scrap, and waste. In this regard, rework

3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 5/11  Question 8 1 / 1 pts The maximum level at which output is produced efficiently. It includes consideration of idle time caused by human and equipment inefficiencies but not by inadequate sales demand. The short-term average level of activity that will approximate demand over a period that does not include trend variations. Correct! The long-term average level of activity that will approximate demand over a period that includes seasonal, cyclical, and trend variations. The maximum capacity assuming continuous operations with no holidays, downtime, etc. Normal capacity is the long-term average level of activity that will approximate demand over a period that includes seasonal, cyclical, and trend variations. Deviations in a given year will be offset in subsequent years.  Question 9 1 / 1 pts The behaviour of the cost in response to volume changes. Whether the cost is expensed in the period in which it is incurred. Correct! The cost object to which the cost is being related. Whether a project’s expenditure is unavoidable because it cannot be changed regardless of any action taken. A direct cost can be specifically associated with a single cost object in an economically feasible way. An indirect cost cannot be specifically associated with a single cost object. Thus, the specific cost object influences whether a cost is direct or indirect. For example, a cost might be directly associated with a single function of the organization (e.g. engineering). The same cost, however, might not be directly associated with a particular project housed in that function. When selecting manufacturing projects in portfolio management, managers must consider the firm’s manufacturing capacity. Normal capacity is In industrial projects, project cost estimators often talk about direct cost and indirect cost. A particular cost might be considered a direct cost for a functional unit but an indirect for a project housed in that functional unit. Whether to classify a cost as either direct or indirect depends upon

3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 6/11  Question 10 1 / 1 pts The behavior of the cost in response to volume changes. Whether the cost is expensed in the period in which it is incurred. Correct! The cost of object to which the cost is being related. Whether an expenditure is unavoidable because it cannot be changed regardless of any action taken. The cost object is the factor that influences whether a cost is classified as direct and indirect. A direct cost can be specifically associated with a single cost object in an economically feasible way. An indirect cost cannot be specifically associated with a single cost object. Thus, the specific cost object influences whether a cost is direct or indirect. For example, a cost might be directly associated with a single plant. The same cost, however, might not be directly associated with a particular department in the plant. Traceability is therefore a key concept in classifying costs as either direct or indirect. Can the cost be easily and economically traced to a single cost object?  Question 11 1 / 1 pts Direct and indirect labour. Correct! Direct Labour and factory overhead. Direct labour and direct materials. Indirect labour and variable factory overhead In manufacturing projects, conversion costs consist of direct labor and factory overhead. These are the costs of converting raw materials into finished product. The terms direct cost and indirect cost are commonly used in finance. A cost might be considered a direct cost of a manufacturing department, but an indirect cost of the product produced in the manufacturing department. Classifying a cost as either direct or indirect depends upon In project costing terminology, conversion costs consist of

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3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 7/11  Question 12 1 / 1 pts The maximum level at which output is produced efficiently. It includes consideration of idle time caused by human and equipment inefficiencies but not by inadequate sales demand. The short-term average level of activity that will approximate demand over a period that does not include trend variations. The long-term average level of activity that will approximate demand over a period that includes seasonal, cyclical, and trend variations. Correct! The maximum capacity assuming continuous operations with no holidays and downtime. Theoretical capacity is the level of a manufacturer's production that would be attained if all its equipment and operations performed continuously at their optimum efficiency. Theoretical capacity is also referred to as ideal capacity. As the names imply, the theoretical capacity or ideal capacity is not realistic due to repairs, maintenance, setups, and other factors (e.g., holidays) that will result in down time.  Question 13 1 / 1 pts Evaluating revenue center performance. Correct! Measuring income and assets for external reporting. Budgeting cash and controlling expenditures. Aiding in variable costing for internal reporting. When selecting manufacturing projects in portfolio management, managers must consider the firm’s manufacturing capacity. Theoretical capacity is Costs are allocated to projects in many ways and for many reasons. Which of the following is a purpose of cost allocation?

3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 8/11 Cost allocation is the process of assigning and reassigning costs to cost objects. It is used for those costs that cannot be directly associated with a specific cost object. Cost allocation is often used for purposes of measuring income and assets for external reporting purposes. Cost allocation is less meaningful for internal purposes because responsibility accounting systems emphasize controllability, a process often ignored in cost allocation. Cost allocation is necessary because of indirect costs.  Question 14 0 / 1 pts Manufacturing costs incurred to produce units of output. All costs associated with manufacturing other than direct labor costs and raw materials. You Answered The sum of direct labor costs and all factory overhead costs. Correct Answer The sum of raw material costs and direct labor costs .  Question 15 1 / 1 pts Correct! Assumes all personnel and equipment will operate at peak efficiency and total plant capacity will be used. Does not consider idle time caused by inadequate sales demand. Includes consideration of idle time caused by both limited sales orders and human and equipment inefficiencies. Is the production volume that is necessary to meet sales demand for the next year. Practical capacity is the maximum level at which output is produced efficiently. It includes consideration of idle time caused by human and equipment inefficiencies but not by inadequate sales demand.  Question 16 1 / 1 pts In manufacturing projects, the term “prime costs” refers to In industrial projects (e.g., BOOT and BOT projects), capacity planning plays a vital role in project success. Practical capacity as a plant capacity concept

3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 9/11 Direct materials. Variable factory overhead. Fixed manufacturing overhead. Correct! Abnormal spoilage Materials, labor, and factory overhead (both fixed and variable) are examples of product costs. Abnormal spoilage is an example of a period cost. Abnormal spoilage is not inherent in a production process and would not arise under efficient operating conditions. Therefore, it should not be categorized as a product cost. Abnormal spoilage should be charged to a loss account in the period that the detection of the spoilage occurs.  Question 17 1 / 1 pts Costs that management decides to incur in the current period that enable the company to achieve objectives other than the filling of others by customers. Costs that are likely to respond to the amount of attention devoted to them by a specified manager. Correct! Costs that are governed mainly by past decisions that established the present levels of operating and organizational capacity and that only change slowly in response to small changes in capacity. Amortization of costs that were capitalized in previous periods. Committed costs are those that are required as a result of past decisions. Committed costs arise from holding property, plant, and equipment. Examples are insurance, real estate taxes, lease payments, and depreciation. They are by nature long-term and cannot be reduced by lowering the short-term level of production.  Which of the following is a period cost rather than a product cost of a manufacturer? In project finance, committed costs are

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3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 10/11 Question 18 1 / 1 pts The explicit cost of a project. Correct! The maximum benefit forgone by investing scarce resources in one project and not in the next-best alternative. The minimum cost to complete a project on schedule and on budget. The maximum economic cost incurred at the end of a project. The opportunity cost of a project may only be known after the hand-off process. Opportunity cost is the maximum benefit forgone by using a scarce resource for a given purpose and not for the next-best alternative. It is also called implicit cost.  Question 19 1 / 1 pts Considers all manufacturing costs as product costs. The inventoried cost of the product includes all production costs, whether variable or fixed. This technique is required for external financial reporting and for tax income purposes. Correct! Considers only variable manufacturing costs as product costs. Fixed manufacturing costs are considered period costs and therefore are expensed as incurred. This technique is not allowed for external financial reporting but is very useful for internal decision making. Charges actual direct materials and direct labor to a cost object (e.g., a project or a department) but applies overhead on the basis of budgeted (normalized) rates. This compensates for the fluctuations in unit cost inherent in actual costing. Applies all manufacturing costs on the basis of normalized/budgeted rates. Manufacturing costs include direct materials, direct labor, and factory overhead. Variable costing considers only variable manufacturing costs as product costs. Fixed manufacturing costs are considered period costs and therefore are expensed as incurred. This technique is not allowed for external financial reporting but is very useful for internal decision making. In project finance, term opportunity cost is used to describe Variable costing also known as direct costing is a costing technique that

3/4/24, 5:56 PM Han Rui Fam (Kelyn) (She/Her)'s Quiz History: Week 2: Test Your Knowledge (TYK) https://northeastern.instructure.com/courses/165089/quizzes/582937/history?version=2 11/11  Question 20 1 / 1 pts Correct! Considers all manufacturing costs as product costs. The inventoried cost of the product includes all production costs, whether variable or fixed. This technique is required for external financial reporting and for tax income purposes. Considers only variable manufacturing costs as product costs. Fixed manufacturing costs are considered period costs and therefore are expensed as incurred. This technique is not allowed for external financial reporting but is very useful for internal decision making. Charges actual direct materials and direct labor to a cost object (e.g., a project or a department) but applies overhead on the basis of budgeted (normalized) rates. This compensates for the fluctuations in unit cost inherent in actual costing. Applies all manufacturing costs on the basis of normalized/budgeted rates. Manufacturing costs include direct materials, direct labor, and factory overhead. Absorption costing also known as full costing or full absorption costing is a costing technique that considers all manufacturing costs as product costs. The inventoried cost of the product includes all production costs, whether variable or fixed. This technique is required for external financial reporting and for tax income purposes. Quiz Score: 18.75 out of 20 This quiz score has been manually adjusted by -0.25 points. Absorption costing also known as full costing or full absorption costing is a costing technique that

Han Rui Fam (Kelyn) (She_Her)'s Quiz History_ Week 2_ Test Your Knowledge (TYK)

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