Principles of Cost Accounting 17th Edition by Vanderbeck - Test Bank

a. 

Manufacturer.

b. 

Merchandiser.

c. 

Service business.

d. 

Not-for-profit service agency.

ANSWER:  

a

RATIONALE:  

The business entity that converts purchased raw materials into finished goods by using labor, technology, and facilities is a manufacturer.

POINTS:  

1

DIFFICULTY:  

Easy

LEARNING OBJECTIVES:  

PRIN.EDWA.16.1 - Introduction

ACCREDITING STANDARDS:  

AACSB Analytic
ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Business Applications

OTHER:  

Bloom's: Remembering

a. 

Manufacturer.

b. 

Merchandiser.

c. 

Service business.

d. 

Wholesaler.

ANSWER:  

b

RATIONALE:  

The business entity that purchases finished goods for resale is a merchandiser.

POINTS:  

1

DIFFICULTY:  

Easy

LEARNING OBJECTIVES:  

PRIN.EDWA.16.1 - Introduction

ACCREDITING STANDARDS:  

AACSB Analytic
ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Business Applications

OTHER:  

Bloom's: Remembering

a. 

Manufacturer.

b. 

Retailer.

c. 

Wholesaler.

d. 

Service business.

ANSWER:  

c

RATIONALE:  

A wholesaler purchases goods from the producer and sells them to the retailer.

POINTS:  

1

DIFFICULTY:  

Easy

LEARNING OBJECTIVES:  

PRIN.EDWA.16.1 - Introduction

ACCREDITING STANDARDS:  

AACSB Analytic
ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Business Applications

OTHER:  

Bloom's: Remembering

a. 

Airlines, accountants, and hair stylists.

b. 

Department stores, poster shops, and wholesalers.

c. 

Aircraft producers, home builders, and machine tool makers.

d. 

None of these are correct.

ANSWER:  

a

RATIONALE:  

Examples of service businesses include airlines, architects, and hair stylists.

POINTS:  

1

DIFFICULTY:  

Moderate

LEARNING OBJECTIVES:  

PRIN.EDWA.16.1 - Introduction

ACCREDITING STANDARDS:  

AACSB Reflective Thinking
ACCT.AICPA.FN.03 - Measurement
BUSPROG.06 - Reflective Thinking
IMA-Business Applications

OTHER:  

Bloom's: Understanding

a. 

determining the selling price of a product.

b. 

cost control.

c. 

quality management.

d. 

delivering product,

ANSWER:  

c

RATIONALE:  

ISO 9000 is a set of international standards for quality management.

POINTS:  

1

DIFFICULTY:  

Easy

LEARNING OBJECTIVES:  

PRIN.EDWA.16.1 - Introduction

ACCREDITING STANDARDS:  

AACSB Analytic
ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Strategic Planning

OTHER:  

Bloom's: Remembering

a. 

Determining the selling price of a product.

b. 

Bidding on contracts.

c. 

Determining the amount to spend on social media to promote the product.

d. 

Determining the amount of profit that each product earns.

ANSWER:  

c

RATIONALE:  

Unit cost information is used in determining selling price, bidding on contracts and determining product profitability, but would not have a bearing on determining how much the product would need to be advertised.

POINTS:  

1

DIFFICULTY:  

Moderate

LEARNING OBJECTIVES:  

PRIN.EDWA.16.2 - LO1: Explain the uses of cost accounting information

ACCREDITING STANDARDS:  

AACSB Analytic
ACCT.AICPA.FN.03 - Measurement
BUSPROG.03 - Analytic
IMA-Strategic Marketing

TOPICS:  

Uses of Cost Accounting Information

OTHER:  

Bloom's: Remembering