Accounting 202: Chapters 4-6

Exam Study Guide

I. 25 Multiple-Choice questions worth 2 points each for a total of 50 points

a. None of the multiple-choice questions will be computational, just short answer.

b. Know what is meant by cost objects and some examples of various cost objects.

c. Know what is meant by cost driver and good examples of cost drivers in specific cases.

d. Direct versus indirect costs; what is the difference?

e. Characteristics of relevant costs

f. Avoidable and unavoidable costs in decision making

g. Differential costs and revenue

h. Opportunity costs and how they enter into the decision making process

i. Sunk costs and their relevancy to decision making

j. Difference between traditional costing and Activity Based Costing (ABC)

k. Types of production that would use traditional or ABC costing

l. ABC cost drivers; Traditional Costing cost drivers

m. Activity levels; unit, batch, product, facility

II. Short Exercises:

a. A table of 10 independent costs will be given. You will need to place each into the hierarchy category of unit-level, batch-level, product-level, or facility-level categories. This exercise is worth 10 points.

b. A decision problem of whether to continue to make a part or have it outsourced. The problem includes an opportunity cost for consideration. (12 Points)

c. A somewhat longer problem that requires Chapter 4 and Chapter 6 information you learned for its solution (calculation of cost to produce under two methods of costing, traditional volume-based and ABC methods). (28 Points)

……………………………..Good Luck, study hard……………Dr. Putman