Question 1

Dividends paid to company shareholders would be shown on the statement of cash flows as

Options :

A : operating cash inflows

B : operating cash outflows

C : cash flows from financing activities

D : cash flows from investing activities

Answer: B

Question 2

Life-cycle costing

Options :

A : Is sometimes used as a basis for cost planning and product pricing.

B : Includes only manufacturing costs incurred over the life of the product.

C : Includes only manufacturing cost, selling expense, and distribution expense.

D : Emphasizes cost savings opportunities during the manufacturing cycle.

Answer: A

Question 3

Contribution margin focuses on which one of the following?

Options :

A : The amount of revenue available to cover fixed costs.

B : The total variable manufacturing costs.

C : How competitive a company is compared to other companies.

D : The total revenue expected during the year.

Answer: A

Question 4

A company decided to implement life-cycle costing in order to achieve cost leadership in its industry. An accountant prepared a draft presentation explaining that life-cycle costing covers costs from the production stage to the sales and service stage of the product. After reviewing the draft, her supervisor asked the accountant to include a statement that life-cycle costing

Options :

A : capitalizes upstream product-related costs to highlight their value added.

B : also covers upstream preproduction costs since those lock in most downstream costs.

C : identifies the benefits of learning that reduce product costs over the product life cycle.

D : analyzes activities to help improve the value of products over their life cycle.

Answer: B

Question 5

Which one of the following is the best reason for using variable costing?

Options :

A : Variable costing is acceptable for income tax reporting purposes.

B : All costs are variable in the long term.

C : Fixed factory overhead is more closely related to the capacity to produce than to the production of specific units.

D : Variable costing usually results in higher operating income than if a company uses absorption costing.

Answer: C

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