Exam 2: Cost Concepts

Prime cost consists of direct materials combined with:

The following account balances has been extracted from Jimbob Co.'s general ledger: Direct materials used in production \ 200,000 Depreciation factory building \ 10,000 Depreciation factory equipment \ 50,000 Depreciation sales department automobiles \ 10,000 Direct wages factory employees \ 200,000 Sales department salaries and commissions \ 150,000 Factory manager's salary \ 50,000 Utility costs factory \ 50,000 Utility costs sales office \ 20,000 What was the total of manufacturing overhead?

Which of the following statements regarding fixed costs is incorrect

All the following would typically be considered indirect costs of manufacturing a particular Boeing 747 to be delivered to Singapore Airlines: electricity to run production equipment, the factory manager's salary, and the cost of the General Electric jet engines installed on the aircraft.

Reference: 02-06 Geneva Steel Corporation produces large sheets of heavy gauge steel. The company showed the following amounts relating to its production for the year just completed: Direct materials used in production \ 110,000 Direct labour costs for the year 55,000 Work in process, beginning 22,000 Finished goods, beginning 45,000 Cost of goods available for sale 288,000 Cost of goods sold 238,000 Work in process, ending 16,000 -The balance of the finished goods inventory at the end of the year was:

All costs incurred in a merchandising firm are considered to be period costs.

Reference: Frosting Corp. has provided the following relating to the most recent month (August 31, 2016) of operations, for their main product, cupcakes Baker's salaries 20,000 Finished goods inventory, beginning 18,000 Finished goods inventory, ending 20,000 General \& administrative expenses 20,000 Indirect materials 17,500 Production Supervisor, Salary 21,000 Purchases of raw materials 28,000 Raw materials inventory, ending 19,000 Raw materials inventory, beginning 18,000 Rent on production factory 19,000 Rent, retail store 18,000 Sales 243,000 Utilities on production factory 17,500 Utilities, retail store 17,000 Wages, retail staff 20,000 WIP inventory, beginning 19,500 WIP inventory, ending 21,500 -What was the amount of raw materials used in production?

Reference: Bergeron Inc. reported the following data for last year: Work in process inventory, beginning \ 100 Work in process inventory, ending \ 150 Finished goods inventory, beginning \ 180 Finished goods inventory, en ding \ 200 Direct labour cost \ 300 Direct materials cost \ 500 Manufacturing overhead cost \ 400 -The conversion cost was?

The cost of rent for a manufacturing plant is generally considered to be a: Prime cost Product cost a. No Yes b. No No c. Yes No d. Yes Yes

Reference: The following data (in thousands of dollars) have been taken from the accounting records of Karlist Corporation for the just completed year. Sales \ 800 Raw materials inventory, beginning \ 60 Raw materials inventory, ending \ 70 Purchases of raw materials \ 180 Direct labour \ 100 Manufacturing overhead \ 190 Administrative expenses \ 110 Selling expenses \ 150 Work in process inventory, beginning \ 70 Work in process inventory, ending \ 80 Finished goods inventory, beginning \ 120 Finished goods inventory, ending \ 160 -The cost of goods manufactured or the year (in thousands of dollars)was:

For a manufacturing company, which of the following is an example of a period rather than a product cost?

Reference: The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just completed year. Sales \ 910 Raw materials inventory, beginning \ 80 Raw materials inventory, ending \ 20 Purchases of raw materials \ 100 Direct labour \ 130 Manufacturing overhead \ 200 Administrative expenses \ 160 Selling expenses \ 140 Work in process inventory, beginning \ 40 Work in process inventory, ending \ 10 Finished goods inventory, beginning \ 130 Finished goods inventory, ending \ 150 -The cost of the raw materials used in production during the year (in thousands of dollars) was:

The gross margin for Cushing Company for the first quarter of last year was $325,000 when sales were $700,000. The beginning inventory of finished goods was $60,000 and the ending inventory of finished goods was $85,000. The cost of goods manufactured for the first quarter would have been:

An accounting course is taught in two classes per week for one hour and fifty minutes each. The classes are held in a building with 36 classrooms that are used for a variety of courses. There are 15 other courses taught in the Accounting Department at this university. If the cost object is the accounting course, which of the following is a direct cost?

If the ending inventory of finished goods is understated, net income will be overstated.

Reference: Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses: -The delivery charges incurred when shipping the computer hard drives to be installed in the computer.

The corporate controller's salary would be considered a(n):

The following information was provided by Grand Company for the year just ended: Beginning finished goods inventory \ 130,425 Ending finished goods inventory \ 125,770 Sales \ 500,000 Gross margin \ 100,000 The cost of goods manufactured for the year was:

Reference: Frosting Corp. has provided the following relating to the most recent month (August 31, 2016) of operations, for their main product, cupcakes Baker's salaries 20,000 Finished goods inventory, beginning 18,000 Finished goods inventory, ending 20,000 General \& administrative expenses 20,000 Indirect materials 17,500 Production Supervisor, Salary 21,000 Purchases of raw materials 28,000 Raw materials inventory, ending 19,000 Raw materials inventory, beginning 18,000 Rent on production factory 19,000 Rent, retail store 18,000 Sales 243,000 Utilities on production factory 17,500 Utilities, retail store 17,000 Wages, retail staff 20,000 WIP inventory, beginning 19,500 WIP inventory, ending 21,500 -What was the cost of goods manufactured for the period?

Within the relevant range, the difference between variable costs and fixed costs is: