Exam 4: Cost Management Systems and Activity-Based Costing

need aggregate rather than detailed cost information.

Parts and materials included in a product are direct costs.

Simpson Company, a manufacturer of windows, has prepared the following list of accounts and their balances: Advertising \ 7,200 Assemblers' wages 16,840 Depreciation of machinery 1,840 Factory utilities 11,120 Lathe operators' wages 13,280 Machinery rep airs 4,520 Office salaries 22,760 Purchases of glue 320 Purchases of nails 160 Purchases of oak 50,000 Purchases of pine 19,800 Supervis ors' salaries 38,280 There were no beginning or ending inventories. Calculate the following: a. Direct materials used b. Direct labor c. Factory overhead d. Prime costs e. Conversion costs

Two- stage ABC systems have a financial accounting flavor because the general ledger is at the core of all the cost data used.

Value- added costs are not necessary.

Rainbow Company manufactures paint in two processes: Mixing and Heating. Total costs incurred in the mixing and cooking departments are as follows: Direct Materials Direct labor Mixing \ 60,000 \ 80,000 Heating \ 40,000 \ 70,000 Indirect manufacturing costs were $100,000 for the Mixing department and $200,000 for the Heating department. Rainbow Company manufactures two products, Superior Paint and Deluxe Paint. Costs are allocated to these products in the following proportions: Mixing Heating DM DL DM DL Sup erior \% \% \% \% Deluxe \% \% \% \% Indirect cost is allocated in proportion to the direct labor costs with each department. The Heating department cost allocated to Superior is:

Collecting costs by a "natural" classification

The Kotter Company has gathered the following information for the year ended December 31, 20X0: Sales \ 104,000 Direct materials used 30,800 Direct labor 20,200 Fixed: Factory overhead 12,400 Selling expenses 4,200 Administrative expens es 8,600 Variable: Factory overhead 6,600 Selling expenses 8,800 Administrative expens es 4,600 Beginning work in process invent ory 50,000 Ending work in process inventory 30,000 Beginning finished goods inventory 0 Ending finished goods inventory 25,000 a. Compute the cost of goods manufactured b. Compute the cost of goods sold

Andy Taylor Corporation has gathered the following information: Sales \ 38,400 Direct materials used 7,340 Direct labor 3,040 Fixed: Factory overhead 2,480 Selling expenses 840 Administrative expenses 1,720 Variable: Factory overhead 12,470 Selling expenses 1,580 Administrative expenses 1,230 There were no beginning or ending inventories. The total period costs are:

Many more costs are direct if the cost objective is a:

is an example of the decisions reflecting the strategic purpose of the cost- management system.

An example of a cost objective is an account title, such as advertising or office supplies.

All of the following are period costs except:

For many organizations, the single largest cost is advertising.

The following information was extracted from the accounting records of Jabbar Manufacturing Company: Direct material s purchased \ 80,000 Direct materials used 76,000 Direct manuf acturing labor costs 10,000 Indirect manufacturing lab or costs 12,000 Sales sal aries 14,000 Other factory expenses 22,000 Selling and administrative expens es 30,000 The total period cost is:

Accountants initially record costs by category.

A group of individual costs that is allocated to cost objectives using a single cost driver

The following information was extracted from the accounting records of Chamberlain Manufacturing Company: Direct materials purch ased \ 80,000 Direct material s used 76,000 Direct manufacturing lab or costs 10,000 Indirect manufacturing lab or costs 12,000 Sales sal aries 14,000 Other factory expens es 22,000 Selling and administrative expenses 20,000 The cost of goods manufactured is:

are included in factory overhead.

is a false statement.