Question 1

Which of the following is an example of a fixed cost?

Accepted Answer

A)  Paper used in the manufacture of textbooks. 
B)  Property taxes paid by a firm to a large city. 
C)  The wages of part-time workers who are paid $8 per hour. 
D)  Gasoline consumed by salespersons' cars. 
E)  Surgical supplies used in a hospital's operating room. 
A)  Paper used in the manufacture of textbooks. 
B)  Property taxes paid by a firm to a large city. 
C)  The wages of part-time workers who are paid $8 per hour. 
D)  Gasoline consumed by salespersons' cars. 
E)  Surgical supplies used in a hospital's operating room.

Question 2

Shu Corporation recently computed total product costs of $567,000 and total period costs of $420,000, excluding $35,000 of sales commissions that were overlooked by the company's administrative assistant. On the basis of this information, Shu's income statement should reveal operating expenses of:

Accepted Answer

A)  $35,000. 
B)  $420,000. 
C)  $455,000. 
D)  $567,000. 
E)  $602,000. 
A)  $35,000. 
B)  $420,000. 
C)  $455,000. 
D)  $567,000. 
E)  $602,000.

Question 3

Depreciation of factory equipment would be classified as:

Accepted Answer

A)  operating cost. 
B)  "other" cost. 
C)  manufacturing overhead. 
D)  period cost. 
E)  administrative cost. 
A)  operating cost. 
B)  "other" cost. 
C)  manufacturing overhead. 
D)  period cost. 
E)  administrative cost.

Question 4

Manufacturers have established a cost classification called product costs. Define the term "product cost" and note where these costs appear in the financial statements. Be specific.

Accepted Answer

Product costs are costs that relate to t

Question 5

Manufacturing costs are classified into four categories.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following costs should be ignored when choosing among alternatives?

Accepted Answer

A)  Opportunity costs. 
B)  Sunk costs. 
C)  Out-of-pocket costs. 
D)  Differential costs. 
E)  None of the answers is correct. 
A)  Opportunity costs. 
B)  Sunk costs. 
C)  Out-of-pocket costs. 
D)  Differential costs. 
E)  None of the answers is correct.

Question 7

As the activity level increases, total fixed cost remains constant and unit fixed cost remains the same.

Accepted Answer

A) True 
 B)False

Question 8

The choices below depict five costs of Garfield Industries and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver?

Accepted Answer

A)  Gasoline consumed; number of miles driven. 
B)  Manufacturing overhead incurred in a heavily automated facility; direct labor hours. 
C)  Sales commissions; gross sales revenue. 
D)  Building maintenance cost; building square footage. 
E)  Human resources department cost; number of employees. 
A)  Gasoline consumed; number of miles driven. 
B)  Manufacturing overhead incurred in a heavily automated facility; direct labor hours. 
C)  Sales commissions; gross sales revenue. 
D)  Building maintenance cost; building square footage. 
E)  Human resources department cost; number of employees.

Question 9

In discussing the operation of her automobile, Dr. Lawson once observed that gasoline is a fixed cost because the cost per gallon is relatively stable. Insurance, on the other hand, is a variable cost because the cost per mile varies inversely with the number of miles driven. Comment on the Dr. Lawson's observation.

Accepted Answer

Dr. Lawson's observations are incorrect,

Question 10

When 5,000 units are produced variable costs are $35 per unit and total costs are $200,000. What are the total costs when 8,000 units are produced?

Accepted Answer

A)  $200,000. 
B)  $305,000. 
C)  $240,000. 
D)  None of the answers is correct. 
E)  Total costs cannot be calculated based on the information presented. 
A)  $200,000. 
B)  $305,000. 
C)  $240,000. 
D)  None of the answers is correct. 
E)  Total costs cannot be calculated based on the information presented.

Question 11

Which type of production process is ideal for a low production volume and one-of-a-kind products?

Accepted Answer

A)  Batch. 
B)  Continuous Flow. 
C)  Job Shop. 
D)  Assembly. 
E)  Direct assembly. 
A)  Batch. 
B)  Continuous Flow. 
C)  Job Shop. 
D)  Assembly. 
E)  Direct assembly.

Question 12

An employee accidentally overstated the year's advertising expense by $50,000. Which of the following correctly depicts the effect of this error?

Accepted Answer

A)  Cost of goods manufactured will be overstated by $50,000. 
B)  Cost of goods sold will be overstated by $50,000. 
C)  Both cost of goods manufactured and cost of goods sold will be overstated by $50,000. 
D)  Cost of goods sold will be overstated by $50,000, and cost of goods manufactured will be understated by $50,000. 
E)  None of the answers is correct. 
A)  Cost of goods manufactured will be overstated by $50,000. 
B)  Cost of goods sold will be overstated by $50,000. 
C)  Both cost of goods manufactured and cost of goods sold will be overstated by $50,000. 
D)  Cost of goods sold will be overstated by $50,000, and cost of goods manufactured will be understated by $50,000. 
E)  None of the answers is correct.

Question 13

An important first step in studying managerial accounting is to create a framework for thinking about the various types of costs incurred by organizations and how those costs are actively managed.

Accepted Answer

A) True 
 B)False

Question 14

Costs that a manager can influence significantly are classified as uncontrollable costs of that manager.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following inventories would a company ordinarily hold for sale?

Accepted Answer

A)  Raw materials. 
B)  Work in process. 
C)  Finished goods. 
D)  Raw materials and finished goods. 
E)  Work in process and finished goods. 
A)  Raw materials. 
B)  Work in process. 
C)  Finished goods. 
D)  Raw materials and finished goods. 
E)  Work in process and finished goods.

Question 16

Which of the following is not a period cost?

Accepted Answer

A)  Legal costs. 
B)  Public relations costs. 
C)  Sales commissions. 
D)  Wages of assembly-line workers. 
E)  The salary of a company's chief financial officer (CFO). 
A)  Legal costs. 
B)  Public relations costs. 
C)  Sales commissions. 
D)  Wages of assembly-line workers. 
E)  The salary of a company's chief financial officer (CFO).

Question 17

The income statements and balance sheets of service, retailing, and manufacturing businesses tend to differ.
Required:
A. Which of these businesses will disclose a cost-of-goods-sold figure on the income statement? Why?
B. Briefly describe the difference between a retailing firm and a manufacturer's disclosure of inventories on the balance sheet.

Accepted Answer

A. Retailers and manufacturers will disc

Question 18

What is the primary trade-off that an accountant must consider when deciding whether to identify cost drivers?

Accepted Answer

A)  Will the cost driver identification provide different costs for different purposes? 
B)  Is the cost/benefit of the process reasonable for more accurate cost behavior obtained? 
C)  Will the cost relationships be too complex to understand? 
D)  Will material-related drivers be more accurate than labor-related drivers?. 
E)  There is no trade-off to consider when using cost drivers. 
A)  Will the cost driver identification provide different costs for different purposes? 
B)  Is the cost/benefit of the process reasonable for more accurate cost behavior obtained? 
C)  Will the cost relationships be too complex to understand? 
D)  Will material-related drivers be more accurate than labor-related drivers?. 
E)  There is no trade-off to consider when using cost drivers.

Question 19

As activity decreases, unit variable cost:

Accepted Answer

A)  increases proportionately with activity. 
B)  decreases proportionately with activity. 
C)  remains constant. 
D)  increases by a fixed amount. 
E)  decreases by a fixed amount. 
A)  increases proportionately with activity. 
B)  decreases proportionately with activity. 
C)  remains constant. 
D)  increases by a fixed amount. 
E)  decreases by a fixed amount.

Question 20

The true statement about cost behavior is that:

Accepted Answer

A)  variable costs are constant on a per-unit basis and change in total as activity changes. 
B)  fixed costs are constant on a per-unit basis and change in total as activity changes. 
C)  fixed costs are constant on a per-unit basis and constant in total as activity changes. 
D)  variable costs change on a per-unit basis and change in total as activity changes. 
E)  variable costs are constant on a per-unit basis and are constant in total as activity changes. 
A)  variable costs are constant on a per-unit basis and change in total as activity changes. 
B)  fixed costs are constant on a per-unit basis and change in total as activity changes. 
C)  fixed costs are constant on a per-unit basis and constant in total as activity changes. 
D)  variable costs change on a per-unit basis and change in total as activity changes. 
E)  variable costs are constant on a per-unit basis and are constant in total as activity changes.

Which of the following is an example of a fixed cost?

Shu Corporation recently computed total product costs of $567,000 and total period costs of $420,000, excluding $35,000 of sales commissions that were overlooked by the company's administrative assistant. On the basis of this information, Shu's income statement should reveal operating expenses of:

Depreciation of factory equipment would be classified as:

Manufacturers have established a cost classification called product costs. Define the term "product cost" and note where these costs appear in the financial statements. Be specific.

Manufacturing costs are classified into four categories.

Which of the following costs should be ignored when choosing among alternatives?

As the activity level increases, total fixed cost remains constant and unit fixed cost remains the same.

The choices below depict five costs of Garfield Industries and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver?

When 5,000 units are produced variable costs are $35 per unit and total costs are $200,000. What are the total costs when 8,000 units are produced?

Which type of production process is ideal for a low production volume and one-of-a-kind products?

An employee accidentally overstated the year's advertising expense by $50,000. Which of the following correctly depicts the effect of this error?

An important first step in studying managerial accounting is to create a framework for thinking about the various types of costs incurred by organizations and how those costs are actively managed.

Costs that a manager can influence significantly are classified as uncontrollable costs of that manager.

Which of the following inventories would a company ordinarily hold for sale?

Which of the following is not a period cost?

What is the primary trade-off that an accountant must consider when deciding whether to identify cost drivers?

As activity decreases, unit variable cost:

The true statement about cost behavior is that:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 2: Basic Cost Management Concepts

Which of the following is an example of a fixed cost?

Shu Corporation recently computed total product costs of $567,000 and total period costs of $420,000, excluding $35,000 of sales commissions that were overlooked by the company's administrative assistant. On the basis of this information, Shu's income statement should reveal operating expenses of:

Depreciation of factory equipment would be classified as:

Manufacturers have established a cost classification called product costs. Define the term "product cost" and note where these costs appear in the financial statements. Be specific.

Manufacturing costs are classified into four categories.

Which of the following costs should be ignored when choosing among alternatives?

As the activity level increases, total fixed cost remains constant and unit fixed cost remains the same.

The choices below depict five costs of Garfield Industries and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver?

When 5,000 units are produced variable costs are $35 per unit and total costs are $200,000. What are the total costs when 8,000 units are produced?

Which type of production process is ideal for a low production volume and one-of-a-kind products?

An employee accidentally overstated the year's advertising expense by $50,000. Which of the following correctly depicts the effect of this error?

An important first step in studying managerial accounting is to create a framework for thinking about the various types of costs incurred by organizations and how those costs are actively managed.

Costs that a manager can influence significantly are classified as uncontrollable costs of that manager.

Which of the following inventories would a company ordinarily hold for sale?

Which of the following is not a period cost?

What is the primary trade-off that an accountant must consider when deciding whether to identify cost drivers?

As activity decreases, unit variable cost:

The true statement about cost behavior is that:

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters