Question 1

What is operating income for 2018?

Accepted Answer

A)  $199,000 
B)  $110,000 
C)  $125,000 
D)  $140,000 
A)  $199,000 
B)  $110,000 
C)  $125,000 
D)  $140,000

Question 2

Cost tracing is ________.

Accepted Answer

A)  the assignment of direct costs to the chosen cost object 
B)  a function of cost allocation 
C)  the process of tracking both direct and indirect costs associated with a cost object 
D)  the process of determining the actual cost of the cost object 
A)  the assignment of direct costs to the chosen cost object 
B)  a function of cost allocation 
C)  the process of tracking both direct and indirect costs associated with a cost object 
D)  the process of determining the actual cost of the cost object

Question 3

Which of the following formulas determine cost of goods sold in a merchandising entity?

Accepted Answer

A)  Beginning inventory + Purchases + Ending inventory = Cost of goods sold 
B)  Beginning inventory + Purchases - Ending inventory = Costs of goods sold 
C)  Beginning inventory - Purchases + Ending inventory = Cost of goods sold 
D)  Beginning inventory - Ending inventory - Purchases = Cost of goods sold 
A)  Beginning inventory + Purchases + Ending inventory = Cost of goods sold 
B)  Beginning inventory + Purchases - Ending inventory = Costs of goods sold 
C)  Beginning inventory - Purchases + Ending inventory = Cost of goods sold 
D)  Beginning inventory - Ending inventory - Purchases = Cost of goods sold

Question 4

Which of the following is not an inventoriable cost of a manufacturer?

Accepted Answer

A)  Sales commissions paid to sales representatives who sell the products made by the manufacturer 
B)  Wages paid to assembly-line workers 
C)  Plant depreciation incurred 
D)  Property taxes on plant 
A)  Sales commissions paid to sales representatives who sell the products made by the manufacturer 
B)  Wages paid to assembly-line workers 
C)  Plant depreciation incurred 
D)  Property taxes on plant

Question 5

One possible item that some companies include as direct manufacturing labor include ________.

Accepted Answer

A)  fringe benefits 
B)  overtime 
C)  idle time 
D)  plant supervisor's salary 
A)  fringe benefits 
B)  overtime 
C)  idle time 
D)  plant supervisor's salary

Question 6

The most likely cost driver of distribution costs is the ________.

Accepted Answer

A)  number of parts within the product 
B)  number of miles driven 
C)  number of products manufactured 
D)  number of production hours 
A)  number of parts within the product 
B)  number of miles driven 
C)  number of products manufactured 
D)  number of production hours

Question 7

Period costs ________.

Accepted Answer

A)  are treated as expenses in the period they are incurred 
B)  are directly traceable to products 
C)  are treated as expenses in the following period they are incurred 
D)  are also referred to as manufacturing overhead costs 
A)  are treated as expenses in the period they are incurred 
B)  are directly traceable to products 
C)  are treated as expenses in the following period they are incurred 
D)  are also referred to as manufacturing overhead costs

Question 8

Andy worked 60 hours last week for Bread Works Manufacturing. Of the 60 hours 10 hours were considered overtime, and also Tony was idle for 8 of the 60 hours due to an equipment malfunction. Andy makes $90 per hour and is paid $135 an hour (time and a half) for overtime. Andy's total compensation for that week would be ________, and assuming Bread Works charges overtime premium and idle time to indirect labor, the amount of this compensation credited to indirect labor would be ________.

Accepted Answer

A)  $5,850; $1,170 
B)  $6,300; $2,070 
C)  $5,130; $2,430 
D)  $5,400; $1,620 
A)  $5,850; $1,170 
B)  $6,300; $2,070 
C)  $5,130; $2,430 
D)  $5,400; $1,620

Question 9

Worcester Manufacturing produces electronic storage devices, and uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labor, and indirect manufacturing costs. Total indirect manufacturing costs for January were $300 million, and were allocated to each product on the basis of direct manufacturing labor costs of each line. Summary data (in millions) for January for the most popular electronic storage device, the Big Brain, was:
   
Required:
a.Compute the manufacturing cost per unit for each product produced in January.
b.Suppose production will be reduced to 30,000 units in February. Speculate as to whether the unit costs in February will most likely be higher or lower than unit costs in January; it is not necessary to calculate the exact February unit cost. Briefly explain your reasoning.

Accepted Answer

a.Unit costs for January were:
($4,600,0

Question 10

Pederson Company reported the following:
 
What is the manufacturing cost for the ending finished goods inventory?

Accepted Answer

A)  $100,000 
B)  $60,000 
C)  $744,000 
D)  $54,000 
A)  $100,000 
B)  $60,000 
C)  $744,000 
D)  $54,000

Question 11

The income statement of a service-sector firm reports ________.

Accepted Answer

A)  period costs only 
B)  cost of goods sold 
C)  both period costs and cost of of goods sold 
D)  direct labor costs 
A)  period costs only 
B)  cost of goods sold 
C)  both period costs and cost of of goods sold 
D)  direct labor costs

Question 12

Marriott International, would be classified as a(n) ________.

Accepted Answer

A)  manufacturing-sector company 
B)  merchandising-sector company 
C)  service-sector company 
D)  financial services firm 
A)  manufacturing-sector company 
B)  merchandising-sector company 
C)  service-sector company 
D)  financial services firm

Question 13

The East Company manufactures several different products. Unit costs associated with Product ORD105 are as follows:
 
What is the percentage of the total fixed costs per unit associated with Product ORD105 with respect to total cost?

Accepted Answer

A)  37% 
B)  32% 
C)  15% 
D)  26% 
A)  37% 
B)  32% 
C)  15% 
D)  26%

Question 14

Cost accounting and cost management include calculating various costs, obtaining financial and nonfinancial information, and analyzing relevant information for decision making.

Accepted Answer

A) True 
 B)False

Question 15

Inventoriable costs are costs of a product that are considered ________.

Accepted Answer

A)  assets in a company's balance sheet when the costs are incurred and that are expensed as cost of goods sold only when the product is sold 
B)  liabilities in a company's balance sheet when the costs are incurred and that are expensed only when the product is sold 
C)  assets in a company's income statement when the costs are capitalized and that are expensed as cost of goods sold only when the product is sold 
D)  liabilities in a company's income statement when the costs are capitalized and that are expensed only when the product is sold 
A)  assets in a company's balance sheet when the costs are incurred and that are expensed as cost of goods sold only when the product is sold 
B)  liabilities in a company's balance sheet when the costs are incurred and that are expensed only when the product is sold 
C)  assets in a company's income statement when the costs are capitalized and that are expensed as cost of goods sold only when the product is sold 
D)  liabilities in a company's income statement when the costs are capitalized and that are expensed only when the product is sold

Question 16

Rapid Cabinet Makers Inc. provided the following information for last month:
 
If sales reduce to half the amount in the next month, what is the projected operating income?

Accepted Answer

A)  $1,000 
B)  $6,000 
C)  $4,500 
D)  $18,500 
A)  $1,000 
B)  $6,000 
C)  $4,500 
D)  $18,500

Question 17

Since costs that are inventoried are not expensed until the units associated with them are sold, a manager can produce more units than are expected to be sold in a period without reducing a firm's net income.

Accepted Answer

A) True 
 B)False

Question 18

Puritan Apparels is a clothing manufacturer. Unit costs associated with one of its products, Product FGS1156 are as follows:
 
What are the inventoriable costs per unit associated with Product FGS1156?

Accepted Answer

A)  $196 
B)  $165 
C)  $178 
D)  $143 
A)  $196 
B)  $165 
C)  $178 
D)  $143

Question 19

A company reported revenues of $377,000, cost of goods sold of $122,000, selling expenses of $12,000, and total operating costs of $72,000. Gross margin for the year is ________.

Accepted Answer

A)  $255,000 
B)  $243,000 
C)  $171,000 
D)  $293,000 
A)  $255,000 
B)  $243,000 
C)  $171,000 
D)  $293,000

Question 20

Buildz Manufacturing currently produces 2,000 tables per month. The following per unit data for 2,000 tables apply for sales to regular customers:
 
The plant has capacity for 4,000 tables and is considering expanding production to 4,000 tables. What is the total cost of producing 4,000 tables?

Accepted Answer

A)  $540,000 
B)  $500,000 
C)  $390,000 
D)  $620,000 
A)  $540,000 
B)  $500,000 
C)  $390,000 
D)  $620,000

Exam 2: An Introduction to Cost Terms and Purposes

What is operating income for 2018?

Cost tracing is ________.

Which of the following formulas determine cost of goods sold in a merchandising entity?

Which of the following is not an inventoriable cost of a manufacturer?

One possible item that some companies include as direct manufacturing labor include ________.

The most likely cost driver of distribution costs is the ________.

Period costs ________.

Pederson Company reported the following: What is the manufacturing cost for the ending finished goods inventory?

The income statement of a service-sector firm reports ________.

Marriott International, would be classified as a(n) ________.

The East Company manufactures several different products. Unit costs associated with Product ORD105 are as follows: What is the percentage of the total fixed costs per unit associated with Product ORD105 with respect to total cost?

Cost accounting and cost management include calculating various costs, obtaining financial and nonfinancial information, and analyzing relevant information for decision making.

Inventoriable costs are costs of a product that are considered ________.

Rapid Cabinet Makers Inc. provided the following information for last month: If sales reduce to half the amount in the next month, what is the projected operating income?

Since costs that are inventoried are not expensed until the units associated with them are sold, a manager can produce more units than are expected to be sold in a period without reducing a firm's net income.

Puritan Apparels is a clothing manufacturer. Unit costs associated with one of its products, Product FGS1156 are as follows: What are the inventoriable costs per unit associated with Product FGS1156?

A company reported revenues of $377,000, cost of goods sold of $122,000, selling expenses of $12,000, and total operating costs of $72,000. Gross margin for the year is ________.

Buildz Manufacturing currently produces 2,000 tables per month. The following per unit data for 2,000 tables apply for sales to regular customers: The plant has capacity for 4,000 tables and is considering expanding production to 4,000 tables. What is the total cost of producing 4,000 tables?

The Manager and Management Accounting

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

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