Question 1

Which of the following is true if the production volume decreases?

Accepted Answer

A)  fixed cost per unit increases 
B)  average cost per unit decreases 
C)  variable cost per unit increases 
D)  variable cost per unit decreases 
A)  fixed cost per unit increases 
B)  average cost per unit decreases 
C)  variable cost per unit increases 
D)  variable cost per unit decreases

Question 2

Which of the following cost is included in cost of goods sold?

Accepted Answer

A)  customer service cost 
B)  manufacturing labor cost 
C)  distribution cost 
D)  marketing cost 
A)  customer service cost 
B)  manufacturing labor cost 
C)  distribution cost 
D)  marketing cost

Question 3

Inventoriable costs are reported as a liability on the balance sheet when incurred and expensed on the income statement when the product is sold.

Accepted Answer

A) True 
 B)False

Question 4

Total manufacturing costs equal ________.

Accepted Answer

A)  direct materials plus prime costs 
B)  direct materials plus conversion costs 
C)  direct manufacturing labor costs plus sunk costs 
D)  direct manufacturing labor costs plus conversion costs 
A)  direct materials plus prime costs 
B)  direct materials plus conversion costs 
C)  direct manufacturing labor costs plus sunk costs 
D)  direct manufacturing labor costs plus conversion costs

Question 5

The balance sheet of a service-sector companies would show ________.

Accepted Answer

A)  work-in-process inventory, and finished goods inventory accounts 
B)  only finished goods inventory 
C)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts 
D)  no inventory accounts 
A)  work-in-process inventory, and finished goods inventory accounts 
B)  only finished goods inventory 
C)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts 
D)  no inventory accounts

Question 6

Under GAAP, only ________ can be assigned to inventories in the financial statements.

Accepted Answer

A)  manufacturing costs 
B)  period costs 
C)  cost of goods sold 
D)  historical costs 
A)  manufacturing costs 
B)  period costs 
C)  cost of goods sold 
D)  historical costs

Question 7

Costs are accounted for in two basic stages: assignment followed by accumulation.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a fixed cost for an automobile manufacturing plant?

Accepted Answer

A)  administrative salaries 
B)  electricity used by assembly-line machines 
C)  sales commissions 
D)  tires 
A)  administrative salaries 
B)  electricity used by assembly-line machines 
C)  sales commissions 
D)  tires

Question 9

Assigning indirect costs is easier than assigning direct costs.

Accepted Answer

A) True 
 B)False

Question 10

What is the gross margin for 2018?

Accepted Answer

A)  $135,000 
B)  $46,000 
C)  $163,000 
D)  $149,000 
A)  $135,000 
B)  $46,000 
C)  $163,000 
D)  $149,000

Question 11

Which of the following statements about the direct/indirect cost classification is true?

Accepted Answer

A)  Indirect costs are always traced. 
B)  Indirect costs are always allocated. 
C)  The design of sales target affects the direct/indirect classification. 
D)  The direct/indirect classification depends on the cost control measures. 
A)  Indirect costs are always traced. 
B)  Indirect costs are always allocated. 
C)  The design of sales target affects the direct/indirect classification. 
D)  The direct/indirect classification depends on the cost control measures.

Question 12

Cost of goods sold refers to the products brought to completion, whether they were started before or during the current accounting period.

Accepted Answer

A) True 
 B)False

Question 13

What are the three types of manufacturing cost?

Accepted Answer

Direct materials costs are the acquisiti

Question 14

In its first year of operation, the Excellent Publishing Company sells 52,000 units and has 1,700 units in stock at year end. The cost of goods sold are $3,100,000. What are the total manufacturing costs for the year if the average unit cost is $8.50?

Accepted Answer

A)  $3,114,450 
B)  $3,100,000 
C)  $3,085,550 
D)  $14,450 
A)  $3,114,450 
B)  $3,100,000 
C)  $3,085,550 
D)  $14,450

Question 15

A plant manufactures several different products. If a particular product is the cost object, then the wages of the plant supervisor can be classified as a(n) ________.

Accepted Answer

A)  direct cost because it occurs in the production facility 
B)  indirect manufacturing cost and therefore is an inventoriable cost 
C)  variable cost as it will vary on a per unit basis depending on volume 
D)  period cost 
A)  direct cost because it occurs in the production facility 
B)  indirect manufacturing cost and therefore is an inventoriable cost 
C)  variable cost as it will vary on a per unit basis depending on volume 
D)  period cost

Question 16

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of indirect cost for the soccer equipment line is the ________.

Accepted Answer

A)  material used to make the soccer balls 
B)  labor to shape the leather used to make the soccer ball 
C)  material used to manufacture the soccer studs 
D)  property taxes paid on the land and building (plant) 
A)  material used to make the soccer balls 
B)  labor to shape the leather used to make the soccer ball 
C)  material used to manufacture the soccer studs 
D)  property taxes paid on the land and building (plant)

Question 17

All costs reported on the income statement of a service-sector company are inventoriable costs.

Accepted Answer

A) True 
 B)False

Question 18

All of the following are factors affecting direct versus indirect cost classification except:

Accepted Answer

A)  materiality of the cost 
B)  cost accuracy 
C)  information technology's ability to trace costs in an economically feasible way 
D)  design of operations 
A)  materiality of the cost 
B)  cost accuracy 
C)  information technology's ability to trace costs in an economically feasible way 
D)  design of operations

Question 19

Which of the following is a manufacturing overhead cost?

Accepted Answer

A)  the use of direct materials in the making of a finished good 
B)  labor cost of plant workers that can be traced accurately and easily to a particular product 
C)  cost of materials that can be traced to individual products in an economically feasible manner 
D)  overtime premiums paid to plant workers 
A)  the use of direct materials in the making of a finished good 
B)  labor cost of plant workers that can be traced accurately and easily to a particular product 
C)  cost of materials that can be traced to individual products in an economically feasible manner 
D)  overtime premiums paid to plant workers

Question 20

What is the operating income for 2018?

Accepted Answer

A)  $73,000 
B)  $49,000 
C)  $36,000 
D)  $62,000 
A)  $73,000 
B)  $49,000 
C)  $36,000 
D)  $62,000

Exam 2: An Introduction to Cost Terms and Purposes

Which of the following is true if the production volume decreases?

Which of the following cost is included in cost of goods sold?

Inventoriable costs are reported as a liability on the balance sheet when incurred and expensed on the income statement when the product is sold.

Total manufacturing costs equal ________.

The balance sheet of a service-sector companies would show ________.

Under GAAP, only ________ can be assigned to inventories in the financial statements.

Costs are accounted for in two basic stages: assignment followed by accumulation.

Which of the following is a fixed cost for an automobile manufacturing plant?

Assigning indirect costs is easier than assigning direct costs.

What is the gross margin for 2018?

Which of the following statements about the direct/indirect cost classification is true?

Cost of goods sold refers to the products brought to completion, whether they were started before or during the current accounting period.

What are the three types of manufacturing cost?

In its first year of operation, the Excellent Publishing Company sells 52,000 units and has 1,700 units in stock at year end. The cost of goods sold are $3,100,000. What are the total manufacturing costs for the year if the average unit cost is $8.50?

A plant manufactures several different products. If a particular product is the cost object, then the wages of the plant supervisor can be classified as a(n) ________.

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of indirect cost for the soccer equipment line is the ________.

All costs reported on the income statement of a service-sector company are inventoriable costs.

All of the following are factors affecting direct versus indirect cost classification except:

Which of the following is a manufacturing overhead cost?

What is the operating income for 2018?

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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