Question 1

Which of the following is an inventoriable cost?

Accepted Answer

A)  manufacturing overhead cost 
B)  customer service costs 
C)  distribution costs 
D)  marketing costs 
A)  manufacturing overhead cost 
B)  customer service costs 
C)  distribution costs 
D)  marketing costs

Question 2

The determination of a cost as either direct or indirect depends upon the ________.

Accepted Answer

A)  accounting standards 
B)  tax system chosen 
C)  inventory valuation 
D)  cost object chosen 
A)  accounting standards 
B)  tax system chosen 
C)  inventory valuation 
D)  cost object chosen

Question 3

A cost object is anything for which a cost measurement is desired.

Accepted Answer

A) True 
 B)False

Question 4

For external reporting ________.

Accepted Answer

A)  costs are classified as either inventoriable or period costs 
B)  costs reflect current values 
C)  there are no prescribed rules since no one is exactly sure how investors and creditors will use these numbers 
D)  costs include amounts that reflect both current and future benefits 
A)  costs are classified as either inventoriable or period costs 
B)  costs reflect current values 
C)  there are no prescribed rules since no one is exactly sure how investors and creditors will use these numbers 
D)  costs include amounts that reflect both current and future benefits

Question 5

In the manufacturing plant, Alex is paid $40 an hour for straight-time and $60 an hour for overtime. One week she worked 54 hours, which included 8 hours of overtime, and 6 hours of idle time caused by material shortages.
Required:
a.What is Alex's total compensation for the week?
b.What amount of compensation would be reported as direct manufacturing labor?
c.What amount of compensation would be reported as manufacturing overhead?

Accepted Answer

a.Total compensation (48 hours × $40) +

Question 6

Manufacturing companies hold only one type of inventory: direct material.

Accepted Answer

A) True 
 B)False

Question 7

Accountants define a cost as the amount of money spent on a resource.

Accepted Answer

A) True 
 B)False

Question 8

Overtime premium is normally considered as a component of direct labor.

Accepted Answer

A) True 
 B)False

Question 9

During 2018, Get There Corporation incurred manufacturing expenses of $200,000 to produce 40,000 finished units. It was determined that 35,000 units were sold by the end of November while 5,000 units remained in ending inventory. The storage cost for December is $0.5 per unit.
Required:
a.What is the cost of producing one unit?
b.What is the amount that will be reported on the income statement for cost of goods sold?
c.What is the cost incurred for storing the inventory?

Accepted Answer

a.$2000,000 / 40,000

Question 10

Which of the following influences the make or buy decision to the company?

Accepted Answer

A)  opportunity cost 
B)  sunk cost 
C)  historical cost 
D)  plant depreciation 
A)  opportunity cost 
B)  sunk cost 
C)  historical cost 
D)  plant depreciation

Question 11

What is gross margin for 2018?

Accepted Answer

A)  $212,000 
B)  $228,000 
C)  $244,000 
D)  $122,000 
A)  $212,000 
B)  $228,000 
C)  $244,000 
D)  $122,000

Question 12

For a manufacturing company, direct material costs may be included in ________.

Accepted Answer

A)  only the direct materials inventory account 
B)  only in the merchandise inventory account reflecting the inventory on hand 
C)  only in both work-in-process inventory and finished goods inventory 
D)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts 
A)  only the direct materials inventory account 
B)  only in the merchandise inventory account reflecting the inventory on hand 
C)  only in both work-in-process inventory and finished goods inventory 
D)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts

Question 13

For a manufacturing company, direct labor costs would be included in ________.

Accepted Answer

A)  only the direct materials inventory to reflect the cost of labor that has worked using those materials 
B)  only in the merchandise inventory to reflect the value added in the production process 
C)  only in both work-in-process inventory and finished goods inventory 
D)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts 
A)  only the direct materials inventory to reflect the cost of labor that has worked using those materials 
B)  only in the merchandise inventory to reflect the value added in the production process 
C)  only in both work-in-process inventory and finished goods inventory 
D)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts

Question 14

Cost behavior refers to ________.

Accepted Answer

A)  how costs react to a change in the level of activity 
B)  whether a cost is incurred in a manufacturing, merchandising, or service company 
C)  classifying costs as either perpetual or period costs 
D)  whether a particular expense is expensed in the same or the following period 
A)  how costs react to a change in the level of activity 
B)  whether a cost is incurred in a manufacturing, merchandising, or service company 
C)  classifying costs as either perpetual or period costs 
D)  whether a particular expense is expensed in the same or the following period

Question 15

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

Accepted Answer

A)  Beginning work-in-process inventory + Cost of goods manufactured - Ending work-in-process inventory = Cost of goods sold 
B)  Beginning work-in-process inventory + Cost of goods manufactured + Ending work-in-process inventory = Cost of goods sold 
C)  Cost of goods manufactured - Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
D)  Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
A)  Beginning work-in-process inventory + Cost of goods manufactured - Ending work-in-process inventory = Cost of goods sold 
B)  Beginning work-in-process inventory + Cost of goods manufactured + Ending work-in-process inventory = Cost of goods sold 
C)  Cost of goods manufactured - Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
D)  Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold

Question 16

The American West Company manufactures several different products. Unit costs associated with Product ORD210 are as follows:
 
What are the inventoriable costs per unit associated with Product ORD210?

Accepted Answer

A)  $134 
B)  $124 
C)  $144 
D)  $114 
A)  $134 
B)  $124 
C)  $144 
D)  $114

Question 17

Pederson Company reported the following:
 
What is the amount of gross profit margin?

Accepted Answer

A)  $1,750,000 
B)  $3,150,000 
C)  $4,725,000 
D)  $1,575,000 
A)  $1,750,000 
B)  $3,150,000 
C)  $4,725,000 
D)  $1,575,000

Question 18

Denver City Manufacturing currently produces 2,000 glasses per month. The following per unit data apply for sales to regular customers and is based on 1,000 units produced.
   
The plant has capacity for 3,000 glasses. Plant supervisor's salary is $15,000.
Required:
a.What is the total cost of producing 2,000 glasses?
b.What is the total cost of producing 1,600 glasses?
c.What is the per unit cost when producing 1,500 glasses?

Accepted Answer

a.[($200 + $40 + $70) × 2,000 units] + (

Question 19

Which of the following is true of indirect costs?

Accepted Answer

A)  Indirect costs are always considered sunk costs. 
B)  All indirect costs are included in cost of goods sold. 
C)  Indirect costs always vary in direct proportion to the level of production. 
D)  Indirect costs cannot be traced to a particular cost object in an economically feasible way. 
A)  Indirect costs are always considered sunk costs. 
B)  All indirect costs are included in cost of goods sold. 
C)  Indirect costs always vary in direct proportion to the level of production. 
D)  Indirect costs cannot be traced to a particular cost object in an economically feasible way.

Question 20

Inventoriable costs ________.

Accepted Answer

A)  include administrative and marketing costs 
B)  are expensed in the accounting period in which the products are sold 
C)  are expensed in the accounting period in which the products are manufactured 
D)  are also referred to as nonmanufacturing costs 
A)  include administrative and marketing costs 
B)  are expensed in the accounting period in which the products are sold 
C)  are expensed in the accounting period in which the products are manufactured 
D)  are also referred to as nonmanufacturing costs

Which of the following is an inventoriable cost?

The determination of a cost as either direct or indirect depends upon the ________.

A cost object is anything for which a cost measurement is desired.

For external reporting ________.

Manufacturing companies hold only one type of inventory: direct material.

Accountants define a cost as the amount of money spent on a resource.

Overtime premium is normally considered as a component of direct labor.

Which of the following influences the make or buy decision to the company?

What is gross margin for 2018?

For a manufacturing company, direct material costs may be included in ________.

For a manufacturing company, direct labor costs would be included in ________.

Cost behavior refers to ________.

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

The American West Company manufactures several different products. Unit costs associated with Product ORD210 are as follows: What are the inventoriable costs per unit associated with Product ORD210?

Pederson Company reported the following: What is the amount of gross profit margin?

Which of the following is true of indirect costs?

Inventoriable costs ________.

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

Filters

Exam 2: An Introduction to Cost Terms and Purposes

Which of the following is an inventoriable cost?

The determination of a cost as either direct or indirect depends upon the ________.

A cost object is anything for which a cost measurement is desired.

For external reporting ________.

Manufacturing companies hold only one type of inventory: direct material.

Accountants define a cost as the amount of money spent on a resource.

Overtime premium is normally considered as a component of direct labor.

Which of the following influences the make or buy decision to the company?

What is gross margin for 2018?

For a manufacturing company, direct material costs may be included in ________.

For a manufacturing company, direct labor costs would be included in ________.

Cost behavior refers to ________.

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

The American West Company manufactures several different products. Unit costs associated with Product ORD210 are as follows: What are the inventoriable costs per unit associated with Product ORD210?

Pederson Company reported the following: What is the amount of gross profit margin?

Which of the following is true of indirect costs?

Inventoriable costs ________.

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

Filters