Question 1

Which of the following is a period cost?

Accepted Answer

A)  costs incurred to provide customer service such as the operation of a 800 phone line to trouble shoot product problems and to answer questions about product warranties 
B)  the cost of materials used to make a product when those materials are an insignificant part of the finished product 
C)  the cost of direct labor 
D)  the amount of depreciation expense recognized because of the use of plant assets such as building and equipment 
A)  costs incurred to provide customer service such as the operation of a 800 phone line to trouble shoot product problems and to answer questions about product warranties 
B)  the cost of materials used to make a product when those materials are an insignificant part of the finished product 
C)  the cost of direct labor 
D)  the amount of depreciation expense recognized because of the use of plant assets such as building and equipment

Question 2

Variable costs ________.

Accepted Answer

A)  are always indirect costs 
B)  increase in total when the actual level of activity increases 
C)  include most personnel costs and depreciation on machinery 
D)  are never considered a part of prime cost 
A)  are always indirect costs 
B)  increase in total when the actual level of activity increases 
C)  include most personnel costs and depreciation on machinery 
D)  are never considered a part of prime cost

Question 3

Howard Manufacturing Company had the following account balances for the quarter ending March 31, unless otherwise noted:
   
Required:
a.Prepare a cost of goods manufactured schedule for the quarter.
b.Prepare a cost of goods sold schedule for the quarter.

Accepted Answer

The answer of Howard Manufacturing Company had the following account...

Question 4

In determining product cost, what concerns does a manufacturing firm have when contracting with a government agency?

Accepted Answer

Government contracts often reimburse on

Question 5

Cost accounting helps to aids managers in formulating strategies, setting prices for products and services and making decisions about the mix of products and services to be offered to customers.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a direct manufacturing cost?

Accepted Answer

A)  plant maintenance 
B)  plant rent 
C)  fringe benefits paid to machine operators 
D)  property taxes on plant 
A)  plant maintenance 
B)  plant rent 
C)  fringe benefits paid to machine operators 
D)  property taxes on plant

Question 7

All costs incurred by a company (sacrifice of a resource) are recorded in the accounting system.

Accepted Answer

A) True 
 B)False

Question 8

An actual cost is the cost incurred-a historical or past cost.

Accepted Answer

A) True 
 B)False

Question 9

Pederson Company reported the following:
 
What is the average manufacturing cost per unit? (Round the answer to the nearest dollar.)

Accepted Answer

A)  $48.00 
B)  $80.00 
C)  $60.00 
D)  $64.00 
A)  $48.00 
B)  $80.00 
C)  $60.00 
D)  $64.00

Question 10

________ are all manufacturing costs that are related to the cost object but cannot be traced to that cost object in an economically feasible way.

Accepted Answer

A)  Indirect manufacturing costs 
B)  Marketing costs incurred 
C)  Variable manufacturing costs 
D)  Custom duties paid for the materials 
A)  Indirect manufacturing costs 
B)  Marketing costs incurred 
C)  Variable manufacturing costs 
D)  Custom duties paid for the materials

Question 11

All manufacturing costs are period costs.

Accepted Answer

A) True 
 B)False

Question 12

Describe both variable and fixed costs. Explain why the distinction between variable and fixed costs is important in cost accounting.

Accepted Answer

Total variable costs increase with incre

Question 13

Banks provide services or what some might call "intangible products" to their customers.

Accepted Answer

A) True 
 B)False

Question 14

Outside the relevant range, variable costs, such as direct material costs ________.

Accepted Answer

A)  will decrease proportionately with changes in sales volumes 
B)  will remain the same with changes in production volumes 
C)  will not change proportionately with changes in production volumes 
D)  will increase proportionately with changes in sales volumes 
A)  will decrease proportionately with changes in sales volumes 
B)  will remain the same with changes in production volumes 
C)  will not change proportionately with changes in production volumes 
D)  will increase proportionately with changes in sales volumes

Question 15

What are the differences between direct costs and indirect costs? Give an example of each.

Accepted Answer

Direct costs are costs that can be trace

Question 16

Under GAAP, for the purposes of calculating inventory costs, product costs include ________.

Accepted Answer

A)  all costs incurred along the value chain 
B)  design costs 
C)  only inventoriable costs 
D)  only research and development costs 
A)  all costs incurred along the value chain 
B)  design costs 
C)  only inventoriable costs 
D)  only research and development costs

Question 17

At a plant where a union agreement sets annual salaries and conditions, annual labor costs usually ________.

Accepted Answer

A)  are considered a variable cost 
B)  are considered a fixed cost 
C)  depend on the scheduling of floor workers 
D)  depend on the scheduling of production runs 
A)  are considered a variable cost 
B)  are considered a fixed cost 
C)  depend on the scheduling of floor workers 
D)  depend on the scheduling of production runs

Question 18

________ sector companies purchase materials and components and convert them into finished goods.

Accepted Answer

A)  Merchandising 
B)  Service 
C)  Manufacturing 
D)  Professional 
A)  Merchandising 
B)  Service 
C)  Manufacturing 
D)  Professional

Question 19

Manufacturing sector firms normally hold three types of inventory: direct materials inventory, work-in-process inventory, and finished goods inventory.

Accepted Answer

A) True 
 B)False

Question 20

On the assembly floor, Jennifer is paid a regular rate of $25 an hour for straight-time assuming 8 working hours a day and five working days in a week. She is paid 1.5 times her regular rate for overtime hours. One week she worked 48 hours.
Required:
a.What is Jennifer'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 = Direct labor (40

Exam 2: An Introduction to Cost Terms and Purposes

Which of the following is a period cost?

Variable costs ________.

Howard Manufacturing Company had the following account balances for the quarter ending March 31, unless otherwise noted: Required: a.Prepare a cost of goods manufactured schedule for the quarter. b.Prepare a cost of goods sold schedule for the quarter.

In determining product cost, what concerns does a manufacturing firm have when contracting with a government agency?

Cost accounting helps to aids managers in formulating strategies, setting prices for products and services and making decisions about the mix of products and services to be offered to customers.

Which of the following is a direct manufacturing cost?

All costs incurred by a company (sacrifice of a resource) are recorded in the accounting system.

An actual cost is the cost incurred-a historical or past cost.

Pederson Company reported the following: What is the average manufacturing cost per unit? (Round the answer to the nearest dollar.)

________ are all manufacturing costs that are related to the cost object but cannot be traced to that cost object in an economically feasible way.

All manufacturing costs are period costs.

Describe both variable and fixed costs. Explain why the distinction between variable and fixed costs is important in cost accounting.

Banks provide services or what some might call "intangible products" to their customers.

Outside the relevant range, variable costs, such as direct material costs ________.

What are the differences between direct costs and indirect costs? Give an example of each.

Under GAAP, for the purposes of calculating inventory costs, product costs include ________.

At a plant where a union agreement sets annual salaries and conditions, annual labor costs usually ________.

________ sector companies purchase materials and components and convert them into finished goods.

Manufacturing sector firms normally hold three types of inventory: direct materials inventory, work-in-process inventory, and finished goods inventory.

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