Question 1

Variable costs are those costs that:

Accepted Answer

A) vary inversely with changes in activity. 
B) vary directly with changes in activity. 
C) remain constant in total as activity changes. 
D) decrease on a per-unit basis as activity increases. 
E) increase on a per-unit basis as activity increases. 
A) vary inversely with changes in activity. 
B) vary directly with changes in activity. 
C) remain constant in total as activity changes. 
D) decrease on a per-unit basis as activity increases. 
E) increase on a per-unit basis as activity increases.

Question 2

Costs that are expensed when incurred are called:

Accepted Answer

A) product costs. 
B) direct costs. 
C) inventoriable costs. 
D) period costs. 
E) indirect costs. 
A) product costs. 
B) direct costs. 
C) inventoriable costs. 
D) period costs. 
E) indirect costs.

Question 3

Waterdown Manufacturing, which began operations on January 1 of the current year, produces an industrial scraper that sells for $325 per unit. Information related to the current year's activities follows. $\begin{array} { l r } 
\text { Number of scrapers produced } & 20,000 \
\text { Number of scrapers sold } & 17,000 \
\text { Variable costs per unit: } & \
\quad \text { Direct materials } & \$ 25  \
\quad \text { Direct labour } & 35 \
\quad \text { Manufacturing overhead } &  60\
\text { Annual fixed costs: } & \
\quad \text { Manufacturing overhead } & \$ 400,000  \
\text { Selling \& administrative } & 140,000
\end{array}$ Waterdown carries its finished-goods inventory at the average unit cost of production. There was no work in process at year-end.
Required:
A. Compute the company's average unit cost of production.
B. Determine the cost of the December 31 finished-goods inventory.
C. Compute the company's cost of goods sold.
D. If next year's production increases to 23,000 units and general cost behaviour patterns do not change, what is the likely effect on:
1. The direct-labour cost of $35 per unit? Why?
2. The fixed manufacturing overhead cost of $400,000? Why?

Accepted Answer

A.   D. 1. No change. Direct labour is a

Question 4

Costs that can be easily traced to a specific department are called:

Accepted Answer

A) direct costs. 
B) indirect costs. 
C) product costs. 
D) manufacturing costs. 
E) processing costs. 
A) direct costs. 
B) indirect costs. 
C) product costs. 
D) manufacturing costs. 
E) processing costs.

Question 5

Which of the following equations is used to calculate the cost of goods sold during the period?

Accepted Answer

A) Beginning finished goods + cost of goods manufactured + ending finished goods. 
B) Beginning finished goods - ending finished goods. 
C) Beginning finished goods + cost of goods manufactured. 
D) Beginning finished goods + cost of goods manufactured - ending finished goods. 
E) Beginning finished goods + ending finished goods - cost of goods manufactured. 
A) Beginning finished goods + cost of goods manufactured + ending finished goods. 
B) Beginning finished goods - ending finished goods. 
C) Beginning finished goods + cost of goods manufactured. 
D) Beginning finished goods + cost of goods manufactured - ending finished goods. 
E) Beginning finished goods + ending finished goods - cost of goods manufactured.

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) Average cost. 
A) Opportunity costs. 
B) Sunk costs. 
C) Out-of-pocket costs. 
D) Differential costs. 
E) Average cost.

Question 7

Work-in-process inventory is composed of:

Accepted Answer

A) direct material and direct labour. 
B) direct labour and manufacturing overhead. 
C) direct material and manufacturing overhead. 
D) prime costs. 
E) direct material, direct labour, and manufacturing overhead. 
A) direct material and direct labour. 
B) direct labour and manufacturing overhead. 
C) direct material and manufacturing overhead. 
D) prime costs. 
E) direct material, direct labour, and manufacturing overhead.

Question 8

Consider the three firms that follow: (1) Air Canada, (2) Chrysler Canada and (3) Zellers. These firms, examples of service providers, manufacturers, and merchandisers, tend to have different characteristics with respect to costs and financial-statement disclosures.
Required:
Determine which of the preceding firms (1, 2, and/or 3) would likely:
A. Disclose operating expenses on the income statement.
B. Have product costs.
C. Have period costs.
D. Disclose cost of goods sold on the income statement.
E. Have no meaningful investment in inventory.
F. Maintain raw-material, work-in-process, and finished-goods inventories.
G. Have variable and fixed costs.

Accepted Answer

A. 1, 2, 3
B. 2, 3
C

Question 9

The salary that is sacrificed by a college student who pursues a degree full time is a(n):

Accepted Answer

A) sunk cost. 
B) out-of-pocket cost. 
C) opportunity cost. 
D) differential cost. 
E) marginal cost. 
A) sunk cost. 
B) out-of-pocket cost. 
C) opportunity cost. 
D) differential cost. 
E) marginal cost.

Question 10

The accounting records of Greenwood Company revealed the following information: $\begin{array} { l r } 
\text { Work in process inventory - Jan 1 } & \$ 58,000 \
\text { Work in process inventory - Dec } 31 & 49,000 \
\text { Finished goods inventory - Jan 1 } & 125,000 \
\text { Finished goods inventory - Dec } 31 & 158,000 \
\text { Cost of goods manufactured } & 754,000
\end{array}$ Greenwood's cost of goods sold is:

Accepted Answer

A) $721,000. 
B) $730,000. 
C) $739,000. 
D) $778,000. 
E) $787,000. 
A) $721,000. 
B) $730,000. 
C) $739,000. 
D) $778,000. 
E) $787,000.

Question 11

The accounting records of Dauphin Company revealed the following information: $\begin{array} { l r } 
\text { Total manufacturing eosts } & \$ 530,000 \
\text { Work in process inventory - Jan 1 } & 56,000 \
\text { Work in process inventory - Dec 31 } & 78,000 \
\text { Finished goods inventory - Jan 1 } & 146,000 \
\text { Finished goods inventory - Dee 31 } & 123,000
\end{array}$ Dauphin's cost of goods sold is:

Accepted Answer

A) $508,000. 
B) $529,000. 
C) $531,000. 
D) $553,000. 
E) $575,000. 
A) $508,000. 
B) $529,000. 
C) $531,000. 
D) $553,000. 
E) $575,000.

Question 12

Tiny Totts is a nursery school for kindergarten children. When there are twenty children enrolled, total revenues and total costs are $6,000 and $3,200, respectively. When there are twenty-one children enrolled, total revenues and total costs are $6,300 and $3,255, respectively. The average cost when there are twenty children enrolled in the school is:

Accepted Answer

A) $55. 
B) $160. 
C) $162.75. 
D) $300 
E) $315. 
A) $55. 
B) $160. 
C) $162.75. 
D) $300 
E) $315.

Question 13

Companies that engage in mass customization:

Accepted Answer

A) tend to have a relatively low production volume. 
B) tend to have a high production volume that involves highly standardized end-products. 
C) tend to have a high production volume, many standardized components, and customer-specified combinations of components. 
D) tend to have a high production volume, many unique components, and customer-specified combinations of components. 
E) could be typified by the refining operations of Shell Oil. 
A) tend to have a relatively low production volume. 
B) tend to have a high production volume that involves highly standardized end-products. 
C) tend to have a high production volume, many standardized components, and customer-specified combinations of components. 
D) tend to have a high production volume, many unique components, and customer-specified combinations of components. 
E) could be typified by the refining operations of Shell Oil.

Question 14

Total costs are $200,000 when 20,000 units are produced; of this amount, variable costs are $84,000. What are the total costs when 26,000 units are produced?

Accepted Answer

A) $150,800. 
B) $214,800. 
C) $225,200. 
D) $260,000. 
E) $369,200. 
A) $150,800. 
B) $214,800. 
C) $225,200. 
D) $260,000. 
E) $369,200.

Question 15

In a manufacturing company, the cost of goods manufactured during the period would include which of the following elements?

Accepted Answer

A) Raw materials used. 
B) Beginning finished goods inventory. 
C) Marketing costs. 
D) Depreciation of delivery trucks. 
E) Selling and Administrative costs. 
A) Raw materials used. 
B) Beginning finished goods inventory. 
C) Marketing costs. 
D) Depreciation of delivery trucks. 
E) Selling and Administrative costs.

Question 16

Ranges Ltd. produces refrigerators and stoves in an assembly-line process. Labour costs incurred during a recent period were: corporate executives, $100,000; assembly-line workers, $80,000; security guards, $18,000. The total of Ranges' direct labour cost was:

Accepted Answer

A) $18,000 
B) $80,000. 
C) $98,000. 
D) $118,000. 
E) $198,000 
A) $18,000 
B) $80,000. 
C) $98,000. 
D) $118,000. 
E) $198,000

Question 17

The accounting records of Banff Corporation revealed the following selected costs: Sales commissions, $25,000; plant supervision, $88,600; and administrative expenses, $179,400. Banff Corporation's period costs total:

Accepted Answer

A) $25,000. 
B) $88,600. 
C) $179,400. 
D) $204,400. 
E) $293,000. 
A) $25,000. 
B) $88,600. 
C) $179,400. 
D) $204,400. 
E) $293,000.

Question 18

Which of the following would not be considered a direct cost with respect to the service department of a new car dealership?

Accepted Answer

A) Wages of repair technicians. 
B) Property taxes paid by the dealership. 
C) Repair parts consumed. 
D) Salary of the department manager. 
E) Depreciation on new equipment used to analyze engine problems. 
A) Wages of repair technicians. 
B) Property taxes paid by the dealership. 
C) Repair parts consumed. 
D) Salary of the department manager. 
E) Depreciation on new equipment used to analyze engine problems.

Question 19

TomKat Corporation has a single facility that it uses for manufacturing, sales, and administrative activities. Should the company's building depreciation charge be expensed in its entirety or is a different accounting procedure appropriate? Explain.

Accepted Answer

The company's depreciation charge is, in

Question 20

Which costs will change with a decrease in activity?

Accepted Answer

A) Total fixed costs and total variable costs. 
B) Unit fixed cost and total variable costs. 
C) Unit variable cost and unit fixed cost. 
D) Unit fixed cost and total fixed cost. 
E) Unit variable cost and fixed manufacturing overhead. 
A) Total fixed costs and total variable costs. 
B) Unit fixed cost and total variable costs. 
C) Unit variable cost and unit fixed cost. 
D) Unit fixed cost and total fixed cost. 
E) Unit variable cost and fixed manufacturing overhead.

Variable costs are those costs that:

Costs that are expensed when incurred are called:

Costs that can be easily traced to a specific department are called:

Which of the following equations is used to calculate the cost of goods sold during the period?

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

Work-in-process inventory is composed of:

The salary that is sacrificed by a college student who pursues a degree full time is a(n):

Companies that engage in mass customization:

Total costs are $200,000 when 20,000 units are produced; of this amount, variable costs are $84,000. What are the total costs when 26,000 units are produced?

In a manufacturing company, the cost of goods manufactured during the period would include which of the following elements?

Ranges Ltd. produces refrigerators and stoves in an assembly-line process. Labour costs incurred during a recent period were: corporate executives, $100,000; assembly-line workers, $80,000; security guards, $18,000. The total of Ranges' direct labour cost was:

The accounting records of Banff Corporation revealed the following selected costs: Sales commissions, $25,000; plant supervision, $88,600; and administrative expenses, $179,400. Banff Corporation's period costs total:

Which of the following would not be considered a direct cost with respect to the service department of a new car dealership?

TomKat Corporation has a single facility that it uses for manufacturing, sales, and administrative activities. Should the company's building depreciation charge be expensed in its entirety or is a different accounting procedure appropriate? Explain.

Which costs will change with a decrease in activity?

The Changing Role of Managerial Accounting

Product Costing and Cost Accumulation

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behaviour, and Cost Estimation

Cost-Volume-Profit Analysis, Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing and Flexible Budgeting

Cost Management Tools

Responsibility Accounting, Investment Centres, 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

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Exam 2: Basic Cost Management Concepts

Variable costs are those costs that:

Costs that are expensed when incurred are called:

Costs that can be easily traced to a specific department are called:

Which of the following equations is used to calculate the cost of goods sold during the period?

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

Work-in-process inventory is composed of:

The salary that is sacrificed by a college student who pursues a degree full time is a(n):

Companies that engage in mass customization:

Total costs are $200,000 when 20,000 units are produced; of this amount, variable costs are $84,000. What are the total costs when 26,000 units are produced?

In a manufacturing company, the cost of goods manufactured during the period would include which of the following elements?

Ranges Ltd. produces refrigerators and stoves in an assembly-line process. Labour costs incurred during a recent period were: corporate executives, $100,000; assembly-line workers, $80,000; security guards, $18,000. The total of Ranges' direct labour cost was:

The accounting records of Banff Corporation revealed the following selected costs: Sales commissions, $25,000; plant supervision, $88,600; and administrative expenses, $179,400. Banff Corporation's period costs total:

Which of the following would not be considered a direct cost with respect to the service department of a new car dealership?

TomKat Corporation has a single facility that it uses for manufacturing, sales, and administrative activities. Should the company's building depreciation charge be expensed in its entirety or is a different accounting procedure appropriate? Explain.

Which costs will change with a decrease in activity?

The Changing Role of Managerial Accounting

Product Costing and Cost Accumulation

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behaviour, and Cost Estimation

Cost-Volume-Profit Analysis, Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing and Flexible Budgeting

Cost Management Tools

Responsibility Accounting, Investment Centres, 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

Filters