Question 1

Information from the records of the Scully Company for July was as follows:
$\begin{array}{llr}
  \text { Sales } &\$307,500\
 \text { Selling and administrative expenses } &52,500\
 \text {Direct materials used  } &66,000\
 \text { Direct labour } &75,000\
 \text {  Variable factory overhead} &50,000\
 \text {Factory overhead  } &51,250\
\end{array}$
  $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$\text { Inventories }$
$\begin{array}{lrr}
&\text {July 1}&\text {July 31}\
\text { Direct materials } & \$ 8,000 & \$ 10,500 \
\text { Work in process } & 18,750 & 21,000 \
\text { Finished goods } & 17,250 & 14,250
\end{array}$
 Scully Corporation produced 20,000 units.
-Refer to the figure.What were the prime costs per unit for July?

Accepted Answer

A) $7.05 
B) $8.8125 
C) $14.7375 
D) $20.00

Question 2

What is developing a company strategy for responding to anticipated new markets an example of?

Accepted Answer

A) planning 
B) control 
C) decision making 
D) performance evaluation

Question 3

In regard to services,what is the definition of inseparability?

Accepted Answer

A) Products cannot be stored. 
B) Direct contact must take place for a sale. 
C) Products have a physical presence. 
D) Direct contact need not take place for the sale.

Question 4

Which of the following is a cost management subsystem designed to provide accurate and timely feedback concerning the performance of managers and others relative to their planning and control of activities?

Accepted Answer

A) financial accounting information system 
B) operational control information system 
C) cost accounting information system 
D) continuous improvement system

Question 5

Information from the records of the Tyler Enterprises for March is as follows:
$$\begin{array} { l r } 
\text { Sales } & \$ 41,000 \
\text { Direct labour } & 10,000 \
\text { Selling and administrative expenses } & 7,000 \
\text { Direct materials purchases } & 6,000 \
\text { Factory averhead } & 13,500
\end{array}$$  $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$\text { Inventories }$
$\begin{array}{lcc}
& \underline{\text { March 1 }}&\underline{\text { March 31}}\
 \text { Direct materials } & \$ 1,200 & \$ 1,400 \
\text { Work in process } & 2,500 & 2,800 \
 \text { Finished goods } & 2,300 & 1,900 \

\end{array}$
-Refer to the figure.What was the cost of materials used in production?

Accepted Answer

A) $5,800 
B) $6,000 
C) $6,200 
D) $19,500

Question 6

Which of the following is NOT a transformational process in an accounting information system?

Accepted Answer

A) collecting data 
B) analyzing data 
C) performance reporting 
D) summarizing data

Question 7

Which of the following costs is an example of a product cost?

Accepted Answer

A) selling commissions 
B) nonfactory office salaries 
C) direct materials 
D) advertising expense

Question 8

What is the term for a computerized information system that strives to input data once and make it available to people across the company for different purposes?

Accepted Answer

A) cost management information system 
B) enterprise resource planning system 
C) internal accounting system 
D) financial accounting system

Question 9

Which of the following is NOT a period cost?

Accepted Answer

A) order-getting costs 
B) order-making costs 
C) order-filling costs 
D) order-selling costs

Question 10

Which steps are included in the planning process?

Accepted Answer

A) comparing actual to forecasts,identifying means of achieving the objectives,making decisions 
B) setting objectives,comparing actual to forecasts,making decisions 
C) setting objectives,identifying means of achieving the objectives,comparing actual to forecasts 
D) setting objectives,identifying means of achieving the objectives,making decisions

Question 11

Which of the following would be considered a line function?

Accepted Answer

A) production 
B) maintenance 
C) public relations 
D) administrative services

Question 12

Which of the following expenses incurred by a department store is a direct cost for the women's shoe department?

Accepted Answer

A) the commissions of the salespersons of the women's shoe department 
B) the salaries for individuals working in the accounting department 
C) the heat and lighting of the women's shoe department 
D) the allocated rent expense for the clothing department

Question 13

Which cost assignment method would likely assign the cost of heating in a plant that makes chairs and go-carts when the chair product line is the cost object?

Accepted Answer

A) driver tracing 
B) direct tracing 
C) allocation 
D) arbitration

Question 14

Information from the records of the Cain Corporation for August was as follows:
$\begin{array}{llr}
  \text {Sales  } &\$1,230,000\
 \text { Selling and administrative expenses } &210,000\
 \text { Direct materials used } &264,000\
 \text { Direct labour } &300,000\
 \text {Factory overhead*  } &405,000\
\end{array}$
 *variable overhead is $205,000,fixed overhead is $200,000
  $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$\text { Inventories }$
$\begin{array}{lrr}
& \underline{\text {August 1}}& \underline{\text {August 31}}\
\text { Direct materials } & \$ 36,000 & \$ 42,000 \
\text { Work in process } & 75,000 & 84,000 \
\text { Finished goods } & 69,000 & 57,000
\end{array}$

-Refer to the figure.What are the variable product costs?

Accepted Answer

A) $764,000 
B) $769,000 
C) $969,000 
D) $1,179,000

Question 15

Which of the following items is not relevant to the cost flows of a service organization?

Accepted Answer

A) finished goods inventory 
B) materials inventory 
C) work-in-process inventory 
D) direct labour

Question 16

Inventory balances for the James Enterprises in February are as follows:
$\begin{array}{lrr}
&\text { February } 1&\text { February } 28\
\text { Raw materials } & \$ 27,000 & \$ 21,000 \
\text { Work in process } & 48,000 & 37,200 \
\text { Finished goods } & 108,000 & 90,000
\end{array}$ During February,purchases of direct materials were $36,000.Direct labour and factory overhead costs were $60,000 and $84,000,respectively.
-Refer to the figure.What is the cost of goods manufactured?

Accepted Answer

A) $180,000 
B) $186,000 
C) $194,000 
D) $196,800

Question 17

Which of the following would NOT be a benefit of a cost management system?

Accepted Answer

A) increasing speed by ignoring nonfinancial information 
B) reducing duplicate data storage and use of data 
C) improving timeliness of reports 
D) increasing the efficiency of generating reliable and accurate information

Question 18

In a company,engineers have redesigned the production process,lowering production costs,shortening the production cycle time,reducing waste,and improving quality.What managerial activity is occurring in this situation?

Accepted Answer

A) controlling 
B) continuous improvement 
C) planning 
D) decision making

Question 19

What would wages paid to a janitor in a factory be classified as?

Accepted Answer

A) direct labour 
B) direct janitor salaries 
C) supervisor salaries 
D) factory overhead

Question 20

How are costs classified when calculating the absorption-costing income for external reporting?

Accepted Answer

A) Manufacturing costs ultimately become nonmanufacturing costs. 
B) Manufacturing costs are product costs and product costs are never expensed. 
C) Costs of selling manufactured products are classified as product costs. 
D) Selling and administrative costs are classified as nonmanufacturing costs.

Exam 1: A: Basic Cost Management Concepts