Question 1

If a cost is recorded as an asset (for example, prepaid rent for an office building), it becomes an expense when the asset has been consumed.

Accepted Answer

A) True 
 B)False

Question 2

Tallon Company manufactures a single product. The product's prime costs consist of

Accepted Answer

A)  direct materials and direct labor. 
B)  direct materials and manufacturing overhead. 
C)  direct labor and manufacturing overhead. 
D)  direct materials, direct labor and manufacturing overhead. 
A)  direct materials and direct labor. 
B)  direct materials and manufacturing overhead. 
C)  direct labor and manufacturing overhead. 
D)  direct materials, direct labor and manufacturing overhead.

Question 3

Revenue minus cost of goods sold equals contribution margin.

Accepted Answer

A) True 
 B)False

Question 4

Shuster Industries manufactures baseballs and identified the following costs associated with their manufacturing activity (V = Variable; F = Fixed). The following information is available for the month of June when 25,000 baseballs were produced, but only 23,500 baseballs were sold.
 $$\begin{array} { l r } 
\text { Power to nin plant equipment } ( \mathrm { V } ) &\$ 25,000 \
\text { Other selling costs } ( \mathrm { V } ) & 149,150 \
\text { Indirect labor } ( \mathrm { F } ) & 50,000 \
\text { Property taxes on factory building } ( \mathrm { F } ) & 12,500 \
\text { Marketing costs } ( \mathrm { V } ) & 30,000 \
\text { Factory Supervisor salaries } ( \mathrm { F } ) & 125,000 \
\text { Direct materials used } ( \mathrm { V } ) & 500,000 \
\text { Depreciation on plarnt equiprnent } ( \mathrm { F } ) & 68,000 \
\text { Shipping costs to custorner } ( \mathrm { V } ) & 48,800 \
\text { Indirect material and supplies } ( \mathrm { V } ) & 37,500 \
\text { Direct labor } ( \mathrm { V } ) & 250,000 \
\text { Adrninistrative salaries } ( \mathrm { F } ) & 300,000 \
\text { Insurance on factory building } ( \mathrm { F } ) & 62,500 \
\text { Utilities, factory } ( \mathrm { V } ) & 50,000 \
\text { General office costs } ( \mathrm { F } ) & 48,000
\end{array}$$ 
Required:
Compute the following amounts for July, assuming 30,000 baseballs were produced and sold: (Assume normal production ranges from 15,000 to 40,000 baseballs)
(a) Total manufacturing costs.
(b) Total conversion costs.
(c) Period costs per unit.
(d) Full costs per unit.

Accepted Answer

(a)[($500,000 + 250,000 + 25,000 + 37,50

Question 5

A computer virus destroyed some of the accounting records for Dorchester Antique Remodeling Company for the years 2019-2021. The following information was salvaged from the computer system.
Required:
Determine the correct amounts for A through P.

Accepted Answer

The answer of A computer virus destroyed some of the...

Question 6

The Shoal Company's manufacturing costs for the third quarter of 2019 were as follows: (CPA adapted)
$\begin{array}{llr}
  \text {Direct materials and direct labor  } &\$700,000\
 \text {  Other variable manufacturing costs} &100,000\
 \text {  Depreciation of factory building and manufacturing equipment} &80,000\
 \text { Other fixed manufacturing costs } &18,000\

\end{array}$

What amount should be considered product costs for external reporting purposes?

Accepted Answer

A)  $700,000 
B)  $800,000 
C)  $880,000 
D)  $898,000 
A)  $700,000 
B)  $800,000 
C)  $880,000 
D)  $898,000

Question 7

The primary goal of the cost accounting system is to provide managers with information to prepare their annual financial statements.

Accepted Answer

A) True 
 B)False

Question 8

Hurwitz Corporation had the following activities during 2019:
   
Required:
(a) Prepare a schedule of cost of goods manufactured for 2019.
(b) Prepare a schedule of cost of goods sold for 2019.
(c) Prepare an income statement for 2019.

Accepted Answer

None

Question 9

The Torchdown Company began operations several years ago. The company purchased a building, and since only half of the space was needed for operations, the remaining space was rented to another firm for rental revenue of $20,000 per year. The success of Torchdown Company's product has resulted in the company needing more space. The renter's lease will expire next month and Torchdown will not renew the lease in order to use the space to expand operations and meet demand.
The company's product requires direct materials that cost $25 per unit. The company employs a production supervisor whose salary is $2,000 per month. Production line workers are paid $15 per hour to manufacture and assemble the product. The company rents the equipment needed to produce the product at a rental cost of $1,500 per month. Additional equipment will be needed as production is expanded and the monthly rental charge for this equipment will be $900 per month. The building is depreciated on a straight-line basis at $9,000 per year.
The company spends $40,000 per year to market the product. Shipping costs for each unit are $20 per unit. The cost of electricity and other utilities used for product is $2 per unit. The company plans to liquidate several investments in order to expand production. These investments currently earn a return of $8,000 per year.
Required:
Using the table below as a reference, describe which cost headings best identify the costs listed in the first column. As more than one type of cost can be applicable, ensure to list all possibilities when entering your answers (e.g., a cost might be a variable cost, and an overhead cost).

Accepted Answer

The answer of The Torchdown Company began operations several years...

Question 10

The following data appeared in Moline Company's records on December 31:
 $\begin{array}{lr}
\text { Direct Materials Inventory, Dec. } 31 & \$ 35,500 \
\text { Direct Materials purchased during the year } & 2,268,000 \
\text { Finished Goods Inventory, Dec. } 31 & 567,000 \
\text { Indirect labor } & 201,600 \
\text { Direct labor } & 2,520,000 \
\text { Factory heat, light, and power } & 234,360 \
\text { Factory depreciation } & 396,900 \
\text { Administrative salaries } & 323,820 \
\text { Miscellaneous factory cost } & 200,970\
\text { Marketing costs } & 233,100 \
\text { Other administrative costs } & 113,400 \
\text { Maintenance on factory equipment } & 76,230 \
\text { Insurance on factory equipment } & 119,700 \
\text { Distribution costs } & 10,080 \
\text { Taxes on manufacturing property } & 82,530 \
\text { Legal fees on customer complaint } & 51,660 \
\text { Direct materials put into production } & 2,407,230 \
\text { Work-in-Process Inventory, Dec. 31 } & 154,980 
\end{array}$ 
On January 1, the Finished Goods Inventory account had a balance of $280,000, and the Work-in-Process Inventory account had a balance of $90,650. Sales revenue for the year was $6,687,500.
Required:
(a) Prepare a cost of goods manufactured statement.
(b) Prepare a cost of goods sold statement.
(c) Prepare a gross margin income statement.

Accepted Answer

None

Question 11

The information below has been taken from the cost records of Gator Corp. for the past year:
 $\begin{array}{llr}
  \text { Raw materials used in production } &\$326\
 \text {Total manufacturing costs charged to production during the year (includes  } &\
 \text {  $ \$ 135 $ of factory overhead) } &686\
 \text {Cost of goods available for sale  } &826\
 \text {  Selling $ \mathcal{\&} $ administrative expenses} &25\
\end{array}$
 
 $$\begin{array} { | l | r | r | } 
\hline \text { Inventories: } & \text { Beginning } & { \text { Ending } } \
\hline \text { Direct materials } & 75 & 85 \
\hline \text { Work in process } & 80 & 30 \
\hline \text { Finished goods } & 90 & 110 \
\hline
\end{array}$$ 
Required:
(a) Calculate the cost of direct materials purchased during the year.
(b) Calculate the direct labor costs charged to production during the year.
(c) Calculate the cost of goods manufactured during the year.
(d) Calculate the cost of goods sold for the year.

Accepted Answer

(a) $75 + x ? 85 = 326; x = $3

Question 12

The following information is available for Barnes Company for the fiscal year ended December 31:
 $\begin{array}{llr}
  \text {  Beginning finished goods inventory in units } &0\
 \text {Units produced  } &4,800\
 \text { Units sold } &4,000\
 \text { Sales } &\$400,000\
 \text { Materials cost } &\$96,000\
 \text { Variable conversion cost used } &\$48,000\
 \text {  Fixed manufacturing cost} &\$72,000\
 \text {  Indirect operating costs (fixed)} &\$80,000\
\end{array}$
 
-
The difference between the variable costing ending inventory and the absorption costing ending inventory is:

Accepted Answer

A)  800 units times $15 per unit fixed manufacturing cost. 
B)  800 units times $10 per unit materials cost. 
C)  800 units times $20 per unit variable conversion cost plus $15 per unit fixed manufacturing cost. 
D)  800 units times $20 per unit variable conversion cost plus $15 per unit fixed manufacturing cost plus $16.67 per unit indirect operating costs. 
A)  800 units times $15 per unit fixed manufacturing cost. 
B)  800 units times $10 per unit materials cost. 
C)  800 units times $20 per unit variable conversion cost plus $15 per unit fixed manufacturing cost. 
D)  800 units times $20 per unit variable conversion cost plus $15 per unit fixed manufacturing cost plus $16.67 per unit indirect operating costs.

Question 13

Which one of the following costs is classified as a period cost? (CIA adapted)

Accepted Answer

A)  The wages of the workers on the shipping docks who load completed products onto outgoing trucks. 
B)  The wages of a worker paid for idle time resulting from a machine breakdown in the molding department. 
C)  The payments for employee (fringe) benefits paid on behalf of the workers in the manufacturing plant. 
D)  The wages paid to workers for reworking defective products that failed the quality inspection upon completion. 
A)  The wages of the workers on the shipping docks who load completed products onto outgoing trucks. 
B)  The wages of a worker paid for idle time resulting from a machine breakdown in the molding department. 
C)  The payments for employee (fringe) benefits paid on behalf of the workers in the manufacturing plant. 
D)  The wages paid to workers for reworking defective products that failed the quality inspection upon completion.

Question 14

Absorption costing measures contribution to operating profit as:

Accepted Answer

A)  Sales less unit level costs spent on goods sold. 
B)  Sales less variable cost of goods sold. 
C)  Sales less absorption cost of goods sold. 
D)  Sales less all costs including operating expenses. 
A)  Sales less unit level costs spent on goods sold. 
B)  Sales less variable cost of goods sold. 
C)  Sales less absorption cost of goods sold. 
D)  Sales less all costs including operating expenses.

Question 15

A(n) ________ is any end to which a cost is assigned.

Accepted Answer

A)  cost object 
B)  cost pool 
C)  cost allocation 
D)  opportunity cost 
A)  cost object 
B)  cost pool 
C)  cost allocation 
D)  opportunity cost

Question 16

The amount of direct materials issued to production is found by

Accepted Answer

A)  subtracting ending work in process from total work in process during the period. 
B)  adding beginning direct materials inventory and the delivered cost of direct materials. 
C)  subtracting ending direct materials from direct materials available for production. 
D)  adding delivered cost of materials, labor, and manufacturing overhead. 
A)  subtracting ending work in process from total work in process during the period. 
B)  adding beginning direct materials inventory and the delivered cost of direct materials. 
C)  subtracting ending direct materials from direct materials available for production. 
D)  adding delivered cost of materials, labor, and manufacturing overhead.

Question 17

Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice?
$\begin{array} {cc} 
& \text { Variable Cost } & \text { Adninistrative Cost } \\end{array}$
A.$\begin{array} {cc} &&& \text { Yes } & &&& && \text { Yes } \\end{array}$
B.$\begin{array} {cc}   &&&\text { Yes } & &&& &&  \text { No } \\end{array}$
C. $\begin{array} {cc}  &&& \text { No } & &&& &&  \text { Yes } \\end{array}$
D. $\begin{array} {cc}   &&& \text { No } & &&& &&  \text { No } \\end{array}$

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 18

Accounting systems typically record opportunity costs as assets and treat them as intangible items on the financial statements.

Accepted Answer

A) True 
 B)False

Question 19

Compute the Cost of Goods Sold for 2019 using the following information:
$\begin{array}{lr}
\text { Direct Materials, Jan. 1, 2019 } & \$ 40,000 \
\text { Work-in-Process, Dec. 31, 2019 } & 69,000 \
\text { Direct Labor } & 48,500 \
\text { Finished Goods, Dec. } 31,2019 & 105,000 \
\text { Finished Goods. Jan. } 1.2019 & 128,000\
\text {Manufacturing Overhead}&72,500\
\text {Direct Materials, Dec. 31, 2019}&43,000\
\text {Work-in Process, Jan. 1, 2019}&87,000\
\text {Purchases of Direct Material}&75,000
\end{array}$

Accepted Answer

A)  $244,000 
B)  $234,000 
C)  $211,000 
D)  $198,000 
A)  $244,000 
B)  $234,000 
C)  $211,000 
D)  $198,000

Question 20

Which of the following accounts would be a period cost rather than a product cost?

Accepted Answer

A)  Depreciation on manufacturing machinery. 
B)  Maintenance on factory machines. 
C)  Production manager's salary. 
D)  Freight out. 
A)  Depreciation on manufacturing machinery. 
B)  Maintenance on factory machines. 
C)  Production manager's salary. 
D)  Freight out.

If a cost is recorded as an asset (for example, prepaid rent for an office building), it becomes an expense when the asset has been consumed.

Tallon Company manufactures a single product. The product's prime costs consist of

Revenue minus cost of goods sold equals contribution margin.

A computer virus destroyed some of the accounting records for Dorchester Antique Remodeling Company for the years 2019-2021. The following information was salvaged from the computer system. Required: Determine the correct amounts for A through P.

The primary goal of the cost accounting system is to provide managers with information to prepare their annual financial statements.

Hurwitz Corporation had the following activities during 2019: Required: (a) Prepare a schedule of cost of goods manufactured for 2019. (b) Prepare a schedule of cost of goods sold for 2019. (c) Prepare an income statement for 2019.

Which one of the following costs is classified as a period cost? (CIA adapted)

Absorption costing measures contribution to operating profit as:

A(n) ________ is any end to which a cost is assigned.

The amount of direct materials issued to production is found by

Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice? Variable Cost Adninistrative Cost A. Yes Yes B. Yes No C. No Yes D. No No

Accounting systems typically record opportunity costs as assets and treat them as intangible items on the financial statements.

Which of the following accounts would be a period cost rather than a product cost?

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

Filters

Exam 2: Cost Concepts and Behavior

If a cost is recorded as an asset (for example, prepaid rent for an office building), it becomes an expense when the asset has been consumed.

Tallon Company manufactures a single product. The product's prime costs consist of

Revenue minus cost of goods sold equals contribution margin.

A computer virus destroyed some of the accounting records for Dorchester Antique Remodeling Company for the years 2019-2021. The following information was salvaged from the computer system. Required: Determine the correct amounts for A through P.

The primary goal of the cost accounting system is to provide managers with information to prepare their annual financial statements.

Hurwitz Corporation had the following activities during 2019: Required: (a) Prepare a schedule of cost of goods manufactured for 2019. (b) Prepare a schedule of cost of goods sold for 2019. (c) Prepare an income statement for 2019.

Which one of the following costs is classified as a period cost? (CIA adapted)

Absorption costing measures contribution to operating profit as:

A(n) ________ is any end to which a cost is assigned.

The amount of direct materials issued to production is found by

Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice? Variable Cost Adninistrative Cost A. Yes Yes B. Yes No C. No Yes D. No No

Accounting systems typically record opportunity costs as assets and treat them as intangible items on the financial statements.

Which of the following accounts would be a period cost rather than a product cost?

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

Filters