Exam 3: Cost Flows and Cost Terminology

C & C Power Lines is a subcontractor that works on public utilities. Which of the following is a key characteristic that makes it distinctively a service company? a. It does not maintain inventories. B) Its products are tangible. C) Its product costs appear below the line in computing gross margin. D) All of its costs are period costs.

Office rent is an example of a (an): a. Administrative cost. B) Product cost. C) Conversion Cost. D) Costs of providing product or service. E) Direct cost.

Unlike service firms, merchandising firms maintain an inventory of goods that they buy and sell.

For financial reporting purposes, merchandising firms expense the cost of items when they purchase them.

Bass Boss Manufacturing Company manufactures two types of bass boats. Bass Boss provides the following data, pertinent to allocating its annual overhead cost of $435,000: What are the cost objects?

The cost flows in merchandising firms resemble the flows for service firms.

Tomba Civil Engineers' manager is attempting to calculate its cost of providing services to clients. Its profit before taxes for January is $4,000, and it's selling and administration costs are $8,000, service revenue is $20,000. How much is its cost of providing service? a. $12,000 B) $4,000 C) $8,000 D) $20,000

Which of the following are the inputs manufacturers use to make their product? a. Direct material, direct labor, and manufacturing overhead. B) Period costs and product costs. C) Conversion costs and direct labor. D) Common costs and special costs. E) Direct material, direct labor, and period costs.

Period costs are added to gross margin to arrive at profit before taxes.

The sum of labor and overhead is referred to as conversion costs.

The following costs were incurred in November: Prime costs during the month totaled:

The proportion of cost allocated to a cost object equals the proportion of driver units in that cost object.

If a company's revenue is $530,000, profit before taxes is $98,000, and product costs are $390,000 then: a. The company's gross margin totals $140,000. B) The company's period costs total $140,000. C) The company's period costs cannot be determined. D) The company's contribution margin totals $140,000.

Which of the following is a cost pool? a. Items that have costs allocated to them. B) Attributes that are measured for each cost object. C) The total costs to allocate D) The rate used to allocate costs

Which of the following inventory equations produces the Cost of Goods Sold? a. Cost of beginning inventory + cost of goods purchased during period - cost of ending inventory. B) Cost of ending inventory + cost of goods purchased during period - cost of beginning inventory. C) Cost of beginning inventory - cost of goods purchased during the period. D) Cost of ending inventory - cost of goods purchased during the period. E) Cost of ending inventory + cost of goods purchased during the period.

The overhead allocated to an individual unit or product line is the number of driver units contained in that unit or product line times the overhead rate per driver unit.

Billings Company's plant manager is trying to better understand his plant's inventory workflow. He determined that $10 million was spent on raw materials, $2 million on direct labor and $3 million on manufacturing overhead. If raw materials beginning and ending inventories are $2 million and $1 million, respectively, and work-in-process beginning and ending inventories are $6 million and $4 million respectively, how much is cost of goods manufactured? a. $17 million. B) $16 million. C) $15 million. D) $18 million.