Question 1

The direct costs of operating a university computer centre would NOT include

Accepted Answer

A) rent paid for computers. 
B) a fair share of university utilities. 
C) paper used by the centre. 
D) computer consultants' salaries. 
A) rent paid for computers. 
B) a fair share of university utilities. 
C) paper used by the centre. 
D) computer consultants' salaries.

Question 2

An equipment lease that specifies payment of £1,000 per month plus £5 per machine hour used is an example of a

Accepted Answer

A) fixed cost. 
B) variable cost. 
C) mixed cost. 
D) step cost. 
A) fixed cost. 
B) variable cost. 
C) mixed cost. 
D) step cost.

Question 3

Classify the following costs incurred by a step railing manufacturing company as direct materials, direct labour, factory overhead, or period costs: a. Wages paid to production workers
b. Utilities in the office
c. Depreciation on machinery in plant
d. Steel
e. Accountant's salary
f. Rent on factory building
g. Rent on office equip ment
h. Maintenance workers' wages
i. Utilities in the plant
j. Maintenance on office equipment

Accepted Answer

The answer of Classify the following costs incurred by a...

Question 4

If total warehousing cost for the year amounts to £350,000, and 40 per cent of the warehousing activity is associated with finished goods and 60 per cent with direct materials, how much of the cost would be charged as a product cost?

Accepted Answer

A) £70,000 
B) £140,000 
C) £210,000 
D) £350,000 
A) £70,000 
B) £140,000 
C) £210,000 
D) £350,000

Question 5

Adams Ltd. rents a truck for a flat fee plus an additional charge per mile. What type of cost is the rent?

Accepted Answer

A) fixed cost 
B) mixed cost 
C) variable cost 
D) step cost 
A) fixed cost 
B) mixed cost 
C) variable cost 
D) step cost

Question 6

Fixed cost per unit is £9 when 20,000 units are produced and £6 when 30,000 units are produced. What is the total fixed cost when nothing is produced?

Accepted Answer

A) £120,000 
B) £270,000 
C) £15 
D) £180,000 
A) £120,000 
B) £270,000 
C) £15 
D) £180,000

Question 7

Harry has just received his bachelor's degree and is considering two alternatives. (1) He could obtain an entry-level accounting position paying £30,000 per year. (2) He could obtain his master's degree with one more year of study and work part-time for £8,000 per year. The opportunity cost associated with Harry obtaining his master's degree is

Accepted Answer

A) £-0-. 
B) £22,000. 
C) £30,000. 
D) £38,000. 
A) £-0-. 
B) £22,000. 
C) £30,000. 
D) £38,000.

Question 8

Direct costs

Accepted Answer

A) can be assigned to cost objects in an economically feasible way. 
B) are typically assigned to cost objects using a cause-and-effect relationship. 
C) result in more accurate cost assignments. 
D) do all of the above. 
A) can be assigned to cost objects in an economically feasible way. 
B) are typically assigned to cost objects using a cause-and-effect relationship. 
C) result in more accurate cost assignments. 
D) do all of the above.

Question 9

Whether a cost is fixed or variable depends on the time horizon. In the long run, all costs are

Accepted Answer

A) fixed. 
B) variable. 
C) mixed. 
D) step. 
A) fixed. 
B) variable. 
C) mixed. 
D) step.

Question 10

The direct material cost is £10,000 when 2,000 units are produced. What is the direct material cost for 2,500 units produced?

Accepted Answer

A) £10,000 
B) £8,000 
C) £15,000 
D) £12,500 
A) £10,000 
B) £8,000 
C) £15,000 
D) £12,500

Question 11

Which of the following costs incurred by a bus manufacturer would NOT be directly attributable to the finished product?

Accepted Answer

A) the wages paid to assembly-line production workers 
B) the tires for buses 
C) the windshields for buses 
D) the depreciation on factory building 
A) the wages paid to assembly-line production workers 
B) the tires for buses 
C) the windshields for buses 
D) the depreciation on factory building

Question 12

Which of the following costs is NOT a product cost?

Accepted Answer

A) rent on an office building 
B) indirect labour 
C) repairs on manufacturing equipment 
D) steel used in inventory items produced 
A) rent on an office building 
B) indirect labour 
C) repairs on manufacturing equipment 
D) steel used in inventory items produced

Question 13

Which of the following cost behaviour patterns are unrelated to unit activity?

Accepted Answer

A) fixed costs 
B) variable costs 
C) step costs 
D) mixed costs 
A) fixed costs 
B) variable costs 
C) step costs 
D) mixed costs

Question 14

Prime product costs include

Accepted Answer

A) only factory overhead. 
B) only direct labour. 
C) direct labour and factory overhead. 
D) direct materials and direct labour. 
A) only factory overhead. 
B) only direct labour. 
C) direct labour and factory overhead. 
D) direct materials and direct labour.

Question 15

Which of the following costs is an indirect product cost?

Accepted Answer

A) property taxes on plant facilities 
B) wages of assembly workers 
C) materials used 
D) president's salary 
A) property taxes on plant facilities 
B) wages of assembly workers 
C) materials used 
D) president's salary

Question 16

Which statement describes step-cost behaviour?

Accepted Answer

A) discontinuous 
B) displays a constant level of cost for a range of output and then jumps to a higher level at some point 
C) must be purchased in chunks 
D) All of the above describe step-cost behaviour. 
A) discontinuous 
B) displays a constant level of cost for a range of output and then jumps to a higher level at some point 
C) must be purchased in chunks 
D) All of the above describe step-cost behaviour.

Question 17

Which of the following costs would be classified as fixed costs with respect to volume?

Accepted Answer

A) the salary of the manager of the Research and Development Department 
B) the cost of a copy machine in the Human Resource Department 
C) the property taxes on the manufacturing facility 
D) all of the above 
A) the salary of the manager of the Research and Development Department 
B) the cost of a copy machine in the Human Resource Department 
C) the property taxes on the manufacturing facility 
D) all of the above

Question 18

Which of the following statements is TRUE about fixed and variable costs?

Accepted Answer

A) Both costs are constant when considered on a per-unit basis. 
B) Both costs are constant when considered on a total basis. 
C) Fixed costs are constant in total and variable costs are constant per unit. 
D) Variable costs are constant in total and fixed costs are constant per unit. 
A) Both costs are constant when considered on a per-unit basis. 
B) Both costs are constant when considered on a total basis. 
C) Fixed costs are constant in total and variable costs are constant per unit. 
D) Variable costs are constant in total and fixed costs are constant per unit.

Question 19

A cost used up in the production of revenues is a(n)

Accepted Answer

A) unexpired cost. 
B) expense. 
C) loss. 
D) asset. 
A) unexpired cost. 
B) expense. 
C) loss. 
D) asset.

Question 20

Which of the following costs incurred by a chair manufacturer would be traced to the product cost through direct tracing?

Accepted Answer

A) the depreciation on factory equipment 
B) the supervisor's salary 
C) the insurance on the factory building 
D) the woodmaker's salary 
A) the depreciation on factory equipment 
B) the supervisor's salary 
C) the insurance on the factory building 
D) the woodmaker's salary

Exam 2: An Introduction to Cost Terms and Concepts

The direct costs of operating a university computer centre would NOT include

An equipment lease that specifies payment of £1,000 per month plus £5 per machine hour used is an example of a

If total warehousing cost for the year amounts to £350,000, and 40 per cent of the warehousing activity is associated with finished goods and 60 per cent with direct materials, how much of the cost would be charged as a product cost?

Adams Ltd. rents a truck for a flat fee plus an additional charge per mile. What type of cost is the rent?

Fixed cost per unit is £9 when 20,000 units are produced and £6 when 30,000 units are produced. What is the total fixed cost when nothing is produced?

Direct costs

Whether a cost is fixed or variable depends on the time horizon. In the long run, all costs are

The direct material cost is £10,000 when 2,000 units are produced. What is the direct material cost for 2,500 units produced?

Which of the following costs incurred by a bus manufacturer would NOT be directly attributable to the finished product?

Which of the following costs is NOT a product cost?

Which of the following cost behaviour patterns are unrelated to unit activity?

Prime product costs include

Which of the following costs is an indirect product cost?

Which statement describes step-cost behaviour?

Which of the following costs would be classified as fixed costs with respect to volume?

Which of the following statements is TRUE about fixed and variable costs?

A cost used up in the production of revenues is a(n)

Which of the following costs incurred by a chair manufacturer would be traced to the product cost through direct tracing?

Introduction to Management Accounting

Cost Assignment

Accounting Entries for a Job Costing System

Process Costing

Joint and By-Product Costing

Income Effects of Alternative Cost Accumulation Systems

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Activity-Based Costing

Activity-Based Costing

Decision-Making Under Conditions of Risk and Uncertainty

Capital Investment Decisions: Appraisal Methods

Capital Investment Decisions: the Impact of Capital Rationing, Taxation, Inflation and Risk

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis 1

Standard Costing and Variance Analysis 2: Further Aspects

Divisional Financial Performance Measures

Transfer Pricing in Divisionalized Companies

Strategic Cost Management

Strategic Performance Management

Cost Estimation and Cost Behaviour

Quantitative Models for the Planning and Control of Inventories

The Application of Linear Programming to Management Accounting

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