Question 1

The total of all the indirect manufacturing inputs are sometimes referred to as manufacturing allocation.

Accepted Answer

A) True 
 B)False  False

Question 2

Product costs are often referred to as inventoriable costs because these are the costs that firms attach to inventories of work in process and finished goods.

Accepted Answer

A) True 
 B)False  True

Question 3

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.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following includes all the components of conversion costs?

Accepted Answer

A) Direct materials and direct labor. 
B) Prime costs plus fixed overhead. 
C) Variable overhead and fixed overhead. 
D) Direct labor plus capacity costs 
A) Direct materials and direct labor. 
B) Prime costs plus fixed overhead. 
C) Variable overhead and fixed overhead. 
D) Direct labor plus capacity costs

Question 5

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?

Accepted Answer

A) $17 million. 
B) $16 million. 
C) $15 million. 
D) $18 million. 
A) $17 million. 
B) $16 million. 
C) $15 million. 
D) $18 million.

Question 6

The cost of purchasing goods from suppliers includes all of the following costs except:

Accepted Answer

A) Cost of transportation. 
B) Amounts paid to suppliers. 
C) Sales commissions. 
D) Costs of preparing goods for sale. 
E) All of the above are included in the cost of purchasing goods from suppliers. 
A) Cost of transportation. 
B) Amounts paid to suppliers. 
C) Sales commissions. 
D) Costs of preparing goods for sale. 
E) All of the above are included in the cost of purchasing goods from suppliers.

Question 7

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?

Accepted Answer

A) $12,000 
B) $4,000 
C) $8,000 
D) $20,000 
A) $12,000 
B) $4,000 
C) $8,000 
D) $20,000

Question 8

Product costs are also known as:

Accepted Answer

A) Prime costs. 
B) Conversion costs. 
C) Period costs. 
D) Inventoriable costs 
A) Prime costs. 
B) Conversion costs. 
C) Period costs. 
D) Inventoriable costs

Question 9

Acme Manufacturing Company's controller was classifying costs for the most recent financial statement period.Which of the following should be excluded from the calculation of gross margin?

Accepted Answer

A) Factory worker wages. 
B) Materials used in assembling a product. 
C) Conveyer belt maintenance for production of all products. 
D) Marketing brochure for the company's new product. 
A) Factory worker wages. 
B) Materials used in assembling a product. 
C) Conveyer belt maintenance for production of all products. 
D) Marketing brochure for the company's new product.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The cost of purchasing goods from suppliers does not include the cost of transportation.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a cost pool?

Accepted Answer

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 
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

Question 15

GAAP provides considerable flexibility regarding reporting formats.

Accepted Answer

A) True 
 B)False

Question 16

To comply with GAAP, an income statement must separate direct and indirect costs.

Accepted Answer

A) True 
 B)False

Question 17

The costs associated with getting products and services ready for sale are known as:

Accepted Answer

A) Sales costs. 
B) Conversion costs. 
C) Opportunity costs. 
D) Product costs. 
E) Costs of goods sold. 
A) Sales costs. 
B) Conversion costs. 
C) Opportunity costs. 
D) Product costs. 
E) Costs of goods sold.

Question 18

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: $\begin{array}{lcc}
\hline\text { Bass Boss Product } & \text { Boss } & \text { Boss } \
& \text { Hog } & \text { Bear } \
\text { Units per year } & 15,000 & 20,000 \
\text { Machine hours/unit } & 3.0 & 5.0\\hline
\text { Materials cost/unit } & \$ 1,500 & \$ 2,000 \
\text { Labor cost/unit } & \$ 800 & \$ 1,000\
\hline
\end{array}$ What are the cost drivers?

Accepted Answer

A) Overhead costs; Units per year. 
B) Boss Hog; Boss Bear. 
C) Overhead costs; Machine hours/unit. 
D) Machine hours/unit; Material cost/unit; Labor cost/unit 
E) Units per year. 
A) Overhead costs; Units per year. 
B) Boss Hog; Boss Bear. 
C) Overhead costs; Machine hours/unit. 
D) Machine hours/unit; Material cost/unit; Labor cost/unit 
E) Units per year.

Question 19

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: $\begin{array}{lcc}
\hline\text { Bass Boss Product } & \text { Boss } & \text { Boss } \
& \text { Hog } & \text { Bear } \
\text { Units per year } & 15,000 & 20,000 \
\text { Machine hours/unit } & 3.0 & 5.0\\hline
\text { Materials cost/unit } & \$ 1,500 & \$ 2,000 \
\text { Labor cost/unit } & \$ 800 & \$ 1,000\
\hline
\end{array}$ What is the cost pool for Bass Boss?

Accepted Answer

A) Annual overhead costs. 
B) Units per year. 
C) Machine hours/unit. 
D) Material costs/unit. 
E) Labor costs/unit. 
A) Annual overhead costs. 
B) Units per year. 
C) Machine hours/unit. 
D) Material costs/unit. 
E) Labor costs/unit.

Question 20

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

Accepted Answer

A) True 
 B)False

The total of all the indirect manufacturing inputs are sometimes referred to as manufacturing allocation.

Product costs are often referred to as inventoriable costs because these are the costs that firms attach to inventories of work in process and finished goods.

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.

Which of the following includes all the components of conversion costs?

The cost of purchasing goods from suppliers includes all of the following costs except:

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?

Product costs are also known as:

Acme Manufacturing Company's controller was classifying costs for the most recent financial statement period.Which of the following should be excluded from the calculation of gross margin?

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

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

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

The cost of purchasing goods from suppliers does not include the cost of transportation.

Which of the following is a cost pool?

GAAP provides considerable flexibility regarding reporting formats.

To comply with GAAP, an income statement must separate direct and indirect costs.

The costs associated with getting products and services ready for sale are known as:

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

Accounting: Information for Decision Making

Identifying and Estimating Costs and Benefits

Techniques for Estimating Fixed and Variable Costs

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Budgetary Control and Variance Analysis

Cost Allocations

Activity-Based Costing Management

Capital Budgeting

Performance Evaluation in Decentralized Organizations

Strategic Planning and Control

Job-Costing Systems

Process-Costing Systems

Refining Systems: Support Activity

Filters

Exam 3: Cost Flows and Cost Terminology

The total of all the indirect manufacturing inputs are sometimes referred to as manufacturing allocation.

Product costs are often referred to as inventoriable costs because these are the costs that firms attach to inventories of work in process and finished goods.

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.

Which of the following includes all the components of conversion costs?

The cost of purchasing goods from suppliers includes all of the following costs except:

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?

Product costs are also known as:

Acme Manufacturing Company's controller was classifying costs for the most recent financial statement period.Which of the following should be excluded from the calculation of gross margin?

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

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

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

The cost of purchasing goods from suppliers does not include the cost of transportation.

Which of the following is a cost pool?

GAAP provides considerable flexibility regarding reporting formats.

To comply with GAAP, an income statement must separate direct and indirect costs.

The costs associated with getting products and services ready for sale are known as:

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

Accounting: Information for Decision Making

Identifying and Estimating Costs and Benefits

Techniques for Estimating Fixed and Variable Costs

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Budgetary Control and Variance Analysis

Cost Allocations

Activity-Based Costing Management

Capital Budgeting

Performance Evaluation in Decentralized Organizations

Strategic Planning and Control

Job-Costing Systems

Process-Costing Systems

Refining Systems: Support Activity

Filters