Question 1

The distinction between direct and indirect costs depends on whether a cost

Accepted Answer

A)  is controllable or non-controllable. 
B)  is variable or fixed. 
C)  can be conveniently and physically traced to a cost object under consideration. 
D)  will increase with changes in levels of activity. 
A)  is controllable or non-controllable. 
B)  is variable or fixed. 
C)  can be conveniently and physically traced to a cost object under consideration. 
D)  will increase with changes in levels of activity. C

Question 2

There is an inverse relationship between prevention costs and failure costs.

Accepted Answer

A) True 
 B)False  True

Question 3

Unexpired costs are reflected on the balance sheet.

Accepted Answer

A) True 
 B)False  True

Question 4

The portion of an asset that was consumed during a period is referred to an expired cost.

Accepted Answer

A) True 
 B)False

Question 5

Langley Company is a construction company that builds houses on special request. What is the proper classification of the carpenters' wages? $\begin{array}{lll}
\underline{\text { Product }} & \underline{\text { Period }} & \underline{\text { Direct }}
\end{array}$

Accepted Answer

A)  yes yes no 
B)  yes no yes 
C)  no no no 
D)  no yes yes 
A)  yes yes no 
B)  yes no yes 
C)  no no no 
D)  no yes yes

Question 6

There is a direct relationship between prevention costs and failure costs.

Accepted Answer

A) True 
 B)False

Question 7

Davis Company. Davis Company manufactures wood file cabinets. The following information is available for June 2008:
$\begin{array}{ll}
&\underline{\text { Beginning }} &\underline{ \text { Ending }} \
\text {Raw Material Inventory}&\$6,000& \$ 7,500 \
\text {Wotk in Process Inventory}&17,300 & 11,700 \
\text { Finished Goods Inventory }&21,000 & 16,300
\end{array}$  Refer to Davis Company. Direct labor is $9.60 per hour and overhead for the month was $9,600. Compute total manufacturing costs for June, if there were 1,500 direct labor hours and $21,000 of raw material was purchased.

Accepted Answer

A)  $58,500 
B)  $46,500 
C)  $43,500 
D)  $43,100 
A)  $58,500 
B)  $46,500 
C)  $43,500 
D)  $43,100

Question 8

The three primary inventory accounts in a manufacturing company are

Accepted Answer

A)  Merchandise Inventory, Supplies Inventory, and Finished Goods Inventory. 
B)  Merchandise Inventory, Work in Process Inventory, and Finished Goods Inventory. 
C)  Supplies Inventory, Work in Process Inventory, and Finished Goods Inventory. 
D)  Raw Material Inventory, Work in Process Inventory, and Finished Goods Inventory. 
A)  Merchandise Inventory, Supplies Inventory, and Finished Goods Inventory. 
B)  Merchandise Inventory, Work in Process Inventory, and Finished Goods Inventory. 
C)  Supplies Inventory, Work in Process Inventory, and Finished Goods Inventory. 
D)  Raw Material Inventory, Work in Process Inventory, and Finished Goods Inventory.

Question 9

When cost relationships are linear, total variable prime costs will vary in proportion to changes in

Accepted Answer

A)  direct labor hours. 
B)  total material cost. 
C)  total overhead cost. 
D)  production volume. 
A)  direct labor hours. 
B)  total material cost. 
C)  total overhead cost. 
D)  production volume.

Question 10

Anything for which management wants to accumulate or collect costs is known as a _________________________.

Accepted Answer

The answer of Anything for which management wants to accumulate...

Question 11

Which of the following defines variable cost behavior? $\begin{array}{llcc}
  \text {Total cost reaction   } &  \text {Cost per urit reaction   } \
  \text { to increase in activity  } &  \text {to increase in activity  } 
\end{array}$

Accepted Answer

A)  remains constant remains constant 
B)  remains constant increases 
C)  increases increases 
D)  increases remains constant 
A)  remains constant remains constant 
B)  remains constant increases 
C)  increases increases 
D)  increases remains constant

Question 12

Both accountants and economists view variable costs as linear in nature.

Accepted Answer

A) True 
 B)False

Question 13

A cost that shifts upward or downward when activity changes by a certain interval is referred to as a mixed cost.

Accepted Answer

A) True 
 B)False

Question 14

Cost of Goods Sold is an

Accepted Answer

A)  unexpired product cost. 
B)  expired product cost. 
C)  unexpired period cost. 
D)  expired period cost. 
A)  unexpired product cost. 
B)  expired product cost. 
C)  unexpired period cost. 
D)  expired period cost.

Question 15

Davis Company. Davis Company manufactures wood file cabinets. The following information is available for June 2008:
$\begin{array}{ll}
&\underline{\text { Beginning }} &\underline{ \text { Ending }} \
\text {Raw Material Inventory}&\$6,000& \$ 7,500 \
\text {Wotk in Process Inventory}&17,300 & 11,700 \
\text { Finished Goods Inventory }&21,000 & 16,300
\end{array}$ 
 Refer to Davis Company. Direct labor is paid $9.60 per hour and overhead for the month was $9,600. If there were 1,500 direct labor hours and $21,000 of raw material purchased, how much is Cost of Goods Sold?

Accepted Answer

A)  $64,500. 
B)  $59,800. 
C)  $38,800. 
D)  $53,800. 
A)  $64,500. 
B)  $59,800. 
C)  $38,800. 
D)  $53,800.

Question 16

Davis Company. Davis Company manufactures wood file cabinets. The following information is available for June 2008:
$\begin{array}{ll}
&\underline{\text { Beginning }} &\underline{ \text { Ending }} \
\text {Raw Material Inventory}&\$6,000& \$ 7,500 \
\text {Wotk in Process Inventory}&17,300 & 11,700 \
\text { Finished Goods Inventory }&21,000 & 16,300
\end{array}$ 
 Refer to Davis Company. Direct labor is paid $9.60 per hour and overhead for the month was $9,600. If there were 1,500 direct labor hours and $21,000 of raw material purchased, Cost of Goods Manufactured is:

Accepted Answer

A)  $49,100. 
B)  $45,000. 
C)  $51,000. 
D)  $49,500. 
A)  $49,100. 
B)  $45,000. 
C)  $51,000. 
D)  $49,500.

Question 17

Mitchell Company The following information has been taken from the cost records of Mitchell Company for the past year:
  $\begin{array}{ll}
\underline{\text {Inventries}}&\underline{\text { Beginning }} &\underline{ \text { Ending }} \
\text {Raw Material}&\$ 75 & \$ 85 \
\text {Wotk in Process}&80 & 30 \
\text { Finished Goods }&90 & 110
\end{array}$  Refer to Mitchell Company. The cost of raw material purchased during the year was

Accepted Answer

A)  $316. 
B)  $336. 
C)  $360. 
D)  $411. 
A)  $316. 
B)  $336. 
C)  $360. 
D)  $411.

Question 18

The assumed range of activity that reflects the company's normal operating range is referred to as the ______________________________.

Accepted Answer

The answer of The assumed range of activity that reflects...

Question 19

A cost that has both fixed and variable components is known as a ____________________ cost.

Accepted Answer

The answer of A cost that has both fixed and...

Question 20

In an actual cost system, factory overhead is applied to Work in Process using a predetermined overhead rate.

Accepted Answer

A) True 
 B)False

The distinction between direct and indirect costs depends on whether a cost

There is an inverse relationship between prevention costs and failure costs.

Unexpired costs are reflected on the balance sheet.

The portion of an asset that was consumed during a period is referred to an expired cost.

Langley Company is a construction company that builds houses on special request. What is the proper classification of the carpenters' wages?

There is a direct relationship between prevention costs and failure costs.

The three primary inventory accounts in a manufacturing company are

When cost relationships are linear, total variable prime costs will vary in proportion to changes in

Anything for which management wants to accumulate or collect costs is known as a _________________________.

Which of the following defines variable cost behavior? Total cost reaction Cost per urit reaction to increase in activity to increase in activity

Both accountants and economists view variable costs as linear in nature.

A cost that shifts upward or downward when activity changes by a certain interval is referred to as a mixed cost.

Cost of Goods Sold is an

The assumed range of activity that reflects the company's normal operating range is referred to as the ______________________________.

A cost that has both fixed and variable components is known as a ____________________ cost.

In an actual cost system, factory overhead is applied to Work in Process using a predetermined overhead rate.

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Exam 1: Cost Terminology and Cost Behaviors

The distinction between direct and indirect costs depends on whether a cost

There is an inverse relationship between prevention costs and failure costs.

Unexpired costs are reflected on the balance sheet.

The portion of an asset that was consumed during a period is referred to an expired cost.

Langley Company is a construction company that builds houses on special request. What is the proper classification of the carpenters' wages?

There is a direct relationship between prevention costs and failure costs.

The three primary inventory accounts in a manufacturing company are

When cost relationships are linear, total variable prime costs will vary in proportion to changes in

Anything for which management wants to accumulate or collect costs is known as a _________________________.

Which of the following defines variable cost behavior? Total cost reaction Cost per urit reaction to increase in activity to increase in activity

Both accountants and economists view variable costs as linear in nature.

A cost that shifts upward or downward when activity changes by a certain interval is referred to as a mixed cost.

Cost of Goods Sold is an

Mitchell Company The following information has been taken from the cost records of Mitchell Company for the past year: Raw Material \ 75 \ 85 Wotk in Process 80 30 Finished Goods 90 110 Refer to Mitchell Company. The cost of raw material purchased during the year was

The assumed range of activity that reflects the company's normal operating range is referred to as the ______________________________.

A cost that has both fixed and variable components is known as a ____________________ cost.

In an actual cost system, factory overhead is applied to Work in Process using a predetermined overhead rate.

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