Question 1

A predictor which has an absolute cause and effect relationship to a cost is referred to a cost driver.

Accepted Answer

A) True 
 B)False

Question 2

Langley Company is a construction company that builds houses on special request. What is the proper classification of the cost of the cement building slab used? $\underline{\text { Direct }} \quad\underline{ \text { Fixed }}$

Accepted Answer

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

Question 3

Period costs include $\begin{array}{llcc}
  \underline{\text {clistribution costs  }} & \underline{ \text {outsude processing costs  } }&\underline{  \text { sales commissions }} \
\end{array}$

Accepted Answer

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

Question 4

A variable cost remains constant on a per-unit basis as production increases

Accepted Answer

A) True 
 B)False

Question 5

In an actual cost system, overhead is assigned to Work in Process Inventory with a credit entry to the account.

Accepted Answer

A) True 
 B)False

Question 6

A mixed cost will be an effective cost driver.

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 paid $9.60 per hour and overhead for the month was $9,600. What are prime costs and conversion costs, respectively if there were 1,500 direct labor hours and $21,000 of raw material was purchased?

Accepted Answer

A)  $29,100 and $33,900 
B)  $33,900 and $24,000 
C)  $33,900 and $29,100 
D)  $24,000 and $33,900 
A)  $29,100 and $33,900 
B)  $33,900 and $24,000 
C)  $33,900 and $29,100 
D)  $24,000 and $33,900

Question 8

The relevant range is valid for all levels of activity

Accepted Answer

A) True 
 B)False

Question 9

Costs that are incurred for monitoring and inspecting are:

Accepted Answer

A)  prevention costs 
B)  detection costs 
C)  appraisal costs 
D)  failure costs 
A)  prevention costs 
B)  detection costs 
C)  appraisal costs 
D)  failure costs

Question 10

Costs that result from defective units, product returns, and complaints are referred to as ____________________ costs.

Accepted Answer

The answer of Costs that result from defective units, product...

Question 11

Long Enterprises   Refer to Long Enterprises. For March, conversion cost incurred was

Accepted Answer

A)  $30,000. 
B)  $40,000. 
C)  $70,000. 
D)  $72,000. 
A)  $30,000. 
B)  $40,000. 
C)  $70,000. 
D)  $72,000.

Question 12

Given the following information for Graves Corporation, prepare the necessary journal entries, assuming that the Raw Material Inventory account contains both direct and indirect material.
 a.$\quad $ Purchased raw material on account $ \$ 28,500 $.
b.$\quad $Put material into production: $ \$ 15,000 $ of direct material and $ \$ 3,000 $ of indirect material. 
c.$\quad $Accrued payroll of $ \$ 90,000 $, of which 70 percent was direct and the remainder was indirect. 
d.$\quad $Incurred and paid other overhead items of $ \$ 36,000 $. 
e.$\quad $Transferred items costing $ \$ 86,500 $ to finished goods. 
f.$\quad $Sold goods costing $ \$ 71,300 $ on account for $ \$ 124,700 $.

Accepted Answer

The answer of Given the following information for Graves Corporation,...

Question 13

An indirect cost can be easily traced to a cost object.

Accepted Answer

A) True 
 B)False

Question 14

The term "prime cost" refers to

Accepted Answer

A)  all manufacturing costs incurred to produce units of output. 
B)  all manufacturing costs other than direct labor and raw material costs. 
C)  raw material purchased and direct labor costs. 
D)  the raw material used and direct labor costs. 
A)  all manufacturing costs incurred to produce units of output. 
B)  all manufacturing costs other than direct labor and raw material costs. 
C)  raw material purchased and direct labor costs. 
D)  the raw material used and direct labor costs.

Question 15

When the number of units manufactured increases, the most significant change in unit cost will be reflected as a(n)

Accepted Answer

A)  increase in the fixed element. 
B)  decrease in the variable element. 
C)  increase in the mixed element. 
D)  decrease in the fixed element. 
A)  increase in the fixed element. 
B)  decrease in the variable element. 
C)  increase in the mixed element. 
D)  decrease in the fixed element.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Plastic used to manufacture dolls is a $\begin{array}{llcc}
\underline{  \text { prime cost } }&\underline{  \text { product cost }}&\underline{  \text {  direct cost} }&\underline{  \text {fixed cost  }} \
\end{array}$

Accepted Answer

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

Question 18

Define relevant range and explain its significance.

Accepted Answer

The relevant range is that range of acti

Question 19

A variable cost will be an effective cost driver.

Accepted Answer

A) True 
 B)False

Question 20

The three stages of production for a manufacturing firm are _________________________, ______________________________, and _________________________.

Accepted Answer

raw materi

A predictor which has an absolute cause and effect relationship to a cost is referred to a cost driver.

Langley Company is a construction company that builds houses on special request. What is the proper classification of the cost of the cement building slab used? $\underline{\text { Direct }} \quad\underline{ \text { Fixed }}$

Period costs include

A variable cost remains constant on a per-unit basis as production increases

In an actual cost system, overhead is assigned to Work in Process Inventory with a credit entry to the account.

A mixed cost will be an effective cost driver.

The relevant range is valid for all levels of activity

Costs that are incurred for monitoring and inspecting are:

Costs that result from defective units, product returns, and complaints are referred to as ____________________ costs.

Long Enterprises Refer to Long Enterprises. For March, conversion cost incurred was

An indirect cost can be easily traced to a cost object.

The term "prime cost" refers to

When the number of units manufactured increases, the most significant change in unit cost will be reflected as a(n)

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

Plastic used to manufacture dolls is a

Define relevant range and explain its significance.

A variable cost will be an effective cost driver.

The three stages of production for a manufacturing firm are _, , and ___.

Filters

Exam 1: Cost Terminology and Cost Behaviors

A predictor which has an absolute cause and effect relationship to a cost is referred to a cost driver.

Langley Company is a construction company that builds houses on special request. What is the proper classification of the cost of the cement building slab used? Direct ‾ Fixed ‾\underline{\text { Direct }} \quad\underline{ \text { Fixed }} Direct ​ Fixed ​

Period costs include

A variable cost remains constant on a per-unit basis as production increases

In an actual cost system, overhead is assigned to Work in Process Inventory with a credit entry to the account.

A mixed cost will be an effective cost driver.

The relevant range is valid for all levels of activity

Costs that are incurred for monitoring and inspecting are:

Costs that result from defective units, product returns, and complaints are referred to as ____________________ costs.

Long Enterprises Refer to Long Enterprises. For March, conversion cost incurred was

An indirect cost can be easily traced to a cost object.

The term "prime cost" refers to

When the number of units manufactured increases, the most significant change in unit cost will be reflected as a(n)

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

Plastic used to manufacture dolls is a

Define relevant range and explain its significance.

A variable cost will be an effective cost driver.

The three stages of production for a manufacturing firm are _________________________, ______________________________, and _________________________.

Filters

Langley Company is a construction company that builds houses on special request. What is the proper classification of the cost of the cement building slab used? $\underline{\text { Direct }} \quad\underline{ \text { Fixed }}$

The three stages of production for a manufacturing firm are _, , and ___.