Question 1

Out-of-pocket costs are defined as the benefit that is sacrificed when the choice of one action precludes taking an alternative course of action.

Accepted Answer

A) True 
 B)False

Question 2

Different cost concepts and classifications are used for different purposes.

Accepted Answer

A) True 
 B)False

Question 3

Sylvia Corporation sold 12,500 units of its single product during the year, reporting a cost of goods sold that totaled $250,000. A review of the company's accounting records disclosed the following information:
   
Sylvia is subject to a 30% income tax rate. 
Required:
A. Determine the selling price per unit.
B. Management established a goal at the beginning of the year to reduce the company's investment in finished-goods inventory and work-in-process inventory.
1. Analyze cost of goods sold and determine if management's goal was achieved with respect to finished-goods inventory. Show computations.
2. Analyze the firm's manufacturing costs and determine if management's goal was achieved with respect to work-in-process inventory. Show computations.
C. Is the company profitable? Show calculations.

Accepted Answer

A. Let X = sales revenue
0.4X = $250,000

Question 4

Which of the following would not be a period cost?

Accepted Answer

A)  Sales salaries. 
B)  Sales commissions. 
C)  Tamper-proof packaging. 
D)  Legal costs. 
E)  Accounting costs. 
A)  Sales salaries. 
B)  Sales commissions. 
C)  Tamper-proof packaging. 
D)  Legal costs. 
E)  Accounting costs.

Question 5

Costs that can be easily traced to a specific department are called:

Accepted Answer

A)  direct costs. 
B)  indirect costs. 
C)  product costs. 
D)  manufacturing costs. 
E)  processing costs. 
A)  direct costs. 
B)  indirect costs. 
C)  product costs. 
D)  manufacturing costs. 
E)  processing costs.

Question 6

Work-in-process inventory is composed of:

Accepted Answer

A)  direct material and direct labor. 
B)  direct labor and manufacturing overhead. 
C)  direct material and manufacturing overhead. 
D)  direct material, direct labor, and manufacturing overhead. 
E)  direct material only. 
A)  direct material and direct labor. 
B)  direct labor and manufacturing overhead. 
C)  direct material and manufacturing overhead. 
D)  direct material, direct labor, and manufacturing overhead. 
E)  direct material only.

Question 7

Sebastian Muffler, Inc. operates an automobile service facility. The table below shows the cost incurred during a month when 500 mufflers were replaced.
  
Required:
Fill in the missing amounts, labeled A through O, in the table above.

Accepted Answer

@#IMG-DLM& Explanatory notes:
A and C each equal $

Question 8

Peyton Manufacturing has the following data:
 
-
If direct materials used during the year were $135,000, what was cost of goods manufactured?

Accepted Answer

A)  $140,500. 
B)  $539,000. 
C)  $409,500. 
D)  $544,500. 
E)  None of the answers is correct. 
A)  $140,500. 
B)  $539,000. 
C)  $409,500. 
D)  $544,500. 
E)  None of the answers is correct.

Question 9

How would a 5% sales commission paid to sales personnel be classified in a manufacturing company?

Accepted Answer

A)  Fixed, period cost. 
B)  Fixed, product cost. 
C)  Variable, period cost. 
D)  Variable, product cost. 
E)  Direct labor, product cost. 
A)  Fixed, period cost. 
B)  Fixed, product cost. 
C)  Variable, period cost. 
D)  Variable, product cost. 
E)  Direct labor, product cost.

Question 10

Travon and Tony (T & T) Enterprises has a single facility that it uses for manufacturing, sales, and administrative activities. Should the company's building depreciation charge be expensed in its entirety or is a different accounting procedure appropriate? Explain.

Accepted Answer

The company's depreciation charge is, in

Question 11

Which of the following statements is true?

Accepted Answer

A)  Product costs affect only the balance sheet. 
B)  Product costs affect only the income statement. 
C)  Period costs affect only the balance sheet. 
D)  Neither product costs nor period costs affect the Statement of Retained Earnings. This can also be a true statement if the period costs were prepaid (i.e., prepaid advertising, depreciation). 
E)  Product costs eventually affect both the balance sheet and the income statement. 
A)  Product costs affect only the balance sheet. 
B)  Product costs affect only the income statement. 
C)  Period costs affect only the balance sheet. 
D)  Neither product costs nor period costs affect the Statement of Retained Earnings. This can also be a true statement if the period costs were prepaid (i.e., prepaid advertising, depreciation). 
E)  Product costs eventually affect both the balance sheet and the income statement.

Question 12

Which of the following would not be classified as a product cost?

Accepted Answer

A)  Direct materials. 
B)  Direct labor. 
C)  Indirect materials. 
D)  Insurance on a manufacturing plant. 
E)  Sales bonuses for meeting quota sales. 
A)  Direct materials. 
B)  Direct labor. 
C)  Indirect materials. 
D)  Insurance on a manufacturing plant. 
E)  Sales bonuses for meeting quota sales.

Question 13

How should a company that manufactures automobiles classify its partially completed vehicles?

Accepted Answer

A)  Supplies. 
B)  Raw materials inventory. 
C)  Finished goods inventory. 
D)  Cost of goods manufactured. 
E)  Work-in-process inventory. 
A)  Supplies. 
B)  Raw materials inventory. 
C)  Finished goods inventory. 
D)  Cost of goods manufactured. 
E)  Work-in-process inventory.

Question 14

Indirect labor is not a component of manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 15

The following selected information was extracted from the 20x3 accounting records of Farrina Products:
   
*Seventy percent of the company's building was devoted to production activities; the remaining 30% was used for selling and administrative functions.
Farrina's beginning and ending work-in-process inventories amounted to $306,000 and $245,000, respectively. The company's beginning and ending finished-goods inventories were $450,000 and $440,000, respectively. 
A. Calculate Farrina's manufacturing overhead for the year.
B. Calculate Farrina's cost of goods manufactured.
C. Compute Farrina's cost of goods sold.

Accepted Answer

The answers include:
A. Manufacturing ov

Question 16

Research and development costs are classified as:

Accepted Answer

A)  product costs. 
B)  period costs. 
C)  inventoriable costs. 
D)  cost of goods sold. 
E)  labor costs. 
A)  product costs. 
B)  period costs. 
C)  inventoriable costs. 
D)  cost of goods sold. 
E)  labor costs.

Question 17

Sunk costs are irrelevant to all future decisions.

Accepted Answer

A) True 
 B)False

Question 18

Peyton Manufacturing has the following data:
 
- 
If the cost of goods manufactured for the year was $565,000, what was the amount of direct materials used during the year?

Accepted Answer

A)  $155,500. 
B)  $140,500. 
C)  $150,000. 
D)  $145,500. 
E)  None of the answers is correct. 
A)  $155,500. 
B)  $140,500. 
C)  $150,000. 
D)  $145,500. 
E)  None of the answers is correct.

Question 19

Prime costs are comprised of:

Accepted Answer

A)  direct materials and manufacturing overhead. 
B)  direct labor and manufacturing overhead. 
C)  direct materials, direct labor, and manufacturing overhead. 
D)  direct materials and direct labor. 
E)  direct materials and indirect materials. 
A)  direct materials and manufacturing overhead. 
B)  direct labor and manufacturing overhead. 
C)  direct materials, direct labor, and manufacturing overhead. 
D)  direct materials and direct labor. 
E)  direct materials and indirect materials.

Question 20

Which two terms below best describe the wages paid to security guards that monitor a factory 24 hours a day?

Accepted Answer

A)  variable cost and direct cost 
B)  fixed cost and direct cost 
C)  variable cost and indirect cost 
D)  fixed cost and indirect cost 
E)  value-added cost and direct cost 
A)  variable cost and direct cost 
B)  fixed cost and direct cost 
C)  variable cost and indirect cost 
D)  fixed cost and indirect cost 
E)  value-added cost and direct cost

Out-of-pocket costs are defined as the benefit that is sacrificed when the choice of one action precludes taking an alternative course of action.

Different cost concepts and classifications are used for different purposes.

Which of the following would not be a period cost?

Costs that can be easily traced to a specific department are called:

Work-in-process inventory is composed of:

Sebastian Muffler, Inc. operates an automobile service facility. The table below shows the cost incurred during a month when 500 mufflers were replaced. Required: Fill in the missing amounts, labeled A through O, in the table above.

Peyton Manufacturing has the following data: - If direct materials used during the year were $135,000, what was cost of goods manufactured?

How would a 5% sales commission paid to sales personnel be classified in a manufacturing company?

Travon and Tony (T & T) Enterprises has a single facility that it uses for manufacturing, sales, and administrative activities. Should the company's building depreciation charge be expensed in its entirety or is a different accounting procedure appropriate? Explain.

Which of the following statements is true?

Which of the following would not be classified as a product cost?

How should a company that manufactures automobiles classify its partially completed vehicles?

Indirect labor is not a component of manufacturing overhead.

Research and development costs are classified as:

Sunk costs are irrelevant to all future decisions.

Peyton Manufacturing has the following data: - If the cost of goods manufactured for the year was $565,000, what was the amount of direct materials used during the year?

Prime costs are comprised of:

Which two terms below best describe the wages paid to security guards that monitor a factory 24 hours a day?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 2: Basic Cost Management Concepts

Out-of-pocket costs are defined as the benefit that is sacrificed when the choice of one action precludes taking an alternative course of action.

Different cost concepts and classifications are used for different purposes.

Which of the following would not be a period cost?

Costs that can be easily traced to a specific department are called:

Work-in-process inventory is composed of:

Sebastian Muffler, Inc. operates an automobile service facility. The table below shows the cost incurred during a month when 500 mufflers were replaced. Required: Fill in the missing amounts, labeled A through O, in the table above.

Peyton Manufacturing has the following data: - If direct materials used during the year were $135,000, what was cost of goods manufactured?

How would a 5% sales commission paid to sales personnel be classified in a manufacturing company?

Travon and Tony (T & T) Enterprises has a single facility that it uses for manufacturing, sales, and administrative activities. Should the company's building depreciation charge be expensed in its entirety or is a different accounting procedure appropriate? Explain.

Which of the following statements is true?

Which of the following would not be classified as a product cost?

How should a company that manufactures automobiles classify its partially completed vehicles?

Indirect labor is not a component of manufacturing overhead.

Research and development costs are classified as:

Sunk costs are irrelevant to all future decisions.

Peyton Manufacturing has the following data: - If the cost of goods manufactured for the year was $565,000, what was the amount of direct materials used during the year?

Prime costs are comprised of:

Which two terms below best describe the wages paid to security guards that monitor a factory 24 hours a day?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters