Question 1

The accounting records of Stingray Company revealed the following information:
 
Stingray's cost of goods sold is:

Accepted Answer

A)  $508,000. 
B)  $529,000. 
C)  $531,000. 
D)  $553,000. 
E)  None of the answers is correct. 
A)  $508,000. 
B)  $529,000. 
C)  $531,000. 
D)  $553,000. 
E)  None of the answers is correct.

Question 2

The fixed cost per unit:

Accepted Answer

A)  will increase as activity increases. 
B)  will decrease as activity decreases. 
C)  will decrease as activity remains constant. 
D)  will remain constant. 
E)  will increase as activity decreases and will decrease as activity increases. 
A)  will increase as activity increases. 
B)  will decrease as activity decreases. 
C)  will decrease as activity remains constant. 
D)  will remain constant. 
E)  will increase as activity decreases and will decrease as activity increases.

Question 3

The fixed costs per unit are $10 when a company produces 10,000 units of product. What are the fixed costs per unit when 8,000 units are produced?

Accepted Answer

A)  $12.50. 
B)  $10.00. 
C)  $8.00. 
D)  $6.50. 
E)  $5.50. 
A)  $12.50. 
B)  $10.00. 
C)  $8.00. 
D)  $6.50. 
E)  $5.50.

Question 4

The following equation -- Beginning finished goods + cost of goods manufactured - ending finished goods -- is used to calculate cost of goods sold during the period.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is true?

Accepted Answer

A)  The word "cost" has the same meaning in all situations in which it is used. 
B)  Cost data, once classified and recorded for a specific application, are appropriate for use in any application. 
C)  Different cost concepts and classifications are used for different purposes. 
D)  All organizations incur the same types of costs. 
E)  Costs incurred in one year are always meaningful in the following year. 
A)  The word "cost" has the same meaning in all situations in which it is used. 
B)  Cost data, once classified and recorded for a specific application, are appropriate for use in any application. 
C)  Different cost concepts and classifications are used for different purposes. 
D)  All organizations incur the same types of costs. 
E)  Costs incurred in one year are always meaningful in the following year.

Question 6

The total cost of direct material, direct labor, and manufacturing overhead transferred from work-in-process inventory to finished-goods inventory is called the cost of goods manufactured.

Accepted Answer

A) True 
 B)False

Question 7

Product costs are:

Accepted Answer

A)  expensed when incurred. 
B)  inventoried. 
C)  treated in the same manner as period costs. 
D)  treated in the same manner as advertising costs. 
E)  subtracted from cost of goods sold. 
A)  expensed when incurred. 
B)  inventoried. 
C)  treated in the same manner as period costs. 
D)  treated in the same manner as advertising costs. 
E)  subtracted from cost of goods sold.

Question 8

Which of the following statements is (are) correct?

Accepted Answer

A)  Overtime premiums should be treated as a component of manufacturing overhead. 
B)  Overtime premiums should be treated as a component of direct labor. 
C)  Idle time should be treated as a component of direct labor. 
D)  Idle time should be accounted for as a special type of loss. 
E)  Overtime premiums should be treated as a component of direct labor and idle time should be treated as a component of direct labor. 
A)  Overtime premiums should be treated as a component of manufacturing overhead. 
B)  Overtime premiums should be treated as a component of direct labor. 
C)  Idle time should be treated as a component of direct labor. 
D)  Idle time should be accounted for as a special type of loss. 
E)  Overtime premiums should be treated as a component of direct labor and idle time should be treated as a component of direct labor.

Question 9

A suitable cost driver for the amount of direct materials used is the number of direct labor hours worked.

Accepted Answer

A) True 
 B)False

Question 10

Finished goods inventory is ordinarily held for sale by a manufacturing company.

Accepted Answer

A) True 
 B)False

Question 11

Inventoriable costs are expensed when incurred.

Accepted Answer

A) True 
 B)False

Question 12

Hernandez Systems began business on January 1 of the current year, producing a single product that is popular with home builders. Demand was very strong, allowing the company to sell its entire manufacturing output of 80,000 units. The following unit costs were incurred:
   
Hernandez anticipates an increase in productive output to 100,000 units and sales of 95,000 units in the next accounting period. The company uses appropriate drivers to determine cost behavior and estimates. 
Required:
A. Assuming that present cost behavior patterns continue, compute the total expected costs in the upcoming accounting period.
B. Jan Compton is about to prepare a graph that shows the unit cost behavior for variable selling and administrative cost. If the graph's horizontal axis is volume and the vertical axis is dollars, briefly describe what Compton's graph should look like.
C. Determine whether the following costs are variable or fixed in terms of behavior:
1. Yearly lease payments for a state-of-the-art cutting machine.
2. A fee paid to a consultant who provided advice about quality issues. The fee was based on the number of consulting hours provided.
3. Cost of an awards dinner for "star" salespeople.

Accepted Answer

A.
 @#IMG-DLM& B. The variable selling a

Question 13

The tuition that will be paid next semester by a college student who pursues a degree is a(n):

Accepted Answer

A)  sunk cost. 
B)  out-of-pocket cost. 
C)  indirect cost. 
D)  average cost. 
E)  marginal cost. 
A)  sunk cost. 
B)  out-of-pocket cost. 
C)  indirect cost. 
D)  average cost. 
E)  marginal cost.

Question 14

Which of the following would likely be a suitable cost driver for the amount of direct materials used?

Accepted Answer

A)  The number of units sold. 
B)  The number of direct labor hours worked. 
C)  The number of machine hours worked. 
D)  The number of units produced. 
E)  The number of employees working in the factory. 
A)  The number of units sold. 
B)  The number of direct labor hours worked. 
C)  The number of machine hours worked. 
D)  The number of units produced. 
E)  The number of employees working in the factory.

Question 15

Which of the following employees would not be classified as indirect labor?

Accepted Answer

A)  Plant Custodian. 
B)  Salesperson. 
C)  An employee that packs products for shipment. 
D)  Plant security guard. 
E)  A line employee that produces parts for chairs using a saw and template. 
A)  Plant Custodian. 
B)  Salesperson. 
C)  An employee that packs products for shipment. 
D)  Plant security guard. 
E)  A line employee that produces parts for chairs using a saw and template.

Question 16

Tao Company had the following inventory balances at the beginning and end of the year:
   
During the year, the company purchased $100,000 of raw material and incurred $340,000 of direct labor costs. Other data: manufacturing overhead incurred, $450,000; sales, $1,560,000; selling and administrative expenses, $90,000; income tax rate, 30%. 
Required:
A. Calculate cost of goods manufactured.
B. Calculate cost of goods sold.
C. Determine Tao's net income.

Accepted Answer

The answer of Tao Company had the following inventory balances...

Question 17

Costs that are expensed when incurred are called:

Accepted Answer

A)  product costs. 
B)  direct costs. 
C)  inventoriable costs. 
D)  period costs. 
E)  indirect costs. 
A)  product costs. 
B)  direct costs. 
C)  inventoriable costs. 
D)  period costs. 
E)  indirect costs.

Question 18

Which of the four items listed below is not a type of production process?

Accepted Answer

A)  Batch. 
B)  Job Shop. 
C)  Continuous Flow. 
D)  Job Flow. 
E)  Assembly. 
A)  Batch. 
B)  Job Shop. 
C)  Continuous Flow. 
D)  Job Flow. 
E)  Assembly.

Question 19

Total costs are $180,000 when 10,000 units are produced; of this amount, variable costs are $64,000. What are the total costs when 13,000 units are produced?

Accepted Answer

A)  $199,200. 
B)  $214,800. 
C)  $234,000. 
D)  None of the answers is correct. 
E)  Total costs cannot be calculated based on the information presented. 
A)  $199,200. 
B)  $214,800. 
C)  $234,000. 
D)  None of the answers is correct. 
E)  Total costs cannot be calculated based on the information presented.

Question 20

The accounting records of Comacho Company revealed the following costs, among others:
 
Costs that would be considered in the calculation of manufacturing overhead total:

Accepted Answer

A)  $149,000. 
B)  $171,000. 
C)  $186,000. 
D)  $442,000. 
E)  None of the answers is correct. 
A)  $149,000. 
B)  $171,000. 
C)  $186,000. 
D)  $442,000. 
E)  None of the answers is correct.

The accounting records of Stingray Company revealed the following information: Stingray's cost of goods sold is:

The fixed cost per unit:

The fixed costs per unit are $10 when a company produces 10,000 units of product. What are the fixed costs per unit when 8,000 units are produced?

The following equation -- Beginning finished goods + cost of goods manufactured - ending finished goods -- is used to calculate cost of goods sold during the period.

Which of the following statements is true?

The total cost of direct material, direct labor, and manufacturing overhead transferred from work-in-process inventory to finished-goods inventory is called the cost of goods manufactured.

Product costs are:

Which of the following statements is (are) correct?

A suitable cost driver for the amount of direct materials used is the number of direct labor hours worked.

Finished goods inventory is ordinarily held for sale by a manufacturing company.

Inventoriable costs are expensed when incurred.

The tuition that will be paid next semester by a college student who pursues a degree is a(n):

Which of the following would likely be a suitable cost driver for the amount of direct materials used?

Which of the following employees would not be classified as indirect labor?

Costs that are expensed when incurred are called:

Which of the four items listed below is not a type of production process?

Total costs are $180,000 when 10,000 units are produced; of this amount, variable costs are $64,000. What are the total costs when 13,000 units are produced?

The accounting records of Comacho Company revealed the following costs, among others: Costs that would be considered in the calculation of manufacturing overhead total:

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

The accounting records of Stingray Company revealed the following information: Stingray's cost of goods sold is:

The fixed cost per unit:

The fixed costs per unit are $10 when a company produces 10,000 units of product. What are the fixed costs per unit when 8,000 units are produced?

The following equation -- Beginning finished goods + cost of goods manufactured - ending finished goods -- is used to calculate cost of goods sold during the period.

Which of the following statements is true?

The total cost of direct material, direct labor, and manufacturing overhead transferred from work-in-process inventory to finished-goods inventory is called the cost of goods manufactured.

Product costs are:

Which of the following statements is (are) correct?

A suitable cost driver for the amount of direct materials used is the number of direct labor hours worked.

Finished goods inventory is ordinarily held for sale by a manufacturing company.

Inventoriable costs are expensed when incurred.

The tuition that will be paid next semester by a college student who pursues a degree is a(n):

Which of the following would likely be a suitable cost driver for the amount of direct materials used?

Which of the following employees would not be classified as indirect labor?

Costs that are expensed when incurred are called:

Which of the four items listed below is not a type of production process?

Total costs are $180,000 when 10,000 units are produced; of this amount, variable costs are $64,000. What are the total costs when 13,000 units are produced?

The accounting records of Comacho Company revealed the following costs, among others: Costs that would be considered in the calculation of manufacturing overhead total:

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