Exam 2: Basic Cost Management Concepts

Tempest Enterprises began operations on January 1, 20x1, with all of its activities conducted from a single facility.The company's accountant concluded that the year's building depreciation should be allocated as follows: selling activities, 20%; administrative activities, 35%; and manufacturing activities, 45%.If Tempest sold 60% of 20x1 production during that year, what percentage of the depreciation would appear (either directly or indirectly) on the 20x1 income statement?

What is the primary trade-off that an accountant must consider when deciding whether to identify cost drivers?

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

The salary that is sacrificed by a college student who pursues a degree full time is a(n):

Rainier Industries has Raw materials inventory on January 1, 20x8 of $32,500 and Raw materials inventory on December 31, 20x8 of $26,700.If raw materials used during the year were $135,000 what was the amount of raw materials purchased during the year?

Which of the following statements is true?

The higher the correlation between the cost and the cost driver, the more accurate will be the resulting understanding of cost behavior.

Harrison Industries began July with a finished-goods inventory of $48,000.The finished-goods inventory at the end of July was $56,000 and the cost of goods sold during the month was $125,000. The cost of goods manufactured during July was:

As activity changes, total variable cost increases or decreases proportionately with the activity change, but unit variable cost remains the same.

Briefly explain the four types of production processes in terms of products and volume.Then give examples of each type.

Beckett Industries has the following beginning and ending inventories for the month of April. Beckett uses one overhead control account and charges overhead to production at 70% of direct labor cost.The company does not formally recognize over- or underapplied overhead until year-end. What is Beckett's cost of goods transferred to finished goods inventory for April?

Rainier Industries has Raw materials inventory on January 1, 20x8 of $32,500 and Raw materials inventory on December 31, 20x8 of $26,700.If purchases of raw materials were $135,000 during the year, what was the amount of raw materials used during the year?

Which of the following inventories would a discount retailer report as an asset?

Selling and administrative costs are always period costs on any type of company's income statement.

Inventoriable costs are expensed when incurred.

When 5,000 units are produced variable costs are $35 per unit and total costs are $200,000.What are the total costs when 8,000 units are produced?

Which of the following is an example of a fixed cost?

Selling and administrative expenses would likely appear on the balance sheet of:

The choices below depict five costs of Garfield Industries and a possible driver for each cost.Which of these choices likely contains an inappropriate cost driver?

The relevant range for Maxco Industries is 10,000 to 16,000 units of product.The variable costs per unit are $6 when a company produces 12,000 units of product.What are the variable costs per unit when 14,000 units are produced?