Exam 2: Basic Managerial Accounting Concepts

Reducing the cost required to achieve a given benefit means that a company is becoming less efficient.

Materials that become part of a product usually are classified as _______________.

You are the accounting manager at Falcon Inc. You just hired a new staff accountant to assist you in breaking out costs into their appropriate classifications. The staff accountant asks you why cost classification is important. How would you respond?

Any costs associated with storing, selling, and delivering the product are classified as product costs.

Conversion cost is the sum of

A variable cost is one that does not increase in total as output increase and does not decrease in total as output decreases.

Figure 2-6. Seaview Company took the following data from their income statement at the end of the current year. -Refer to Figure 2-6. What was cost of goods sold for the year?

Costs that can be easily and accurately traced to a cost object are called __________.

Figure 2-5. In July, Econo Company purchased materials costing $21,000 and incurred direct labor cost of $18,000. Overhead totaled $32,000 for the month. Information on inventories was as follows: -Refer to Figure 2-5. What were the total manufacturing costs in July?

Cost is:

Select the appropriate definition of each of the items listed below. a. Income Statement b. Cost of goods manufactured c. Work in process d. Gross margin e. Operating income -Gross margin - selling and administrative expenses

During the month of June, Telecom Inc. had cost of goods manufactured of $112,000, direct materials cost of $52,000, direct labor cost of $37,000 and overhead cost of $26,000. The work in process balance at June 30 equaled $10,000. What was the work in process balance on June 1?

Product costs

Costs are directly, not indirectly, associated with cost objects.

Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles. a. direct materials b. direct labor c. overhead d. selling expense e. administrative expense -cost of tires

Stabler Company, a manufacturing firm, has provided the following information for the month of May: Required:

Cashman Company supplied the following information for the month of December. Required: Solve for the following amounts assuming that Cashman Company's operating income in December was $44,100.

Select the appropriate classification of the output generated by each of the following industries. a. Tangible b. Intangible -Law firm

Select the appropriate classification of the items listed below. a. selling expense b. administrative expense c. direct materials d. direct labor e. overhead -Chief of surgery's salary at a hospital

Figure 2-2. Lonborg Co. had the following beginning and ending inventory balances for the year ended December 31, 2011: In addition, direct labor costs of $30,000 were incurred, overhead equaled $42,000, materials purchased were $27,000 and selling and administrative costs were $22,000. Lonborg Co. sold 25,000 units of product during the year at a sales price of $5.00 per unit. -Refer to Figure 2-2. What was Lonborg's operating income <loss> for the year?