Question 1

The sequence of major activities that every organization carries out to fulfill its mission is known as:

Accepted Answer

A)  the manufacturing process. 
B)  product planning and development. 
C)  the value chain. 
D)  marketing. 
A)  the manufacturing process. 
B)  product planning and development. 
C)  the value chain. 
D)  marketing. C

Question 2

Rossiter Company failed to record a credit sale at the end of the year,although the reduction in finished goods inventories was correctly recorded when the goods were shipped to the customer.Which one of the following statements is correct?

Accepted Answer

A)  Accounts receivable was not affected,inventory was not affected,sales were understated,and cost of goods sold was understated. 
B)  Accounts receivable was understated,inventory was overstated,sales were understated,and cost of goods sold was overstated. 
C)  Accounts receivable was not affected,inventory was understated,sales were understated,and cost of goods sold was understated. 
D)  Accounts receivable was understated,inventory was not affected,sales were understated,and cost of goods sold was not affected. 
A)  Accounts receivable was not affected,inventory was not affected,sales were understated,and cost of goods sold was understated. 
B)  Accounts receivable was understated,inventory was overstated,sales were understated,and cost of goods sold was overstated. 
C)  Accounts receivable was not affected,inventory was understated,sales were understated,and cost of goods sold was understated. 
D)  Accounts receivable was understated,inventory was not affected,sales were understated,and cost of goods sold was not affected. D

Question 3

Laco Company acquired its factory building about 20 years ago.For a number of years the company has rented out a small,unused part of the building.The renter's lease will expire soon.Rather than renewing the lease,Laco Company is considering using the space itself to manufacture a new product.Under this option,the unused space will continue to be depreciated on a straight-line basis,as in past years.
Direct materials and direct labour cost for the new product would be $50 per unit.In order to have a place to store finished units of the new product,the company would have to rent a small warehouse nearby.The rental cost would be $2,000 per month.It would cost the company an additional $4,000 each month to advertise the new product.A new production supervisor would be hired to oversee production of the new product who would be paid $3,000 per month.The company would pay a sales commission of $10 for each unit of product that is sold.
Required:
Complete the chart below by placing an "X" under each column heading that helps to identify the costs listed to the left.There can be "X's" placed under more than one heading for a single cost.For example,a cost might be a product cost,an opportunity cost,and a sunk cost;there would be an "X" placed under each of these headings on the answer sheet opposite the cost.

Accepted Answer

*Between the alternatives of (1)renting the space out again or (2)using the space to produce the new product.

§ We suggest you allow either answers (a blank or an X)in this cell.Some experts would consider an opportunity cost to be a differential cost and others would not.It is all a matter of definition and the definitions given in the text do not really cover this contingency.

Question 4

A cost that differs from one month to another is known as a differential cost.

Accepted Answer

A) True 
 B)False

Question 5

If the ending inventory of finished goods is understated,net income will be overstated.

Accepted Answer

A) True 
 B)False

Question 6

A manufacturing company prepays its insurance coverage for a three-year period.The premium for the three years is $2,700 and is paid at the beginning of the first year.Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities.What amounts should be considered product and period costs respectively for the first year of coverage?

Accepted Answer

A)  choice a. 
B)  choice b. 
C)  choice c. 
D)  choice d. 
A)  choice a. 
B)  choice b. 
C)  choice c. 
D)  choice d.

Question 7

Which of the following statements is true?

Accepted Answer

A)  An indirect cost can be easily traced to an individual cost object. 
B)  An indirect cost is one incurred to support a number of cost objects. 
C)  A direct cost cannot be easily and economically traced to a cost object. 
D)  The determination of a cost object is nor relevant to the traceability of costs. 
A)  An indirect cost can be easily traced to an individual cost object. 
B)  An indirect cost is one incurred to support a number of cost objects. 
C)  A direct cost cannot be easily and economically traced to a cost object. 
D)  The determination of a cost object is nor relevant to the traceability of costs.

Question 8

The cost of goods sold for the year (in thousands of dollars)was:

Accepted Answer

A)  $410. 
B)  $490. 
C)  $570. 
D)  $610. 
A)  $410. 
B)  $490. 
C)  $570. 
D)  $610.

Question 9

The balance of the finished goods inventory at the end of the year was:

Accepted Answer

A)  $45,000. 
B)  $50,000. 
C)  $95,000. 
D)  $193,000. 
A)  $45,000. 
B)  $50,000. 
C)  $95,000. 
D)  $193,000.

Question 10

Which of the following costs is often important in decision making,but is omitted from conventional accounting records?

Accepted Answer

A)  Fixed cost. 
B)  Sunk cost. 
C)  Opportunity cost. 
D)  Indirect cost. 
A)  Fixed cost. 
B)  Sunk cost. 
C)  Opportunity cost. 
D)  Indirect cost.

Question 11

Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm.

Accepted Answer

A) True 
 B)False

Question 12

Manufacturing overhead combined with direct materials is known as conversion cost.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?

Accepted Answer

A)  Sheet steel in a file cabinet made by the company. 
B)  Manufacturing equipment depreciation. 
C)  Idle time for direct labour. 
D)  Taxes on a factory building. 
A)  Sheet steel in a file cabinet made by the company. 
B)  Manufacturing equipment depreciation. 
C)  Idle time for direct labour. 
D)  Taxes on a factory building.

Question 14

The following data (in thousands of dollars)have been taken from the accounting records of Larmont Corporation for the just completed year.

Accepted Answer

@#IMG-DLM& 
Required:
a.Prepare a Schedule of Cost

Question 15

The wages of factory maintenance personnel would usually be considered to be:

Accepted Answer

A)  choice a. 
B)  choice b. 
C)  choice c. 
D)  choice d. 
A)  choice a. 
B)  choice b. 
C)  choice c. 
D)  choice d.

Question 16

Green Company's costs for the month of August were as follows: direct materials,$27,000;direct labour,$34,000;sales salaries,$14,000;indirect labour,$10,000;indirect materials,$15,000;general corporate administrative cost,$12,000;taxes on manufacturing facility,$2,000;and rent on factory,$17,000.The beginning work in process inventory was $16,000 and the ending work in process inventory was $9,000.What was the cost of goods manufactured for the month?

Accepted Answer

A)  $105,000. 
B)  $112,000. 
C)  $132,000. 
D)  $138,000. 
A)  $105,000. 
B)  $112,000. 
C)  $132,000. 
D)  $138,000.

Question 17

Direct materials are a part of:

Accepted Answer

A)  choice a. 
B)  choice b. 
C)  choice c. 
D)  choice d. 
A)  choice a. 
B)  choice b. 
C)  choice c. 
D)  choice d.

Question 18

Last month a manufacturing company had the following operating results:   What was the cost of goods manufactured for the month?

Accepted Answer

A)  $411,000. 
B)  $412,000. 
C)  $413,000. 
D)  $463,000. 
A)  $411,000. 
B)  $412,000. 
C)  $413,000. 
D)  $463,000.

Question 19

Delta Merchandising,Inc.has provided the following information for the year just ended:   The ending inventory for the company at year end was:

Accepted Answer

A)  $9,950. 
B)  $14,050. 
C)  $24,500. 
D)  $65,450. 
A)  $9,950. 
B)  $14,050. 
C)  $24,500. 
D)  $65,450.

Question 20

Assume that cost of goods sold for January was $124,000.The net income for January was:

Accepted Answer

A)  $25,000. 
B)  $26,000. 
C)  $51,000. 
D)  $61,000. 
A)  $25,000. 
B)  $26,000. 
C)  $51,000. 
D)  $61,000.

The sequence of major activities that every organization carries out to fulfill its mission is known as:

Rossiter Company failed to record a credit sale at the end of the year,although the reduction in finished goods inventories was correctly recorded when the goods were shipped to the customer.Which one of the following statements is correct?

A cost that differs from one month to another is known as a differential cost.

If the ending inventory of finished goods is understated,net income will be overstated.

Which of the following statements is true?

The cost of goods sold for the year (in thousands of dollars)was:

The balance of the finished goods inventory at the end of the year was:

Which of the following costs is often important in decision making,but is omitted from conventional accounting records?

Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm.

Manufacturing overhead combined with direct materials is known as conversion cost.

Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?

The following data (in thousands of dollars)have been taken from the accounting records of Larmont Corporation for the just completed year.

The wages of factory maintenance personnel would usually be considered to be:

Direct materials are a part of:

Last month a manufacturing company had the following operating results: What was the cost of goods manufactured for the month?

Delta Merchandising,Inc.has provided the following information for the year just ended: The ending inventory for the company at year end was:

Assume that cost of goods sold for January was $124,000.The net income for January was:

An Introduction to Managerial Accounting and Cost Concepts

Systems Design: Activity-Based Costing

Systems Design: Process Costing

Cost Behavior: Analysis and Use

Cost-Volume-Profit Relationships

Profit Planning

Standard Costs

Flexible Budgets and Overhead Analysis

Decentralization

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

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Exam 2: Systems Design: Job-Order Costing

The sequence of major activities that every organization carries out to fulfill its mission is known as:

Rossiter Company failed to record a credit sale at the end of the year,although the reduction in finished goods inventories was correctly recorded when the goods were shipped to the customer.Which one of the following statements is correct?

A cost that differs from one month to another is known as a differential cost.

If the ending inventory of finished goods is understated,net income will be overstated.

Which of the following statements is true?

The cost of goods sold for the year (in thousands of dollars)was:

The balance of the finished goods inventory at the end of the year was:

Which of the following costs is often important in decision making,but is omitted from conventional accounting records?

Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm.

Manufacturing overhead combined with direct materials is known as conversion cost.

Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?

The following data (in thousands of dollars)have been taken from the accounting records of Larmont Corporation for the just completed year.

The wages of factory maintenance personnel would usually be considered to be:

Direct materials are a part of:

Last month a manufacturing company had the following operating results: What was the cost of goods manufactured for the month?

Delta Merchandising,Inc.has provided the following information for the year just ended: The ending inventory for the company at year end was:

Assume that cost of goods sold for January was $124,000.The net income for January was:

An Introduction to Managerial Accounting and Cost Concepts

Systems Design: Activity-Based Costing

Systems Design: Process Costing

Cost Behavior: Analysis and Use

Cost-Volume-Profit Relationships

Profit Planning

Standard Costs

Flexible Budgets and Overhead Analysis

Decentralization

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Filters