Exam 3: Basic Cost Management Concepts

All indirect manufacturing costs are commonly combined into a single cost pool called:

If finished goods inventory has increased during the period, which of the following is always true?

Complete the inventory formula: Beginning Inventory + ______ = ________ + Ending Inventory

In order to assure that accounting information is accurate and to avoid potentially costly mistakes in the decision making process, firms should:

Assume the following information pertaining to Cub Company: Prime costs \ 195,000 Conversion costs 221,000 Direct materials used 85,000 Beginning work in process 98,000 Ending work in process 81,000 Total manufacturing cost is calculated to be:

Stephenson Company's computer system recently crashed, erasing much of the company's financial data. The following accounting information was discovered soon afterwards on the CFO's back-up computer data. Cost of Goods Sold \ 380,000 Work-in-Process Inventory, Beginning 30,000 Work-in-Process Inventory, Ending 40,000 Selling and Administrative Expense 50,000 Finished Goods Inventory, Ending 15,000 Finished Goods Inventory, Beginning ? Direct Materials Purchased 171,000 Factory Overhead Applied 112,000 Operating Income 22,000 Direct Materials Inventory, Beginning 18,000 Direct Materials Inventory, Ending 6,000 Cost of Goods Manufactured 340,000 Direct Labor 55,000 The CFO of Stephenson Company has asked you to recalculate the following accounts and report to him by week's end. What should be the amount of total manufacturing cost?

Which of the following should be considered a structural cost driver?

Strategic analysis uses which of the following to help a firm improve its competitive position through an analysis of product and production complexity?

Conrad, Inc. recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records. Cost of Goods Sold \ 65,000 Work-in-Process Inventory, Beginning 10,500 Work-in-Process Inventory, Ending 9,000 Selling and Administrative Expense 15,000 Finished Goods Inventory, Ending 15,000 Finished Goods Inventory, Beginning ? Direct Materials Used ? Factory Overhead Applied 12,000 Operating Income 14,000 Direct Materials Inventory, Beginning 11,000 Direct Materials Inventory, Ending 6,000 Cost of Goods Manufactured 60,000 Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The CFO of Conrad, Inc. has asked you to recalculate the following accounts and to report to him by the end of the day. What is the amount of total manufacturing cost?

The Gray Company has a staff of five clerks in its general accounting department.Three clerks who work during the day perform sundry accounting tasks; the two clerks who work in the evening are responsible for (1) collecting the cost data for the various jobs in process, (2) verifying manufacturing material and labor reports, and (3) supplying production reports to the supervisors by the next morning.The salaries of these two clerks who work at night should be classified as:

Williams Company is an East Coast producer of electronic furnace air filters. A significant jump in new housing starts in the region has triggered a 25 percent increase in orders for the filter units, especially the quality model that Williams sells for $270. Six weeks after increasing production to supply the increased orders, the assistant controller notices some unusual unit cost data in the monthly report she is preparing. Prior and current month unit values are given below: Filter This Month Last Month Change Average total cost \ 167.20 \ 171.14 -\ 3.94 Cost of last unit produced 104.90 101.22 +3.68 Required: (1) Suggest some possible causes for the decline in average total cost. (2) Assume now the opposite change has occurred, namely, average total cost has risen $3.94 per unit, while unit variable cost has fallen by $3.68 per unit. Suggest a possible situation to explain these changes.

Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files: Cost of goods sold \ 80,000 Work in process inventory, January 1, 2016 18,500 Work in process inventory, December 31, 2016 14,500 Selling and Administrative Expenses 16,000 Net Income 30,000 Factory overhead 20,000 Direct materials inventory, January 1, 2016 26,000 Direct materials inventory, December 31, 2016 14,000 Cost of goods manufactured 98,000 Finished goods inventory, January 1, 2016 31,000 Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow. What should be the amount in the finished goods inventory at December 31, 2016?

How will unit (average) cost of manufacturing (materials, labor and overhead) usually change if the production level rises?

The following data relates to the Solar Products Company for the fiscal year ended December 31: Direct Materials Inventory, Beginning \ 60 Direct Materials Inventory, Ending 40 Direct Materials Purchases 290 Direct Labor 33 Finished Goods Inventory, Beginning 90 Finished Goods Inventory, Ending 100 Factory overhead 155 Work-in-Process Inventory, Beginning 80 Work-in-Process Inventory, Ending 60 Required: Prepare a statement of cost of goods manufactured and cost of goods sold.

Consider the following for Columbia Street Manufacturing: Change in finished goods inventory \ 985 increase Change in work-in-process inventory \ 350 decrease Total manufacturing costs \ 900 What are the cost of goods manufactured and cost of goods sold? Cost of goods Cost of goods manufactured sold A) \ 885 \ 1,050 B) \ 1,250 \ 265 C) \ 1,525 \ 925 D) \ 1,250 \ 565

Which of the following is an example of an indirect cost?

The three attributes of cost information include accuracy, timeliness, and

If the volume of production is increased over the level planned, the cost per unit would be expected to:

Young Fashions Company produces children's clothing. During the current year, the company incurred the following costs: Factory Rent \1 44,000 Direct labor used 525,000 Factory utilities 120,000 Direct materials purchases 850,000 Indirect materials 106,000 Indirect labor 90,000 $\text { Inventories for the year were: }$ January 1 December 31 Direct materials \2 20,000 \1 55,000 Work in process 160,000 128,000 Finished goods 320,000 310,000 Required: Prepare a statement of cost of goods manufactured and cost of goods sold.

The change in total cost associated with each change in the quantity of the cost driver is: