Question 1

In a manufacturing company, all costs are period costs.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements about product costs is true?

Accepted Answer

A) Product costs are deducted from revenue when the production process is completed. 
B) Product costs are deducted from revenue as expenditures are made. 
C) Product costs associated with unsold finished goods and work in process appear on the balance sheet as assets. 
D) Product costs appear on financial statements only when products are sold. 
A) Product costs are deducted from revenue when the production process is completed. 
B) Product costs are deducted from revenue as expenditures are made. 
C) Product costs associated with unsold finished goods and work in process appear on the balance sheet as assets. 
D) Product costs appear on financial statements only when products are sold.

Question 3

Prime cost equals manufacturing overhead cost.

Accepted Answer

A) True 
 B)False

Question 4

For financial reporting purposes, the total amount of period costs incurred to sell 9,000 units is closest to:

Accepted Answer

A) $35,700 
B) $9,000 
C) $53,550 
D) $44,550 
A) $35,700 
B) $9,000 
C) $53,550 
D) $44,550

Question 5

Dizzy donates $2 of every entrance fee to a local homeless shelter.This charitable contribution would best be described as a:

Accepted Answer

A) fixed cost 
B) mixed cost 
C) step-variable cost 
D) true variable cost 
A) fixed cost 
B) mixed cost 
C) step-variable cost 
D) true variable cost

Question 6

If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Accepted Answer

A) $33,300 
B) $31,050 
C) $28,050 
D) $39,900 
A) $33,300 
B) $31,050 
C) $28,050 
D) $39,900

Question 7

The gross margin for September was:

Accepted Answer

A) $2,122,900 
B) $2,591,500 
C) $1,627,700 
D) $4,347,000 
A) $2,122,900 
B) $2,591,500 
C) $1,627,700 
D) $4,347,000

Question 8

Prime cost is the sum of direct materials cost and direct labor cost.

Accepted Answer

A) True 
 B)False

Question 9

To the nearest whole dollar, what should be the total lease cost at a sales volume of 29,200 units in a month? (Assume that this sales volume is within the relevant range.)

Accepted Answer

A) $712,140 
B) $697,200 
C) $727,080 
D) $668,548 
A) $712,140 
B) $697,200 
C) $727,080 
D) $668,548

Question 10

The contribution margin for September was:

Accepted Answer

A) $3,878,400 
B) $2,122,900 
C) $2,591,500 
D) $1,627,700 
A) $3,878,400 
B) $2,122,900 
C) $2,591,500 
D) $1,627,700

Question 11

A fixed cost fluctuates in total as activity changes but remains constant on a per unit basis over the relevant range.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following costs could contain both variable and fixed cost elements with respect to the total output of the company?

Accepted Answer

A) Sales commissions. 
B) Manufacturing overhead. 
C) Direct materials. 
D) Administrative salaries. 
A) Sales commissions. 
B) Manufacturing overhead. 
C) Direct materials. 
D) Administrative salaries.

Question 13

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory?

Accepted Answer

A) The cost of the glue in a chair. 
B) The amount paid to the individual who stains a chair. 
C) The workman's compensation insurance of the supervisor who oversees production. 
D) The factory utilities of the department in which production takes place. 
A) The cost of the glue in a chair. 
B) The amount paid to the individual who stains a chair. 
C) The workman's compensation insurance of the supervisor who oversees production. 
D) The factory utilities of the department in which production takes place.

Question 14

In making the decision to invest in the model 220 machine, the opportunity cost was:

Accepted Answer

A) $348,000 
B) $340,000 
C) $360,000 
D) $411,000 
A) $348,000 
B) $340,000 
C) $360,000 
D) $411,000

Question 15

Contribution margin and gross margin mean the same thing.

Accepted Answer

A) True 
 B)False

Question 16

Depreciation on equipment a company uses in its selling and administrative activities would be classified as a period cost.

Accepted Answer

A) True 
 B)False

Question 17

An example of a committed fixed cost is:

Accepted Answer

A) management training seminars. 
B) a long-term equipment lease. 
C) research and development. 
D) advertising. 
A) management training seminars. 
B) a long-term equipment lease. 
C) research and development. 
D) advertising.

Question 18

Which of the following costs is classified as both a prime cost and a conversion cost?

Accepted Answer

A) Direct materials. 
B) Direct labor. 
C) Variable overhead. 
D) Fixed overhead. 
A) Direct materials. 
B) Direct labor. 
C) Variable overhead. 
D) Fixed overhead.

Question 19

Fixed costs expressed on a per unit basis do not change with changes in activity.

Accepted Answer

A) True 
 B)False

Question 20

For financial reporting purposes, the total amount of product costs incurred to make 4,000 units is closest to:

Accepted Answer

A) $57,200 
B) $8,800 
C) $44,400 
D) $53,200 
A) $57,200 
B) $8,800 
C) $44,400 
D) $53,200

Exam 1: Managerial Accounting and Cost Concepts

In a manufacturing company, all costs are period costs.

Which of the following statements about product costs is true?

Prime cost equals manufacturing overhead cost.

For financial reporting purposes, the total amount of period costs incurred to sell 9,000 units is closest to:

Dizzy donates $2 of every entrance fee to a local homeless shelter.This charitable contribution would best be described as a:

If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

The gross margin for September was:

Prime cost is the sum of direct materials cost and direct labor cost.

To the nearest whole dollar, what should be the total lease cost at a sales volume of 29,200 units in a month? (Assume that this sales volume is within the relevant range.)

The contribution margin for September was:

A fixed cost fluctuates in total as activity changes but remains constant on a per unit basis over the relevant range.

Which of the following costs could contain both variable and fixed cost elements with respect to the total output of the company?

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory?

In making the decision to invest in the model 220 machine, the opportunity cost was:

Contribution margin and gross margin mean the same thing.

Depreciation on equipment a company uses in its selling and administrative activities would be classified as a period cost.

An example of a committed fixed cost is:

Which of the following costs is classified as both a prime cost and a conversion cost?

Fixed costs expressed on a per unit basis do not change with changes in activity.

For financial reporting purposes, the total amount of product costs incurred to make 4,000 units is closest to:

Job-Order Costing: Calculating Unit Product Costs

Job-Order Costing: Cost Flows and External Reporting

Activity-Based Costing

Process Costing6 Cost-Volume-Profit Relationships

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Performance Measurement in Decentralized Organizations

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Flexible Budgets Standard Costs and Variance Analysis

Statement of Cash Flows

Financial Statement Analysis

Job-Order Costing: Cost Flows and External Reporting

Process Costing6 Cost-Volume-Profit Relationships

Cost-Volume-Profit Relationships

Flexible Budgets, Standard Costs, and Variance Analysis

Flexible Budgets, Standard Costs, and Variance Analysis

A Capital Budgeting Decisions

A Statement of Cash Flows

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