Question 1

A band of normal activity or volume in which specific cost-volume relationships are maintained is referred to as the:

Accepted Answer

A) average range 
B) cost-allocation range 
C) cost driver range 
D) relevant range 
A) average range 
B) cost-allocation range 
C) cost driver range 
D) relevant range

Question 2

The following information pertains to Ball Company:
   39,800 units are sold during the year for $100 per unit.
Required:
a. What is the average manufacturing cost per unit?
b. What is the amount of ending finished goods inventory?
c. What is the amount of gross margin?

Accepted Answer

a. $2,400,000 / 40,000 = $60.0

Question 3

Answer the following questions using the information below:
For last year, Lewisburn Manufacturing reported the following:
  
-What was Lewisburn's gross margin (or gross profit)?

Accepted Answer

A) $103,000 
B) $152,000 
C) $268,000 
D) $317,000 
A) $103,000 
B) $152,000 
C) $268,000 
D) $317,000

Question 4

Actual costs and historical costs are two different terms referring to the same thing.

Accepted Answer

A) True 
 B)False

Question 5

Answer the following questions using the information below:
Axle and Wheel Manufacturing currently produces 1,000 axles per month. The following per unit data apply for sales to regular customers:
  
-What is the per unit cost when producing 3,000 axles?

Accepted Answer

A) $58.33 
B) $175.00 
C) $85.00 
D) $125.00 
A) $58.33 
B) $175.00 
C) $85.00 
D) $125.00

Question 6

________ include the compensation of all manufacturing labor that can be traced to the cost object.

Accepted Answer

A) Direct manufacturing labor costs 
B) Indirect manufacturing costs 
C) Direct material costs 
D) Manufacturing overhead costs 
A) Direct manufacturing labor costs 
B) Indirect manufacturing costs 
C) Direct material costs 
D) Manufacturing overhead costs

Question 7

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of direct costs for the golf equipment line are:

Accepted Answer

A) beverages provided daily in the plant break room 
B) monthly lease payments for a specialized piece of equipment needed to manufacture the golf driver 
C) salaries of the clerical staff that work in the company administrative offices 
D) utilities paid for the manufacturing plant 
A) beverages provided daily in the plant break room 
B) monthly lease payments for a specialized piece of equipment needed to manufacture the golf driver 
C) salaries of the clerical staff that work in the company administrative offices 
D) utilities paid for the manufacturing plant

Question 8

The following information pertains to the Duggan Corporation:   What is cost of goods sold?

Accepted Answer

A) $244,000 
B) $248,000 
C) $243,000 
D) $249,000 
A) $244,000 
B) $248,000 
C) $243,000 
D) $249,000

Question 9

The most likely cost driver of direct labor costs is the:

Accepted Answer

A) number of machine setups for the product 
B) number of miles driven 
C) number of production hours 
D) number of machine hours 
A) number of machine setups for the product 
B) number of miles driven 
C) number of production hours 
D) number of machine hours

Question 10

Answer the following questions using the information below:
For last year, Lewisburn Manufacturing reported the following:
  
-What was Lewisburn's operating income?

Accepted Answer

A) $76,000 
B) $128,000 
C) $177,000 
D) $280,000 
A) $76,000 
B) $128,000 
C) $177,000 
D) $280,000

Question 11

Merchandising companies normally report:

Accepted Answer

A) only merchandise inventory 
B) only finished goods inventory 
C) direct materials inventory, work-in-process inventory, and finished goods inventory accounts 
D) no inventory accounts 
A) only merchandise inventory 
B) only finished goods inventory 
C) direct materials inventory, work-in-process inventory, and finished goods inventory accounts 
D) no inventory accounts

Question 12

Cost assignment :

Accepted Answer

A) is always arbitrary 
B) is includes tracing and allocating 
C) is the same as cost accumulation 
D) is finding the difference between budgeted and actual costs 
A) is always arbitrary 
B) is includes tracing and allocating 
C) is the same as cost accumulation 
D) is finding the difference between budgeted and actual costs

Question 13

Lou Marinaro worked 44 hours last week for Breakbad Manufacturing. Of the 44 hours 4 hours were considered overtime, and also Marinaro was idle for 5 of the 44 hours due to an equipment malfunction. Marinaro makes $40 per hour and is paid $60 an hour (time and a half)for overtime. Marinaro's total compensation for that week would be ________, and assuming Breakbad charges overtime premium and idle time to indirect labor, the amount of this compensation credited to indirect labor would be ________.

Accepted Answer

A) $1,680; $80 
B) $1,680; $280 
C) $1,840; $80 
D) $1,840; $280 
A) $1,680; $80 
B) $1,680; $280 
C) $1,840; $80 
D) $1,840; $280

Question 14

A mixed cost is:

Accepted Answer

A) a fixed cost 
B) a cost with fixed and variable elements 
C) a variable cost 
D) always an indirect cost 
A) a fixed cost 
B) a cost with fixed and variable elements 
C) a variable cost 
D) always an indirect cost

Question 15

Product cost for financial statement purposes may include:

Accepted Answer

A) all costs allowed by government agencies 
B) all costs included for pricing and product-mix decisions 
C) production costs 
D) all costs except marketing costs 
A) all costs allowed by government agencies 
B) all costs included for pricing and product-mix decisions 
C) production costs 
D) all costs except marketing costs

Question 16

Operating income is sales revenue minus operating expenses.

Accepted Answer

A) True 
 B)False

Question 17

Assigning direct costs poses more problems than assigning indirect costs.

Accepted Answer

A) True 
 B)False

Question 18

A unit cost is computed by dividing total cost by the number of units.

Accepted Answer

A) True 
 B)False

Question 19

Answer the following questions using the information below:
The following information pertains to Alleigh's Mannequins:
  
-What is the amount of ending finished goods inventory?

Accepted Answer

A) $42,500 
B) $25,424 
C) $25,000 
D) $1,475,000 
A) $42,500 
B) $25,424 
C) $25,000 
D) $1,475,000

Question 20

All costs reported on the income statement of a service-sector company are period costs.

Accepted Answer

A) True 
 B)False

Exam 2: An Introduction to Cost Terms and Purposes

A band of normal activity or volume in which specific cost-volume relationships are maintained is referred to as the:

The following information pertains to Ball Company: 39,800 units are sold during the year for $100 per unit. Required: a. What is the average manufacturing cost per unit? b. What is the amount of ending finished goods inventory? c. What is the amount of gross margin?

Answer the following questions using the information below: For last year, Lewisburn Manufacturing reported the following: -What was Lewisburn's gross margin (or gross profit)?

Actual costs and historical costs are two different terms referring to the same thing.

Answer the following questions using the information below: Axle and Wheel Manufacturing currently produces 1,000 axles per month. The following per unit data apply for sales to regular customers: -What is the per unit cost when producing 3,000 axles?

________ include the compensation of all manufacturing labor that can be traced to the cost object.

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of direct costs for the golf equipment line are:

The following information pertains to the Duggan Corporation: What is cost of goods sold?

The most likely cost driver of direct labor costs is the:

Answer the following questions using the information below: For last year, Lewisburn Manufacturing reported the following: -What was Lewisburn's operating income?

Merchandising companies normally report:

Cost assignment :

A mixed cost is:

Product cost for financial statement purposes may include:

Operating income is sales revenue minus operating expenses.

Assigning direct costs poses more problems than assigning indirect costs.

A unit cost is computed by dividing total cost by the number of units.

Answer the following questions using the information below: The following information pertains to Alleigh's Mannequins: -What is the amount of ending finished goods inventory?

All costs reported on the income statement of a service-sector company are period costs.

The Accountants Role in the Organization

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

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