Question 1

Variable costs:

Accepted Answer

A) are always indirect costs 
B) increase in total when the actual level of activity increases 
C) include most personnel costs and depreciation on machinery 
D) can always be traced directly to the cost object 
A) are always indirect costs 
B) increase in total when the actual level of activity increases 
C) include most personnel costs and depreciation on machinery 
D) can always be traced directly to the cost object

Question 2

Which of the following is a mixed cost?

Accepted Answer

A) monthly rent payment 
B) manager's salary 
C) monthly electric bill 
D) direct materials 
A) monthly rent payment 
B) manager's salary 
C) monthly electric bill 
D) direct materials

Question 3

Answer the following questions using the information below:
The following information pertains to Alleigh's Mannequins:
  
-Which of the following companies is part of the merchandising sector of our economy?

Accepted Answer

A) Ford 
B) Hewlett Packard 
C) Macy's 
D) Michael Toback Accounting Firm 
A) Ford 
B) Hewlett Packard 
C) Macy's 
D) Michael Toback Accounting Firm

Question 4

For external reporting, GAAP requires that costs be classified as either variable or fixed.

Accepted Answer

A) True 
 B)False

Question 5

Work-in-process inventory are goods partially worked on but not yet completed.

Accepted Answer

A) True 
 B)False

Question 6

Butler Hospital wants to estimate the cost for each patient stay. It is a general health care facility offering only basic services and not specialized services such as organ transplants.
Required:
a. Classify each of the following costs as either direct or indirect with respect to each patient.
b. Classify each of the following costs as either fixed or variable with respect to hospital costs per day.

Accepted Answer

The answer of Butler Hospital wants to estimate the cost...

Question 7

Inventoriable costs for external reporting purposes are also called:

Accepted Answer

A) product costs 
B) period costs 
C) variable costs 
D) direct manufacturing costs 
A) product costs 
B) period costs 
C) variable costs 
D) direct manufacturing costs

Question 8

Service-sector companies provide services or intangible products to their customers.

Accepted Answer

A) True 
 B)False

Question 9

Classifying a cost as either direct or indirect depends upon:

Accepted Answer

A) the behavior of the cost in response to volume changes 
B) whether the cost is expensed in the period in which it is incurred 
C) whether the cost can be easily identified with the cost object 
D) whether an expenditure is avoidable or not in the future 
A) the behavior of the cost in response to volume changes 
B) whether the cost is expensed in the period in which it is incurred 
C) whether the cost can be easily identified with the cost object 
D) whether an expenditure is avoidable or not in the future

Question 10

The income statement of a service-sector firm reports:

Accepted Answer

A) period costs only 
B) inventoriable costs only 
C) both period and inventoriable costs 
D) period and inventoriable costs but at different times; the reporting varies 
A) period costs only 
B) inventoriable costs only 
C) both period and inventoriable costs 
D) period and inventoriable costs but at different times; the reporting varies

Question 11

Manufacturing-sector companies 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

All manufacturing costs are inventoriable costs.

Accepted Answer

A) True 
 B)False

Question 13

When making decisions:

Accepted Answer

A) it is best to use average costs 
B) it is best to use unit costs 
C) it is best to use total costs rather than unit costs 
D) All of these types of costs can be used for decision making; it varies depending on the decision required. 
A) it is best to use average costs 
B) it is best to use unit costs 
C) it is best to use total costs rather than unit costs 
D) All of these types of costs can be used for decision making; it varies depending on the decision required.

Question 14

Which of the following formulas determine cost of goods sold in a manufacturing entity?

Accepted Answer

A) Beginning work-in-process inventory + Cost of goods manufactured - Ending work-in-process inventory = Cost of goods sold 
B) Beginning work-in-process inventory + Cost of goods manufactured + Ending work-in-process inventory = Cost of goods sold 
C) Cost of goods manufactured - Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
D) Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
A) Beginning work-in-process inventory + Cost of goods manufactured - Ending work-in-process inventory = Cost of goods sold 
B) Beginning work-in-process inventory + Cost of goods manufactured + Ending work-in-process inventory = Cost of goods sold 
C) Cost of goods manufactured - Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
D) Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold

Question 15

Manufacturing overhead costs may include all of the following EXCEPT:

Accepted Answer

A) salary of the plant supervisor 
B) labor that can be traced to individual products 
C) material that can be traced to individual products 
D) overtime premiums paid to plant workers 
A) salary of the plant supervisor 
B) labor that can be traced to individual products 
C) material that can be traced to individual products 
D) overtime premiums paid to plant workers

Question 16

All of the following are true EXCEPT that indirect costs:

Accepted Answer

A) may be included in prime costs 
B) are not easily traced to products or services 
C) vary with the selection of the cost object 
D) may be included in manufacturing overhead 
A) may be included in prime costs 
B) are not easily traced to products or services 
C) vary with the selection of the cost object 
D) may be included in manufacturing overhead

Question 17

Describe a variable cost. Describe a fixed cost. Explain why the distinction between variable and fixed costs is important in cost accounting.

Accepted Answer

Total variable costs increase with incre

Question 18

Debated items that some companies include as direct manufacturing labor include:

Accepted Answer

A) fringe benefits 
B) vacation pay 
C) training time 
D) All of these answers are correct. 
A) fringe benefits 
B) vacation pay 
C) training time 
D) All of these answers are correct.

Question 19

Tire and Spoke Manufacturing currently produces 1,000 bicycles per month. The following per unit data apply for sales to regular customers:   The plant has capacity for 3,000 bicycles and is considering expanding production to 2,000 bicycles. What is the per unit cost of producing 2,000 bicycles?

Accepted Answer

A) $79 per unit 
B) $158 per unit 
C) $74 per unit 
D) $134 per unit 
A) $79 per unit 
B) $158 per unit 
C) $74 per unit 
D) $134 per unit

Question 20

Messinger Manufacturing Company had the following account balances for the quarter ending March 31, unless otherwise noted:
   Required:
a. Prepare a cost of goods manufactured schedule for the quarter.
b. Prepare a cost of goods sold schedule for the quarter.

Accepted Answer

a. Messing

Exam 2: An Introduction to Cost Terms and Purposes

Variable costs:

Which of the following is a mixed cost?

Answer the following questions using the information below: The following information pertains to Alleigh's Mannequins: -Which of the following companies is part of the merchandising sector of our economy?

For external reporting, GAAP requires that costs be classified as either variable or fixed.

Work-in-process inventory are goods partially worked on but not yet completed.

Inventoriable costs for external reporting purposes are also called:

Service-sector companies provide services or intangible products to their customers.

Classifying a cost as either direct or indirect depends upon:

The income statement of a service-sector firm reports:

Manufacturing-sector companies report:

All manufacturing costs are inventoriable costs.

When making decisions:

Which of the following formulas determine cost of goods sold in a manufacturing entity?

Manufacturing overhead costs may include all of the following EXCEPT:

All of the following are true EXCEPT that indirect costs:

Describe a variable cost. Describe a fixed cost. Explain why the distinction between variable and fixed costs is important in cost accounting.

Debated items that some companies include as direct manufacturing labor include:

Tire and Spoke Manufacturing currently produces 1,000 bicycles per month. The following per unit data apply for sales to regular customers: The plant has capacity for 3,000 bicycles and is considering expanding production to 2,000 bicycles. What is the per unit cost of producing 2,000 bicycles?

Messinger Manufacturing Company had the following account balances for the quarter ending March 31, unless otherwise noted: Required: a. Prepare a cost of goods manufactured schedule for the quarter. b. Prepare a cost of goods sold schedule for the quarter.

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

Filters