Question 1

In making product mix and pricing decisions, managers should focus on:

Accepted Answer

A) total costs 
B) unit costs 
C) variable costs 
D) fixed costs 
A) total costs 
B) unit costs 
C) variable costs 
D) fixed costs

Question 2

Bosely Manufacturing Co. wants to classify costs for the product produced at its facility. The company produces only one product at the facility and operates continually. The cost categories are:
   The following costs are found in the accounting records:
   Required:
Assign each of the above costs to the most appropriate cost categories.

Accepted Answer

Product cost includes a, b, d,

Question 3

Mirabella, Inc., reports the following information for September sales:
   Required:
If sales double in October, what is the projected operating income?

Accepted Answer

($60,000 ×

Question 4

Answer the following questions using the information below:
For last year, Lewisburn Manufacturing reported the following:
  
-What was Lewisburn's cost of goods sold?

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 5

Product cost for reimbursement under government contracts may include all costs EXCEPT:

Accepted Answer

A) marketing costs 
B) design costs 
C) production costs 
D) research and development costs 
A) marketing costs 
B) design costs 
C) production costs 
D) research and development costs

Question 6

When should the overtime premium of direct manufacturing labor be considered an indirect manufacturing cost? A direct manufacturing cost?

Accepted Answer

The overtime premium of direct manufactu

Question 7

Overtime premium is normally considered as a component of direct labor.

Accepted Answer

A) True 
 B)False

Question 8

For external reporting:

Accepted Answer

A) costs are classified as either inventoriable or period costs 
B) costs reflect current values 
C) there are no prescribed rules since no one is exactly sure how investors and creditors will use these numbers 
D) costs include amounts that reflect both current and future benefits 
A) costs are classified as either inventoriable or period costs 
B) costs reflect current values 
C) there are no prescribed rules since no one is exactly sure how investors and creditors will use these numbers 
D) costs include amounts that reflect both current and future benefits

Question 9

A cost system determines the cost of a cost object by:

Accepted Answer

A) accumulating and then assigning costs 
B) accumulating costs 
C) assigning and then accumulating costs 
D) assigning costs 
A) accumulating and then assigning costs 
B) accumulating costs 
C) assigning and then accumulating costs 
D) assigning costs

Question 10

Finished goods inventory would normally include:

Accepted Answer

A) direct materials in stock and awaiting use in the manufacturing process 
B) goods partially worked on but not yet fully completed 
C) goods fully completed but not yet sold 
D) products in their original form intended to be sold without changing their basic form 
A) direct materials in stock and awaiting use in the manufacturing process 
B) goods partially worked on but not yet fully completed 
C) goods fully completed but not yet sold 
D) products in their original form intended to be sold without changing their basic form

Question 11

If each motorcycle requires a belt that costs $20 and 2,000 motorcycles are produced for the month, the total cost for belts is:

Accepted Answer

A) considered to be a direct fixed cost 
B) considered to be a direct variable cost 
C) considered to be an indirect fixed cost 
D) considered to be an indirect variable cost 
A) considered to be a direct fixed cost 
B) considered to be a direct variable cost 
C) considered to be an indirect fixed cost 
D) considered to be an indirect variable cost

Question 12

Costs are accounted for in two basic stages: assignment followed by accumulation.

Accepted Answer

A) True 
 B)False

Question 13

Costs expensed on the income statement in the accounting period incurred are called:

Accepted Answer

A) direct costs 
B) indirect costs 
C) period costs 
D) inventoriable costs 
A) direct costs 
B) indirect costs 
C) period costs 
D) inventoriable costs

Question 14

Product costs used for pricing and product-mix decisions generally include:

Accepted Answer

A) manufacturing costs only 
B) design costs plus manufacturing costs 
C) all costs incurred along the value chain 
D) distribution costs only 
A) manufacturing costs only 
B) design costs plus manufacturing costs 
C) all costs incurred along the value chain 
D) distribution costs only

Question 15

Product costs used for external reporting generally include:

Accepted Answer

A) manufacturing costs only 
B) design costs plus manufacturing costs 
C) all costs incurred along the value chain 
D) All of these answers are correct. 
A) manufacturing costs only 
B) design costs plus manufacturing costs 
C) all costs incurred along the value chain 
D) All of these answers are correct.

Question 16

Answer the following questions using the information below:
  
-What is gross margin for 20X5?

Accepted Answer

A) $243,000 
B) $527,000 
C) $357,000 
D) $350,000 
A) $243,000 
B) $527,000 
C) $357,000 
D) $350,000

Question 17

Some fixed costs may be classified as direct manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 18

The most likely cost driver of distribution costs is the:

Accepted Answer

A) number of parts within the product 
B) number of miles driven 
C) number of products manufactured 
D) number of production hours 
A) number of parts within the product 
B) number of miles driven 
C) number of products manufactured 
D) number of production hours

Question 19

When 10,000 units are produced, variable costs are $6 per unit. Therefore, when 20,000 units are produced:

Accepted Answer

A) variable costs will total $120,000 
B) variable costs will total $60,000 
C) variable unit costs will increase to $12 per unit 
D) variable unit costs will decrease to $3 per unit 
A) variable costs will total $120,000 
B) variable costs will total $60,000 
C) variable unit costs will increase to $12 per unit 
D) variable unit costs will decrease to $3 per unit

Question 20

Costs that are initially recorded as assets and expensed when sold are called:

Accepted Answer

A) period costs 
B) inventoriable costs 
C) variable costs 
D) fixed costs 
A) period costs 
B) inventoriable costs 
C) variable costs 
D) fixed costs

Exam 2: An Introduction to Cost Terms and Purposes

In making product mix and pricing decisions, managers should focus on:

Mirabella, Inc., reports the following information for September sales: Required: If sales double in October, what is the projected operating income?

Answer the following questions using the information below: For last year, Lewisburn Manufacturing reported the following: -What was Lewisburn's cost of goods sold?

Product cost for reimbursement under government contracts may include all costs EXCEPT:

When should the overtime premium of direct manufacturing labor be considered an indirect manufacturing cost? A direct manufacturing cost?

Overtime premium is normally considered as a component of direct labor.

For external reporting:

A cost system determines the cost of a cost object by:

Finished goods inventory would normally include:

If each motorcycle requires a belt that costs $20 and 2,000 motorcycles are produced for the month, the total cost for belts is:

Costs are accounted for in two basic stages: assignment followed by accumulation.

Costs expensed on the income statement in the accounting period incurred are called:

Product costs used for pricing and product-mix decisions generally include:

Product costs used for external reporting generally include:

Answer the following questions using the information below: -What is gross margin for 20X5?

Some fixed costs may be classified as direct manufacturing costs.

The most likely cost driver of distribution costs is the:

When 10,000 units are produced, variable costs are $6 per unit. Therefore, when 20,000 units are produced:

Costs that are initially recorded as assets and expensed when sold are called:

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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