Question 1

Answer the following questions using the information below:
  
-What is cost of goods manufactured for 20X3?

Accepted Answer

A) $230,000 
B) $257,000 
C) $283,000 
D) $355,000 
A) $230,000 
B) $257,000 
C) $283,000 
D) $355,000

Question 2

When making strategic decisions about which products to produce, managers do NOT need to know how revenues and costs vary with changes in output level.

Accepted Answer

A) True 
 B)False

Question 3

Hammer Inc., had the following activities during 2012:
   Required:
a. What is the cost of direct materials used during 2012?
b. What is cost of goods manufactured for 2012?
c. What is cost of goods sold for 2012?
d. What amount of prime costs was added to production during 2012?
e. What amount of conversion costs was added to production during 2012?

Accepted Answer

a. $20,000 + $61,600 - $10,400 = $71,200

Question 4

If a worker is paid for 40 hours, but is idle for 5 of those 40 hours, the 5 hour of idle time would be considered a component of direct labor.

Accepted Answer

A) True 
 B)False

Question 5

Actual costs are:

Accepted Answer

A) the costs incurred 
B) budgeted costs 
C) estimated costs 
D) forecasted costs 
A) the costs incurred 
B) budgeted costs 
C) estimated costs 
D) forecasted costs

Question 6

When 100,000 units are produced the fixed cost is $20 per unit. Therefore, when 500,000 units are produced fixed costs will remain at $20 per unit.

Accepted Answer

A) True 
 B)False

Question 7

Google would be an example of a merchandising company.

Accepted Answer

A) True 
 B)False

Question 8

Variable costs per unit vary with the level of production or sales volume.

Accepted Answer

A) True 
 B)False

Question 9

Conversion costs include all direct manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 10

XIAN Manufacturing produces a unique valve, and has the capacity to produce 50,000 valves annually. Currently XIAN produces 40,000 valves and is thinking about increasing production to 45,000 valves next year. What is the most likely behavior of total manufacturing costs and unit manufacturing costs given this change?

Accepted Answer

A) Total manufacturing costs will increase and unit manufacturing costs will stay the same. 
B) Total manufacturing costs will increase and unit manufacturing costs will decrease. 
C) Total manufacturing costs will stay the same and unit manufacturing costs will stay the same. 
D) Total manufacturing costs will stay the same and unit manufacturing costs will decrease. 
A) Total manufacturing costs will increase and unit manufacturing costs will stay the same. 
B) Total manufacturing costs will increase and unit manufacturing costs will decrease. 
C) Total manufacturing costs will stay the same and unit manufacturing costs will stay the same. 
D) Total manufacturing costs will stay the same and unit manufacturing costs will decrease.

Question 11

Indirect manufacturing costs:

Accepted Answer

A) can be traced to the product that created the costs 
B) can be easily identified with the cost object 
C) generally include the cost of material and the cost of labor 
D) may include both variable and fixed costs 
A) can be traced to the product that created the costs 
B) can be easily identified with the cost object 
C) generally include the cost of material and the cost of labor 
D) may include both variable and fixed costs

Question 12

Prime costs include:

Accepted Answer

A) direct materials and direct manufacturing labor costs 
B) direct manufacturing labor and manufacturing overhead costs 
C) direct materials and manufacturing overhead costs 
D) only direct materials 
A) direct materials and direct manufacturing labor costs 
B) direct manufacturing labor and manufacturing overhead costs 
C) direct materials and manufacturing overhead costs 
D) only direct materials

Question 13

Product costs may refer to:

Accepted Answer

A) inventoriable costs for external reporting 
B) design costs plus manufacturing costs for government contracts 
C) all costs incurred along the value chain for pricing decisions 
D) All of these answers are correct. 
A) inventoriable costs for external reporting 
B) design costs plus manufacturing costs for government contracts 
C) all costs incurred along the value chain for pricing decisions 
D) All of these answers are correct.

Question 14

The materiality of the cost is a factor in classifying the cost as a direct or indirect cost.

Accepted Answer

A) True 
 B)False

Question 15

Fixed costs:

Accepted Answer

A) may include either direct or indirect costs 
B) vary with production or sales volumes 
C) include parts and materials used to manufacture a product 
D) can be adjusted in the short run to meet actual demands 
A) may include either direct or indirect costs 
B) vary with production or sales volumes 
C) include parts and materials used to manufacture a product 
D) can be adjusted in the short run to meet actual demands

Question 16

Cost objects include:

Accepted Answer

A) products 
B) customers 
C) departments 
D) All of these answers are correct. 
A) products 
B) customers 
C) departments 
D) All of these answers are correct.

Question 17

Period costs:

Accepted Answer

A) include only fixed costs 
B) seldom influence financial success or failure 
C) include the cost of selling, delivering, and after-sales support for customers 
D) should be treated as an indirect cost rather than as a direct manufacturing cost 
A) include only fixed costs 
B) seldom influence financial success or failure 
C) include the cost of selling, delivering, and after-sales support for customers 
D) should be treated as an indirect cost rather than as a direct manufacturing cost

Question 18

Period costs are never included as part of inventory.

Accepted Answer

A) True 
 B)False

Question 19

Conversion costs include:

Accepted Answer

A) direct materials and direct manufacturing labor costs 
B) direct manufacturing labor and manufacturing overhead costs 
C) direct materials and manufacturing overhead costs 
D) only direct materials 
A) direct materials and direct manufacturing labor costs 
B) direct manufacturing labor and manufacturing overhead costs 
C) direct materials and manufacturing overhead costs 
D) only direct materials

Question 20

Management accountants help managers identify which information is relevant to a particular decision.

Accepted Answer

A) True 
 B)False

Exam 2: An Introduction to Cost Terms and Purposes

Answer the following questions using the information below: -What is cost of goods manufactured for 20X3?

When making strategic decisions about which products to produce, managers do NOT need to know how revenues and costs vary with changes in output level.

If a worker is paid for 40 hours, but is idle for 5 of those 40 hours, the 5 hour of idle time would be considered a component of direct labor.

Actual costs are:

When 100,000 units are produced the fixed cost is $20 per unit. Therefore, when 500,000 units are produced fixed costs will remain at $20 per unit.

Google would be an example of a merchandising company.

Variable costs per unit vary with the level of production or sales volume.

Conversion costs include all direct manufacturing costs.

Indirect manufacturing costs:

Prime costs include:

Product costs may refer to:

The materiality of the cost is a factor in classifying the cost as a direct or indirect cost.

Fixed costs:

Cost objects include:

Period costs:

Period costs are never included as part of inventory.

Conversion costs include:

Management accountants help managers identify which information is relevant to a particular decision.

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