Question 1

Which one of the following is a variable cost for an insurance company?

Accepted Answer

A)  rent 
B)  president's salary 
C)  sales commissions 
D)  property taxes 
E)  amortization on the office equipment 
A)  rent 
B)  president's salary 
C)  sales commissions 
D)  property taxes 
E)  amortization on the office equipment

Question 2

Use the information below to answer the following question(s).
Montreal Industries Inc. had the following activities during the year::
  
-Merchandising-sector companies

Accepted Answer

A)  purchase materials and convert them to finished goods. 
B)  buy goods and resell them. 
C)  provide services or intangible products. 
D)  have only variable costs. 
E)  have period and some manufacturing costs. 
A)  purchase materials and convert them to finished goods. 
B)  buy goods and resell them. 
C)  provide services or intangible products. 
D)  have only variable costs. 
E)  have period and some manufacturing costs.

Question 3

An actual cost is a predicted cost.

Accepted Answer

A) True 
 B)False

Question 4

Governance refers to a company's relationship with all levels of government.

Accepted Answer

A) True 
 B)False

Question 5

Manufacturing-sector companies purchase materials and other resources for conversion into various finished goods.

Accepted Answer

A) True 
 B)False

Question 6

For purposes of calculating inventory costs under GAAP, only production costs can be used.

Accepted Answer

A) True 
 B)False

Question 7

Conversion costs include all direct manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 8

If a worker is paid for 8 hours, but is idle for 1 of those 8 hours, the 1 hour of idle time would be considered a component of direct labour.

Accepted Answer

A) True 
 B)False

Question 9

Answer the following question(s) using the information below.
The following information pertains to Alleigh's Mannequins:
  
-What is the amount of gross margin?

Accepted Answer

A)  $1,475,000 
B)  $1,500,000 
C)  $1,047,250 
D)  $1,032,500 
E)  $1,007,425 
A)  $1,475,000 
B)  $1,500,000 
C)  $1,047,250 
D)  $1,032,500 
E)  $1,007,425

Question 10

A manufacturing plant produces two product lines: football equipment and hockey equipment. Direct costs for the football equipment line are the

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

Question 11

Why is it possible that a raw material such as glue might be considered as an indirect material for one furniture manufacturer and as a direct material for another furniture manufacture?

Accepted Answer

It is possible for a raw material such a

Question 12

A cost object is always either a product or a service.

Accepted Answer

A) True 
 B)False

Question 13

Sheen Manufacturing has three cost objects that it uses to assign costs in its manufacturing plants. They are:
   The following manufacturing overhead costs categories are found in the accounting records:
1. Amortization on buildings and equipment
2. Fringe benefits
3. Idle time wages
4. Lubricants for machines
5. Night security
6. Overtime premiums
7. Property insurance
8. Property taxes
9. Safety hats and shoes
10. Supervisor's salaries
11. Utilities
Required:
Assign each of the cost categories to the one cost object you consider most appropriate.

Accepted Answer

Cost object # 1 includes categ

Question 14

A department could be considered a cost object.

Accepted Answer

A) True 
 B)False

Question 15

Cost assignment is

Accepted Answer

A)  always arbitrary. 
B)  linking actual costs to cost objects. 
C)  the same as cost accumulation. 
D)  finding the difference between budgeted and actual costs. 
E)  the same as cost conversion. 
A)  always arbitrary. 
B)  linking actual costs to cost objects. 
C)  the same as cost accumulation. 
D)  finding the difference between budgeted and actual costs. 
E)  the same as cost conversion.

Question 16

A manufacturing plant produces two product lines: football equipment and hockey equipment. An indirect cost for the hockey equipment line is the

Accepted Answer

A)  material used to make the hockey sticks. 
B)  labour to bind the shaft to the blade of the hockey stick. 
C)  shift supervisor for the hockey line. 
D)  plant supervisor. 
E)  salesperson travelling expenses. 
A)  material used to make the hockey sticks. 
B)  labour to bind the shaft to the blade of the hockey stick. 
C)  shift supervisor for the hockey line. 
D)  plant supervisor. 
E)  salesperson travelling expenses.

Question 17

Use the information below to answer the following question(s).
Frazer Inc. had the following activities in the year:
  
-Inventoriable costs

Accepted Answer

A)  include administrative and marketing costs. 
B)  are expensed in the accounting period in which the products are sold. 
C)  are particularly useful in management accounting. 
D)  are also referred to as nonmanufacturing costs. 
E)  are similar to period costs. 
A)  include administrative and marketing costs. 
B)  are expensed in the accounting period in which the products are sold. 
C)  are particularly useful in management accounting. 
D)  are also referred to as nonmanufacturing costs. 
E)  are similar to period costs.

Question 18

If each furnace required a hose that costs $20 and 2,000 furnaces are produced for the month, the $40,000 total cost for hoses

Accepted Answer

A)  is considered to be a direct fixed cost. 
B)  is considered to be a direct variable cost. 
C)  is considered to be an indirect fixed cost. 
D)  is considered to be an indirect variable cost. 
E)  is considered to be variable or fixed, depending on the relevant range. 
A)  is considered to be a direct fixed cost. 
B)  is considered to be a direct variable cost. 
C)  is considered to be an indirect fixed cost. 
D)  is considered to be an indirect variable cost. 
E)  is considered to be variable or fixed, depending on the relevant range.

Question 19

Merchandising companies purchase products and sell them to customers without changing their basic form.

Accepted Answer

A) True 
 B)False

Question 20

Classifying a cost as either direct or indirect depends upon

Accepted Answer

A)  the behaviour 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 identified with the cost object. 
D)  whether an expenditure is avoidable or not in the future. 
E)  the inventory classification system. 
A)  the behaviour 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 identified with the cost object. 
D)  whether an expenditure is avoidable or not in the future. 
E)  the inventory classification system.

Exam 2: An Introduction to Cost Terms and Purposes

Which one of the following is a variable cost for an insurance company?

Use the information below to answer the following question(s). Montreal Industries Inc. had the following activities during the year:: -Merchandising-sector companies

An actual cost is a predicted cost.

Governance refers to a company's relationship with all levels of government.

Manufacturing-sector companies purchase materials and other resources for conversion into various finished goods.

For purposes of calculating inventory costs under GAAP, only production costs can be used.

Conversion costs include all direct manufacturing costs.

If a worker is paid for 8 hours, but is idle for 1 of those 8 hours, the 1 hour of idle time would be considered a component of direct labour.

Answer the following question(s) using the information below. The following information pertains to Alleigh's Mannequins: -What is the amount of gross margin?

A manufacturing plant produces two product lines: football equipment and hockey equipment. Direct costs for the football equipment line are the

Why is it possible that a raw material such as glue might be considered as an indirect material for one furniture manufacturer and as a direct material for another furniture manufacture?

A cost object is always either a product or a service.

A department could be considered a cost object.

Cost assignment is

A manufacturing plant produces two product lines: football equipment and hockey equipment. An indirect cost for the hockey equipment line is the

Use the information below to answer the following question(s). Frazer Inc. had the following activities in the year: -Inventoriable costs

If each furnace required a hose that costs $20 and 2,000 furnaces are produced for the month, the $40,000 total cost for hoses

Merchandising companies purchase products and sell them to customers without changing their basic form.

Classifying a cost as either direct or indirect depends upon

The Accountants Vital Role in Decision Making

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

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