Question 1

The relevant range is important because

Accepted Answer

A)  it specifies which costs should be used for a given decision. 
B)  it provides a basis for determining a range of acceptable cost alternatives. 
C)  it is required to determine inventoriable costs under Canadian GAAP. 
D)  it specifies the limits beyond which the relationship of cost to cost drivers may not be valid. 
E)  it determines the time horizon. 
A)  it specifies which costs should be used for a given decision. 
B)  it provides a basis for determining a range of acceptable cost alternatives. 
C)  it is required to determine inventoriable costs under Canadian GAAP. 
D)  it specifies the limits beyond which the relationship of cost to cost drivers may not be valid. 
E)  it determines the time horizon.

Question 2

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

Accepted Answer

A)  Beginning inventory + Ending inventory - Cost of goods manufactured 
B)  Cost of goods manufactured + Ending inventory + Beginning inventory 
C)  Beginning inventory - Ending inventory - Cost of goods manufactured. 
D)  Cost of goods manufactured - Ending inventory + Beginning inventory 
E)  Ending inventory - Beginning inventory - Cost of goods manufactured 
A)  Beginning inventory + Ending inventory - Cost of goods manufactured 
B)  Cost of goods manufactured + Ending inventory + Beginning inventory 
C)  Beginning inventory - Ending inventory - Cost of goods manufactured. 
D)  Cost of goods manufactured - Ending inventory + Beginning inventory 
E)  Ending inventory - Beginning inventory - Cost of goods manufactured

Question 3

Unit costs are considered to be an average cost per unit.

Accepted Answer

A) True 
 B)False

Question 4

Kym Manufacturing provided the following information for last month:   If sales double next month, what is the projected operating income?

Accepted Answer

A)  $14,000 
B)  $15,000 
C)  $18,000 
D)  $19,000 
A)  $14,000 
B)  $15,000 
C)  $18,000 
D)  $19,000

Question 5

Product costs are the sum of the costs assigned to a product for a specific purpose.

Accepted Answer

A) True 
 B)False

Question 6

Answer the following question(s) 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)  $24,750 
C)  $25,000 
D)  $25,425 
E)  $42,500. 
A)  $42,500 
B)  $24,750 
C)  $25,000 
D)  $25,425 
E)  $42,500.

Question 7

Manufacturing sector firms normally hold three types of inventory: direct materials inventory, work-in-process inventory, and finished goods inventory.

Accepted Answer

A) True 
 B)False

Question 8

The variable cost per unit of a product should stay the same throughout the relevant range of production.

Accepted Answer

A) True 
 B)False

Question 9

Product costs used for external reporting under GAAP include

Accepted Answer

A)  manufacturing costs only. 
B)  design costs plus manufacturing costs. 
C)  all costs incurred along the value chain. 
D)  prime costs but not conversion costs. 
E)  only conversion costs. 
A)  manufacturing costs only. 
B)  design costs plus manufacturing costs. 
C)  all costs incurred along the value chain. 
D)  prime costs but not conversion costs. 
E)  only conversion costs.

Question 10

Which of the following is a fixed cost for an automobile manufacturing plant?

Accepted Answer

A)  amortization on factory equipment 
B)  electricity used by assembly-line machines 
C)  sales commissions 
D)  windows for each car produced 
E)  labour cost of assembly line workers 
A)  amortization on factory equipment 
B)  electricity used by assembly-line machines 
C)  sales commissions 
D)  windows for each car produced 
E)  labour cost of assembly line workers

Question 11

Operating income does not include interest expense and income taxes.

Accepted Answer

A) True 
 B)False

Question 12

Use the information below to answer the following question(s).
Macadamia Co. produced and sold 40,000 units last year. Per unit revenue and costs were as follows:
   Fixed manufacturing overhead and administrative salaries are fixed costs. The per unit amounts are based on last year's production.
-Calculate this year's operating income if the company plans to produce and sell 50,000 units.

Accepted Answer

A)  $50,000 
B)  $0 
C)  $ 
D)  $ 
E)  $250,000 
A)  $50,000 
B)  $0 
C)  $ 
D)  $ 
E)  $250,000

Question 13

"Cost" is defined by accountants as a resource sacrificed or foregone to achieve a specific objective.

Accepted Answer

A) True 
 B)False

Question 14

What are the differences between direct costs and indirect costs? Give an example of each.

Accepted Answer

Direct costs are costs that can be trace

Question 15

Use the information below to answer the following question(s).
Frazer Inc. had the following activities in the year:
  
-Generally, costs which are initially recorded as an asset and subsequently become an expense are called

Accepted Answer

A)  inventoriable costs. 
B)  non-manufacturing costs. 
C)  manufacturing costs. 
D)  non-capitalized costs. 
E)  non-inventoriable costs. 
A)  inventoriable costs. 
B)  non-manufacturing costs. 
C)  manufacturing costs. 
D)  non-capitalized costs. 
E)  non-inventoriable costs.

Question 16

Evans 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?
Assume that Evans uses a two-part classification system for prime and conversion costs.
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. $40,000 + $123,200 -$20,800 = $142,40

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Cost behaviour refers to

Accepted Answer

A)  how costs react to a change in the level of activity. 
B)  whether a cost is incurred in a manufacturing, merchandising, or service company. 
C)  classifying costs as either inventoriable or period costs. 
D)  whether a particular expense has been ethically incurred. 
E)  how costs react to a change in selling price. 
A)  how costs react to a change in the level of activity. 
B)  whether a cost is incurred in a manufacturing, merchandising, or service company. 
C)  classifying costs as either inventoriable or period costs. 
D)  whether a particular expense has been ethically incurred. 
E)  how costs react to a change in selling price.

Question 19

Answer the following question using the information below.
Pederson Company reported the following:
  
-What is the amount of gross margin?

Accepted Answer

A)  $1,750,000 
B)  $3,525,000 
C)  $3,405,000 
D)  $1,645,000 
E)  $1,525,000 
A)  $1,750,000 
B)  $3,525,000 
C)  $3,405,000 
D)  $1,645,000 
E)  $1,525,000

Question 20

Which one of the following items is typically an example of an indirect cost of a cost object?

Accepted Answer

A)  courier charges for shipment delivery 
B)  manufacturing plant electricity 
C)  direct manufacturing labour 
D)  wood used for furniture manufacture 
E)  refundable sales tax on direct materials 
A)  courier charges for shipment delivery 
B)  manufacturing plant electricity 
C)  direct manufacturing labour 
D)  wood used for furniture manufacture 
E)  refundable sales tax on direct materials

Exam 2: An Introduction to Cost Terms and Purposes

The relevant range is important because

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

Unit costs are considered to be an average cost per unit.

Kym Manufacturing provided the following information for last month: If sales double next month, what is the projected operating income?

Product costs are the sum of the costs assigned to a product for a specific purpose.

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

Manufacturing sector firms normally hold three types of inventory: direct materials inventory, work-in-process inventory, and finished goods inventory.

The variable cost per unit of a product should stay the same throughout the relevant range of production.

Product costs used for external reporting under GAAP include

Which of the following is a fixed cost for an automobile manufacturing plant?

Operating income does not include interest expense and income taxes.

"Cost" is defined by accountants as a resource sacrificed or foregone to achieve a specific objective.

What are the differences between direct costs and indirect costs? Give an example of each.

Use the information below to answer the following question(s). Frazer Inc. had the following activities in the year: -Generally, costs which are initially recorded as an asset and subsequently become an expense are called

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

Cost behaviour refers to

Answer the following question using the information below. Pederson Company reported the following: -What is the amount of gross margin?

Which one of the following items is typically an example of an indirect cost of a cost object?

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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