Question 1

Service companies do not have product costs so they often consider all operating expenses as part of their cost of service.

Accepted Answer

A) True 
 B)False

Question 2

If Royal Ltd. purchases each unit of product X for $100 and can sell it in the market for $135, the selling price of the product for Royal would be $100.

Accepted Answer

A) True 
 B)False

Question 3

Management accounting information of a company is primarily used by:

Accepted Answer

A)  its customers to understand the pricing of the product. 
B)  its creditors to understand the credibility of the business. 
C)  its employees to plan and control operations. 
D)  its investors to make their investment decisions. 
A)  its customers to understand the pricing of the product. 
B)  its creditors to understand the credibility of the business. 
C)  its employees to plan and control operations. 
D)  its investors to make their investment decisions.

Question 4

Star Health Inc. is a fitness center in Oklahoma City. In October, the company earned $550,000 in revenues and incurred the following operating costs from 340 customers:
$$\begin{array} { | l | r | } 
\hline \text { Manager's salary } & \$ 50,000 \
\hline \text { Gym Rent } & 60,000 \
\hline \text { Depreciation Expense-Equipment } & 25,000 \
\hline \text { Office Supplies } & 30,000 \
\hline \text { Utilities Expense } & 89,700 \
\hline \text { Trainer's Salary } & 25,000 \
\hline
\end{array}$$ How much is the unit cost per customer service?

Accepted Answer

A)  $795.00 
B)  $749.12 
C)  $1,617.65 
D)  $822.65 
A)  $795.00 
B)  $749.12 
C)  $1,617.65 
D)  $822.65

Question 5

For a manufacturing business, which of the following would be considered a direct labor cost?

Accepted Answer

A)  Wages of the assembly line staff 
B)  Wages of the factory janitors 
C)  Wages of the factory manager 
D)  Salaries of the internal auditors 
A)  Wages of the assembly line staff 
B)  Wages of the factory janitors 
C)  Wages of the factory manager 
D)  Salaries of the internal auditors

Question 6

Which of the following will be included in manufacturing overhead costs?

Accepted Answer

A)  Indirect labor and indirect materials 
B)  Salaries of salesmen 
C)  Direct materials and direct labor 
D)  Delivery costs to ship goods to customers 
A)  Indirect labor and indirect materials 
B)  Salaries of salesmen 
C)  Direct materials and direct labor 
D)  Delivery costs to ship goods to customers

Question 7

The following information relates to Webster Inc.: $\begin{array}{|l|r|}
\hline \text { Advertising Costs } & \$ 10,270 \
\hline \text { Sales Salary } & 4,500 \
\hline \text { Sales Revenue } & 450,000 \
\hline \text { President's Salary } & 40,300 \
\hline \text { Office Rent } & 61,100 \
\hline \text { Manufacturing Equipment Depreciation } & 2,080 \
\hline \text { Indirect Materials } & 9,360 \
\hline \text { Indirect Labor } & 11,700 \
\hline \text { Factory Repair and Maintenance } & 910 \
\hline \text { Direct Materials } & 28,080 \
\hline \text { Direct Labor } & 35,100 \
\hline \text { Delivery Vehicle Depreciation } & 1,027 \
\hline \text { Administrative Salaries } & 24,700\\hline 
\end{array}$ 
-How much was Webster's manufacturing overhead?

Accepted Answer

A)  $21,060 
B)  $21,970 
C)  $24,050 
D)  $141,897 
A)  $21,060 
B)  $21,970 
C)  $24,050 
D)  $141,897

Question 8

Wages and benefits of assembly line workers are included in manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 9

Samson Inc. reported the following information for the year 2015: $$\begin{array} { | l | r | } 
\hline \text { Service Revenue } & \$ 40,000 \
\hline \text { Operating Expenses } & \$ 23,625 \
\hline \text { Net Income } & \$ 16,375 \
\hline \text { Number of Services Provided for the Year } & 10,500 \
\hline
\end{array}$$ How much was the unit cost per service?

Accepted Answer

A)  $1.56 
B)  $3.20 
C)  $2.25 
D)  $3.81 
A)  $1.56 
B)  $3.20 
C)  $2.25 
D)  $3.81

Question 10

A merchandiser need not calculate cost per unit as it resells goods that are already manufactured.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following formulas represents cost of goods sold for a merchandising business?

Accepted Answer

A)  Beginning Inventory - Ending Inventory = Cost of Goods Sold 
B)  Purchases and Freight In - Ending Inventory = Cost of Goods Sold 
C)  Ending Inventory + Purchases and Freight In - Beginning Inventory = Cost of Goods Sold 
D)  Beginning Inventory + Purchases and Freight In - Ending Inventory = Cost of Goods Sold 
A)  Beginning Inventory - Ending Inventory = Cost of Goods Sold 
B)  Purchases and Freight In - Ending Inventory = Cost of Goods Sold 
C)  Ending Inventory + Purchases and Freight In - Beginning Inventory = Cost of Goods Sold 
D)  Beginning Inventory + Purchases and Freight In - Ending Inventory = Cost of Goods Sold

Question 12

Product costs, such as factory overhead, should be treated as an asset until the product is sold.

Accepted Answer

A) True 
 B)False

Question 13

Crystal Inc. is a merchandiser of stone ornaments. It sold 15,000 units in 2015. The company has provided the following information: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 557,000 \
\hline \text { Purchases (excluding freight in) } & 300,000 \
\hline \text { Selling and Administrative Expenses } & 69,000 \
\hline \text { Freight In } & 15,000 \
\hline \text { Beginning Merchandise Inventory } & 45,000 \
\hline \text { Ending Merchandise Inventory } & 55,700 \
\hline
\end{array}$$ How much is the gross profit for 2015?

Accepted Answer

A)  $183,700 
B)  $304,300 
C)  $252,700 
D)  $257,000 
A)  $183,700 
B)  $304,300 
C)  $252,700 
D)  $257,000

Question 14

Wages and benefits of factory managers are considered as product costs.

Accepted Answer

A) True 
 B)False

Question 15

Kyanite Corporation reports costs for 2015 as follows: $$\begin{array} { | l | r | } 
\hline \text { Raw Materials } & \$ 50,000 \
\hline \text { Wages to Line Workers } & 25,000 \
\hline \text { Office Rent } & 14,000 \
\hline \text { Indirect Materials } & 30,000 \
\hline
\end{array}$$
- How much is the total product costs for 2015?

Accepted Answer

A)  $30,000 
B)  $105,000 
C)  $119,000 
D)  $75,000 
A)  $30,000 
B)  $105,000 
C)  $119,000 
D)  $75,000

Question 16

Jasper Corporation reports the following cost information for March: $$\begin{array} { | l | r | } 
\hline \text { Cost of Goods Manufactured } & \$ 75,000 \
\hline \text { Direct Materials Used } & 16,850 \
\hline \text { Finished Goods Inventory, March 1 } & 4,500 \
\hline \text { Finished Goods Inventory, March 31 } & 2,650 \
\hline \text { Work-in-Process Inventory, March 1 } & 9,670 \
\hline \text { Work-in-Process Inventory, March 31 } & 1,250 \
\hline \text { Direct Labor } & 36,300 \
\hline
\end{array}$$ What is the amount of manufacturing overhead incurred by Jasper in March?

Accepted Answer

A)  $20,000 
B)  $30,270 
C)  $13,430 
D)  $136,570 
A)  $20,000 
B)  $30,270 
C)  $13,430 
D)  $136,570

Question 17

Which of the following would appear as a line item on the income statements of both, a merchandiser and a manufacturer?

Accepted Answer

A)  Direct Labor 
B)  Cost of Goods Manufactured 
C)  Direct Materials 
D)  Cost of Goods Sold 
A)  Direct Labor 
B)  Cost of Goods Manufactured 
C)  Direct Materials 
D)  Cost of Goods Sold

Question 18

An enterprise resource planning system (ERP):

Accepted Answer

A)  is a cost management system in which a company produces products just in time to satisfy needs. 
B)  requires the implementation of total quality management. 
C)  integrates all worldwide functions, departments and data of a company into a single system. 
D)  cannot be implemented in service companies. 
A)  is a cost management system in which a company produces products just in time to satisfy needs. 
B)  requires the implementation of total quality management. 
C)  integrates all worldwide functions, departments and data of a company into a single system. 
D)  cannot be implemented in service companies.

Question 19

Period costs are the:

Accepted Answer

A)  current assets and liabilities reported on the balance sheet. 
B)  costs that are incurred and expensed during the same accounting period. 
C)  costs related to production of products the company purchases and sells. 
D)  same as manufacturing overhead costs. 
A)  current assets and liabilities reported on the balance sheet. 
B)  costs that are incurred and expensed during the same accounting period. 
C)  costs related to production of products the company purchases and sells. 
D)  same as manufacturing overhead costs.

Question 20

Manufacturing overhead includes indirect manufacturing costs, such as insurance and depreciation on the factory building.

Accepted Answer

A) True 
 B)False

Service companies do not have product costs so they often consider all operating expenses as part of their cost of service.

If Royal Ltd. purchases each unit of product X for $100 and can sell it in the market for $135, the selling price of the product for Royal would be $100.

Management accounting information of a company is primarily used by:

For a manufacturing business, which of the following would be considered a direct labor cost?

Which of the following will be included in manufacturing overhead costs?

Wages and benefits of assembly line workers are included in manufacturing overhead.

Samson Inc. reported the following information for the year 2015: Service Revenue \ 40,000 Operating Expenses \ 23,625 Net Income \ 16,375 Number of Services Provided for the Year 10,500 How much was the unit cost per service?

A merchandiser need not calculate cost per unit as it resells goods that are already manufactured.

Which of the following formulas represents cost of goods sold for a merchandising business?

Product costs, such as factory overhead, should be treated as an asset until the product is sold.

Wages and benefits of factory managers are considered as product costs.

Kyanite Corporation reports costs for 2015 as follows: Raw Materials \ 50,000 Wages to Line Workers 25,000 Office Rent 14,000 Indirect Materials 30,000 - How much is the total product costs for 2015?

Which of the following would appear as a line item on the income statements of both, a merchandiser and a manufacturer?

An enterprise resource planning system (ERP):

Period costs are the:

Manufacturing overhead includes indirect manufacturing costs, such as insurance and depreciation on the factory building.

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 1: Introduction to Managerial Accounting

Service companies do not have product costs so they often consider all operating expenses as part of their cost of service.

If Royal Ltd. purchases each unit of product X for $100 and can sell it in the market for $135, the selling price of the product for Royal would be $100.

Management accounting information of a company is primarily used by:

For a manufacturing business, which of the following would be considered a direct labor cost?

Which of the following will be included in manufacturing overhead costs?

Wages and benefits of assembly line workers are included in manufacturing overhead.

Samson Inc. reported the following information for the year 2015: Service Revenue \ 40,000 Operating Expenses \ 23,625 Net Income \ 16,375 Number of Services Provided for the Year 10,500 How much was the unit cost per service?

A merchandiser need not calculate cost per unit as it resells goods that are already manufactured.

Which of the following formulas represents cost of goods sold for a merchandising business?

Product costs, such as factory overhead, should be treated as an asset until the product is sold.

Wages and benefits of factory managers are considered as product costs.

Kyanite Corporation reports costs for 2015 as follows: Raw Materials \ 50,000 Wages to Line Workers 25,000 Office Rent 14,000 Indirect Materials 30,000 - How much is the total product costs for 2015?

Which of the following would appear as a line item on the income statements of both, a merchandiser and a manufacturer?

An enterprise resource planning system (ERP):

Period costs are the:

Manufacturing overhead includes indirect manufacturing costs, such as insurance and depreciation on the factory building.

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters