Question 1

When making decisions:

Accepted Answer

A) it is best to use unit costs. 
B) it is best to use total costs rather than unit costs. 
C) it is best to use average costs. 
D) All of these types of costs can be used for decision making;it varies depending on the decision required. 
A) it is best to use unit costs. 
B) it is best to use total costs rather than unit costs. 
C) it is best to use average costs. 
D) All of these types of costs can be used for decision making;it varies depending on the decision required.

Question 2

A 'mixed cost' is:

Accepted Answer

A) a variable cost. 
B) always an indirect cost. 
C) a fixed cost. 
D) a cost with fixed and variable elements. 
A) a variable cost. 
B) always an indirect cost. 
C) a fixed cost. 
D) a cost with fixed and variable elements.

Question 3

Retail sector companies purchase and then sell tangible products without changing their basic form.

Accepted Answer

A) True 
 B)False

Question 4

Insurance on a factory can be classified as a period cost.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following costs consists only of all direct manufacturing costs?

Accepted Answer

A) Conversion 
B) Fixed 
C) Variable 
D) Prime 
A) Conversion 
B) Fixed 
C) Variable 
D) Prime

Question 6

Perth Production Company manufactured 100 000 units in 2018 and reported the following costs:
 $\begin{array}{lrlr}
\text { Sandpaper } & \$ 32000 & \text { Leasing costs-plant } & \$ 384000 \
\text { Materials handling } & 320000 & \text { Depreciation-equipment } & 224000 \
\text { Coolants \& lubricants } & 22400 & \text { Property taxes-equipment } & 32000 \
\text { Indirect manufacturing labour } & 275200 & \text { Fire insurance-equipment } & 16000 \
\text { Direct manufacturing labour } & 2176000 & \text { Direct material purchases } & 3136000 \
\text { Direct materials, } 1 / 1 / 18 & 384000 & \text { Direct materials, } 12 / 31 / 18 & 275200 \
\text { Finished goods, } 1 / 1 / 18 & 672000 & \text { Sales reventue } & 12800000 \
\text { Finished goods, } 12 / 31 / 18 & 1280000 & \text { Sales commissions } & 640000 \
\text { Work-in-process, } 1 / 1 / 18 & 96000 & \text { Sales salaries } & 576000 \
\text { Work-in-process, } 12 / 31 / 18 & 64000 & \text { Advertising costs } & 480000 \
& & \text { Administration costs } & 800000
\end{array}$ 
Required:
a.What is the amount of direct materials used during 2018?
b.What manufacturing costs were added to WIP during 2018?
c.What is cost of goods manufactured for 2018?
d.What is cost of goods sold for 2018?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.$384 000 + $3 136 000 - $275 200 = $3

Question 7

The ________ the amount of a cost-that is,the more immaterial the cost is-the less likely it is to be economically feasible to trace that cost to a particular cost object.

Accepted Answer

A) smaller 
B) larger 
C) more precise 
D) less precise 
A) smaller 
B) larger 
C) more precise 
D) less precise

Question 8

Answer the following questions using the information below:
The SouthAus Company manufactures several different products.Unit costs associated with Product ADE108 are as follows:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 40 \
\text { Direct manufacturing labour } & 8 \
\text { Variable manufacturing overhead } & 12 \
\text { Fixed manufacturing overhead } & 23 \
\text { Sales commissions (2\% of sales) } & 6 \
\text { Administrative salaries } & 9 \underline { 9 } \
\quad \text { Total } & \$ 98
\end{array}$$
-What are the variable costs per unit associated with Product ADE108?

Accepted Answer

A) $60 
B) $48 
C) $66 
D) $83 
A) $60 
B) $48 
C) $66 
D) $83

Question 9

For 2018,Baggy Green Caps Inc. ,had sales of 75 000 units and production of 100 000 units.Other information for the year included:
 $\begin{array}{l}
\begin{array}{lr}
\text { Direct manufacturing labour } & \$ 187500 \
\text { Variable manufacturing overhead } & 100000 \
\text { Direct materials } & 150000 \
\text { Variable selling expenses } & 100000 \
\text { Fixed administrative expenses } & 100000 \
\text { Fixed manufacturing overhead } & 200000
\end{array}\
\text { There was no beginning inventory. }
\end{array}$ 
Required:
a.Compute the ending finished goods inventory under both absorption and variable costing.
b.Compute the cost of goods sold under both absorption and variable costing.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

None

Question 10

Answer the following questions using the information below:
Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes:
The budgeted denominator level is 800 units.
Units produced total 1000 units.
Units sold total 950 units.
Beginning inventory was zero.
The fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-Under absorption costing,the production-volume variance is:

Accepted Answer

A) $450 
B) 0 
C) $1800 
D) $1350 
A) $450 
B) 0 
C) $1800 
D) $1350

Question 11

What is a variable,such as the level of activity or volume,called that causally affects costs over a given time span?

Accepted Answer

A) Cost accumulator 
B) Cost allocation 
C) Cost driver 
D) Cost manager 
A) Cost accumulator 
B) Cost allocation 
C) Cost driver 
D) Cost manager

Question 12

Improvements in information-gathering technology make it possible to consider more and more costs as:

Accepted Answer

A) direct costs. 
B) fixed costs. 
C) indirect costs. 
D) variable costs. 
A) direct costs. 
B) fixed costs. 
C) indirect costs. 
D) variable costs.

Question 13

For the purposes of making decisions about pricing and which products provide the most profits,the manager is interested in the overall (total)profitability of different products and,consequently,assigns costs incurred in all business functions of the value chain to the different products.

Accepted Answer

A) True 
 B)False

Question 14

Answer the following questions using the information below:
The Mt Tambourine Company manufactures several different products.Unit costs associated with Product SK2040 are as follows:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 60 \
\text { Direct manufacturing labour } & 10 \
\text { Variable manufacturing overhead } & 18 \
\text { Fixed manufacturing overhead } & 32 \
\text { Sales commissions (2\% of sales) } & 4 \
\text { Administrative salaries } & \underline { 16 } \
\quad \text { Total } & \$ 140
\end{array}$$
-What are the inventoriable costs per unit associated with Product SK2040?

Accepted Answer

A) $120 
B) $140 
C) $88 
D) $50 
A) $120 
B) $140 
C) $88 
D) $50

Question 15

Which of the following is NOT a period cost?

Accepted Answer

A) General and administrative costs 
B) Marketing costs 
C) Research and development costs 
D) Manufacturing costs 
A) General and administrative costs 
B) Marketing costs 
C) Research and development costs 
D) Manufacturing costs

Question 16

Answer the following questions using the information below:
The following information pertains to Bondi Creations:
 $\begin{array}{ll}
\hline & \
\hline \text { Manufacturing costs } & \$ 1,500,000 \
\hline \text { Units manufactured } & 30,000 \
\hline \text { Units sold } & 29,500 \text { units sold for } \$ 85 \text { per unit } \
\hline \text { Beginning inventory } & 0 \text { units } \
\hline\\hline
\end{array}$
-What is the amount of gross margin?

Accepted Answer

A) $2 507 500 
B) $1 500 000 
C) $1 475 000 
D) $1 032 500 
A) $2 507 500 
B) $1 500 000 
C) $1 475 000 
D) $1 032 500

Question 17

Raw materials that can be traced to a cost object are an example of an indirect cost.

Accepted Answer

A) True 
 B)False

Question 18

Within the relevant range,if there is a change in the level of the cost driver,then:

Accepted Answer

A) total fixed costs will change and total variable costs will remain the same 
B) total fixed costs and total variable costs will remain the same 
C) total fixed costs and total variable costs will change 
D) total fixed costs will remain the same and total variable costs will change 
A) total fixed costs will change and total variable costs will remain the same 
B) total fixed costs and total variable costs will remain the same 
C) total fixed costs and total variable costs will change 
D) total fixed costs will remain the same and total variable costs will change

Question 19

Answer the following questions using the information below:
Jindabyne Pillows produces and sells a decorative pillow for $75.00 per unit.In the first month of operation,
2000 units were produced and 1750 units were sold.Actual fixed costs are the same as the amount budgeted for the month.Other information for the month includes:
 $\begin{array}{lr}
\text { Variable manufacturing costs } & \$ 20.00 \text { per unit } \
\text { Variable marketing costs } & \$ 3.00 \text { per unit } \
\text { Fixed manufacturing costs } & \$ 7.00 \text { per unit } \
\text { Administrative expenses, all fixed } & \$ 15.00 \text { per unit }\\text { Ending inventories: }\
\text { Direct materials } & -0- \
\text { WIP } & -0- \
\text { Finished goods } & 250 \text { urits }
\end{array}$
-What is contribution margin using variable costing?

Accepted Answer

A) $96 250 
B) $91 000 
C) $104 000 
D) $110 000 
A) $96 250 
B) $91 000 
C) $104 000 
D) $110 000

Question 20

By summing unit costs throughout the ________,managers calculate the unit cost of the different products or services they deliver and determine the profitability of each product or service.

Accepted Answer

A) organisation 
B) business environment 
C) value chain 
D) organisation structure 
A) organisation 
B) business environment 
C) value chain 
D) organisation structure

When making decisions:

A 'mixed cost' is:

Retail sector companies purchase and then sell tangible products without changing their basic form.

Insurance on a factory can be classified as a period cost.

Which of the following costs consists only of all direct manufacturing costs?

The ________ the amount of a cost-that is,the more immaterial the cost is-the less likely it is to be economically feasible to trace that cost to a particular cost object.

What is a variable,such as the level of activity or volume,called that causally affects costs over a given time span?

Improvements in information-gathering technology make it possible to consider more and more costs as:

For the purposes of making decisions about pricing and which products provide the most profits,the manager is interested in the overall (total)profitability of different products and,consequently,assigns costs incurred in all business functions of the value chain to the different products.

Which of the following is NOT a period cost?

Answer the following questions using the information below: The following information pertains to Bondi Creations: Manufacturing costs \ 1,500,000 Units manufactured 30,000 Units sold 29,500 units sold for \ 85 per unit Beginning inventory 0 units -What is the amount of gross margin?

Raw materials that can be traced to a cost object are an example of an indirect cost.

Within the relevant range,if there is a change in the level of the cost driver,then:

By summing unit costs throughout the ________,managers calculate the unit cost of the different products or services they deliver and determine the profitability of each product or service.

Management Accounting in Context

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

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

Measuring and Reporting Sustainability

Filters

Exam 2: Different Costs for Different Purposes

When making decisions:

A 'mixed cost' is:

Retail sector companies purchase and then sell tangible products without changing their basic form.

Insurance on a factory can be classified as a period cost.

Which of the following costs consists only of all direct manufacturing costs?

The ________ the amount of a cost-that is,the more immaterial the cost is-the less likely it is to be economically feasible to trace that cost to a particular cost object.

What is a variable,such as the level of activity or volume,called that causally affects costs over a given time span?

Improvements in information-gathering technology make it possible to consider more and more costs as:

For the purposes of making decisions about pricing and which products provide the most profits,the manager is interested in the overall (total)profitability of different products and,consequently,assigns costs incurred in all business functions of the value chain to the different products.

Which of the following is NOT a period cost?

Answer the following questions using the information below: The following information pertains to Bondi Creations: Manufacturing costs \ 1,500,000 Units manufactured 30,000 Units sold 29,500 units sold for \ 85 per unit Beginning inventory 0 units -What is the amount of gross margin?

Raw materials that can be traced to a cost object are an example of an indirect cost.

Within the relevant range,if there is a change in the level of the cost driver,then:

By summing unit costs throughout the ________,managers calculate the unit cost of the different products or services they deliver and determine the profitability of each product or service.

Management Accounting in Context

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

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

Measuring and Reporting Sustainability

Filters