Question 1

Work-in-process inventory are goods partially worked on but not yet completed.

Accepted Answer

A) True 
 B)False

Question 2

Direct costs of a cost object are related to the particular cost object and can be traced to it in an economically feasible (cost-effective)way.

Accepted Answer

A) True 
 B)False

Question 3

The MOST likely cost driver of distribution costs is the:

Accepted Answer

A) number of parts within the product. 
B) number of production hours. 
C) number of products manufactured. 
D) number of miles driven. 
A) number of parts within the product. 
B) number of production hours. 
C) number of products manufactured. 
D) number of miles driven.

Question 4

If the unit level of inventory increases during an accounting period,then:

Accepted Answer

A) operating profit will be the same under absorption costing and variable costing. 
B) more operating profit will be reported under absorption costing than variable costing. 
C) less operating profit will be reported under absorption costing than variable costing. 
D) the exact effect on operating profit cannot be determined. 
A) operating profit will be the same under absorption costing and variable costing. 
B) more operating profit will be reported under absorption costing than variable costing. 
C) less operating profit will be reported under absorption costing than variable costing. 
D) the exact effect on operating profit cannot be determined.

Question 5

Non-financial measures such as comparing units in ending inventory this period to units in ending inventory last period can help reduce build-up of excess inventory.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a costing system that variable and absorption costing CANNOT be combined with?

Accepted Answer

A) Normal costing 
B) Standard costing 
C) Mixed costing 
D) Actual costing 
A) Normal costing 
B) Standard costing 
C) Mixed costing 
D) Actual costing

Question 7

Which of the following formulae determine cost of goods sold in a manufacturing sector company?

Accepted Answer

A) Cost of goods manufactured - Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
B) Beginning work-in-process inventory + Cost of goods manufactured - Ending work-in-process inventory = Cost of goods sold 
C) Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
D) Beginning work-in-process inventory + Cost of goods manufactured + Ending work-in-process inventory = Cost of goods sold 
A) Cost of goods manufactured - Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
B) Beginning work-in-process inventory + Cost of goods manufactured - Ending work-in-process inventory = Cost of goods sold 
C) Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
D) Beginning work-in-process inventory + Cost of goods manufactured + Ending work-in-process inventory = Cost of goods sold

Question 8

Costs expensed on the income statement in the accounting period incurred are called:

Accepted Answer

A) period costs. 
B) inventoriable costs. 
C) indirect costs. 
D) direct costs. 
A) period costs. 
B) inventoriable costs. 
C) indirect costs. 
D) direct costs.

Question 9

Hadlee Company sells its products for $66 each.The current production level is 25 000 units,although only 20 000 units are anticipated to be sold.
 Unit manufacturing costs are:
$\begin{array} { l l } \text { Direct materials } & \$ 12.00 \ \text { Direct manufacturing labour } & \$ 18.00 \ \text { Variable manufacturing costs } & \$ 9.00 \ \text { Total fixed manufacturing costs } & \$ 180000\
\text {Marketing expenses}
&\text { \$ 6.00  per unit, plus  \$ 60000  per year} \end{array}$
 
Required:
a.Prepare an income statement using absorption costing.
b.Prepare an income statement using variable costing.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.Absorpti

Question 10

A plant manufactures several different products.The wages of the plant supervisor can be classified as a(n):

Accepted Answer

A) period cost. 
B) variable cost. 
C) inventoriable cost. 
D) direct cost. 
A) period cost. 
B) variable cost. 
C) inventoriable cost. 
D) direct cost.

Question 11

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 period costs per unit associated with Product SK2040?

Accepted Answer

A) $52 
B) $4 
C) $20 
D) $16 
A) $52 
B) $4 
C) $20 
D) $16

Question 12

A decision maker cannot adjust capacity over the short run.

Accepted Answer

A) True 
 B)False

Question 13

Absorption costing:

Accepted Answer

A) treats direct manufacturing costs as a period cost. 
B) includes fixed manufacturing overhead as an inventoriable cost. 
C) expenses marketing costs as cost of goods sold. 
D) is required for internal reports to managers. 
A) treats direct manufacturing costs as a period cost. 
B) includes fixed manufacturing overhead as an inventoriable cost. 
C) expenses marketing costs as cost of goods sold. 
D) is required for internal reports to managers.

Question 14

What do managers use their knowledge of to guide decisions,for example about product innovation,quality and customer service?

Accepted Answer

A) Prices 
B) Markets 
C) Competitors 
D) Costs 
A) Prices 
B) Markets 
C) Competitors 
D) Costs

Question 15

Direct manufacturing ________ costs include the compensation of all manufacturing labour that can be traced to the cost object (work in process and then finished goods)in an economically feasible way.

Accepted Answer

A) material 
B) labour 
C) overhead 
D) projected 
A) material 
B) labour 
C) overhead 
D) projected

Question 16

When 10 000 units are produced,variable costs are $6 per unit.Therefore,when 20 000 units are produced:

Accepted Answer

A) variable unit costs will increase to $12 per unit. 
B) variable unit costs will decrease to $3 per unit. 
C) variable costs will total $120 000. 
D) variable costs will total $60 000. 
A) variable unit costs will increase to $12 per unit. 
B) variable unit costs will decrease to $3 per unit. 
C) variable costs will total $120 000. 
D) variable costs will total $60 000.

Question 17

Which of the following are all manufacturing costs that are related to the cost object but cannot be traced to that cost object?

Accepted Answer

A) Direct material costs 
B) Indirect manufacturing costs 
C) Direct manufacturing labour costs 
D) Period costs 
A) Direct material costs 
B) Indirect manufacturing costs 
C) Direct manufacturing labour costs 
D) Period costs

Question 18

How is a unit cost computed?

Accepted Answer

A) Dividing total cost by the number of units 
B) Adding variable cost to fixed cost 
C) Multiplying total cost by the number of units 
D) Dividing variable cost by the number of units 
A) Dividing total cost by the number of units 
B) Adding variable cost to fixed cost 
C) Multiplying total cost by the number of units 
D) Dividing variable cost by the number of units

Question 19

Under both variable costing and absorption costing,all variable manufacturing costs are inventoriable costs and all non-manufacturing costs in the value chain (e.g.R&D,marketing),whether variable or fixed,are period costs and are recorded as expenses when incurred.

Accepted Answer

A) True 
 B)False

Question 20

Answer the following questions using the information below:
Wangaratta Corporation incurred fixed manufacturing costs of $6000 during 2018.Other information for 2018 includes:
The budgeted denominator level is 1000 units.
Units produced total 750 units.
Units sold total 600 units.
Beginning inventory was zero.
The company uses absorption costing and the fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-Fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total:

Accepted Answer

A) $3600 
B) 0 
C) $6000 
D) $4800 
A) $3600 
B) 0 
C) $6000 
D) $4800

Work-in-process inventory are goods partially worked on but not yet completed.

Direct costs of a cost object are related to the particular cost object and can be traced to it in an economically feasible (cost-effective)way.

The MOST likely cost driver of distribution costs is the:

If the unit level of inventory increases during an accounting period,then:

Non-financial measures such as comparing units in ending inventory this period to units in ending inventory last period can help reduce build-up of excess inventory.

Which of the following is a costing system that variable and absorption costing CANNOT be combined with?

Which of the following formulae determine cost of goods sold in a manufacturing sector company?

Costs expensed on the income statement in the accounting period incurred are called:

A plant manufactures several different products.The wages of the plant supervisor can be classified as a(n):

A decision maker cannot adjust capacity over the short run.

Absorption costing:

What do managers use their knowledge of to guide decisions,for example about product innovation,quality and customer service?

Direct manufacturing ________ costs include the compensation of all manufacturing labour that can be traced to the cost object (work in process and then finished goods)in an economically feasible way.

When 10 000 units are produced,variable costs are $6 per unit.Therefore,when 20 000 units are produced:

Which of the following are all manufacturing costs that are related to the cost object but cannot be traced to that cost object?

How is a unit cost computed?

Under both variable costing and absorption costing,all variable manufacturing costs are inventoriable costs and all non-manufacturing costs in the value chain (e.g.R&D,marketing),whether variable or fixed,are period costs and are recorded as expenses when incurred.

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

Work-in-process inventory are goods partially worked on but not yet completed.

Direct costs of a cost object are related to the particular cost object and can be traced to it in an economically feasible (cost-effective)way.

The MOST likely cost driver of distribution costs is the:

If the unit level of inventory increases during an accounting period,then:

Non-financial measures such as comparing units in ending inventory this period to units in ending inventory last period can help reduce build-up of excess inventory.

Which of the following is a costing system that variable and absorption costing CANNOT be combined with?

Which of the following formulae determine cost of goods sold in a manufacturing sector company?

Costs expensed on the income statement in the accounting period incurred are called:

A plant manufactures several different products.The wages of the plant supervisor can be classified as a(n):

A decision maker cannot adjust capacity over the short run.

Absorption costing:

What do managers use their knowledge of to guide decisions,for example about product innovation,quality and customer service?

Direct manufacturing ________ costs include the compensation of all manufacturing labour that can be traced to the cost object (work in process and then finished goods)in an economically feasible way.

When 10 000 units are produced,variable costs are $6 per unit.Therefore,when 20 000 units are produced:

Which of the following are all manufacturing costs that are related to the cost object but cannot be traced to that cost object?

How is a unit cost computed?

Under both variable costing and absorption costing,all variable manufacturing costs are inventoriable costs and all non-manufacturing costs in the value chain (e.g.R&D,marketing),whether variable or fixed,are period costs and are recorded as expenses when incurred.

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