Question 1

Which of the following is an example of a fixed cost?

Accepted Answer

A)  power cost in the machining department 
B)  wood in the manufacture of furniture 
C)  labour cost paid on a piece basis 
D)  lease payments on machinery 
A)  power cost in the machining department 
B)  wood in the manufacture of furniture 
C)  labour cost paid on a piece basis 
D)  lease payments on machinery

Question 2

Which of the following costs is NOT recorded in the company's accounting system?

Accepted Answer

A)  sunk cost 
B)  opportunity cost 
C)  direct cost 
D)  indirect cost 
A)  sunk cost 
B)  opportunity cost 
C)  direct cost 
D)  indirect cost

Question 3

Direct costs

Accepted Answer

A)  can be assigned to cost objects in an economically feasible way 
B)  are typically assigned to cost objects using a cause-and-effect relationship 
C)  result in more accurate cost assignments 
D)  do all of the above 
A)  can be assigned to cost objects in an economically feasible way 
B)  are typically assigned to cost objects using a cause-and-effect relationship 
C)  result in more accurate cost assignments 
D)  do all of the above

Question 4

Which of the following costs would be classified as variable costs with respect to volume?

Accepted Answer

A)  property taxes on the manufacturing facility 
B)  the wheels on an automobile 
C)  the cost of installing production equipment 
D)  all of the above 
A)  property taxes on the manufacturing facility 
B)  the wheels on an automobile 
C)  the cost of installing production equipment 
D)  all of the above

Question 5

The Penang Company has the following information available regarding costs at various levels of monthly production:
Required:
   
a.
Identify each cost as being variable, fixed, or mixed by writing the name of each cost under one of the following headings:
Variable Costs Fixed Costs Mixed Costs
b.
Develop an equation for total monthly production costs.
c.
Predict total costs for a monthly production volume of 8,000 units.

Accepted Answer

The answer of The Penang Company has the following information...

Question 6

Which of the following is an example of a committed fixed expense?

Accepted Answer

A)  depreciation on a factory building 
B)  supervisor's salary 
C)  direct labour 
D)  insurance on a building 
A)  depreciation on a factory building 
B)  supervisor's salary 
C)  direct labour 
D)  insurance on a building

Question 7

Unit costs are critical for

Accepted Answer

A)  valuing inventory. 
B)  determining net income. 
C)  decisions to enter a new product line. 
D)  all of the above. 
A)  valuing inventory. 
B)  determining net income. 
C)  decisions to enter a new product line. 
D)  all of the above.

Question 8

Whether a cost is fixed or variable depends on the time horizon. In the long run, all costs are

Accepted Answer

A)  fixed 
B)  variable 
C)  mixed 
D)  step 
A)  fixed 
B)  variable 
C)  mixed 
D)  step

Question 9

_____ are expensed in the period in which they are incurred.

Accepted Answer

A)  Direct materials 
B)  Product costs 
C)  Factory overhead 
D)  Nonproduction costs 
A)  Direct materials 
B)  Product costs 
C)  Factory overhead 
D)  Nonproduction costs

Question 10

The wages of a production equipment operator would be classified as

Accepted Answer

A)  direct materials 
B)  direct labour 
C)  manufacturing overhead 
D)  selling and administrative costs 
A)  direct materials 
B)  direct labour 
C)  manufacturing overhead 
D)  selling and administrative costs

Question 11

Sunk costs are

Accepted Answer

A)  future costs that have no benefit. 
B)  relevant costs that have only short-run benefits. 
C)  target costs. 
D)  cannot be avoided. 
A)  future costs that have no benefit. 
B)  relevant costs that have only short-run benefits. 
C)  target costs. 
D)  cannot be avoided.

Question 12

The direct costs of operating a university computer centre would NOT include

Accepted Answer

A)  rent paid for computers. 
B)  a fair share of university utilities. 
C)  paper used by the centre. 
D)  computer consultants' salaries. 
A)  rent paid for computers. 
B)  a fair share of university utilities. 
C)  paper used by the centre. 
D)  computer consultants' salaries.

Question 13

In a traditional manufacturing company, product costs include

Accepted Answer

A)  direct materials only. 
B)  direct materials, direct labour, and factory overhead. 
C)  direct materials and direct labour only. 
D)  direct labour only. 
A)  direct materials only. 
B)  direct materials, direct labour, and factory overhead. 
C)  direct materials and direct labour only. 
D)  direct labour only.

Question 14

Adams Ltd. rents a truck for a flat fee plus an additional charge per mile. What type of cost is the rent?

Accepted Answer

A)  fixed cost 
B)  mixed cost 
C)  variable cost 
D)  step cost 
A)  fixed cost 
B)  mixed cost 
C)  variable cost 
D)  step cost

Question 15

The appropriate cost accounting system to use when inventory items are produced on an assembly line is

Accepted Answer

A)  job-order costing. 
B)  process costing. 
C)  weighted average. 
D)  perpetual method. 
A)  job-order costing. 
B)  process costing. 
C)  weighted average. 
D)  perpetual method.

Question 16

Prime product costs include

Accepted Answer

A)  only factory overhead. 
B)  only direct labour. 
C)  direct labour and factory overhead. 
D)  direct materials and direct labour. 
A)  only factory overhead. 
B)  only direct labour. 
C)  direct labour and factory overhead. 
D)  direct materials and direct labour.

Question 17

Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that starts at the origin and reaches a maximum value and beyond this point the line becomes parallel to the horizontal axis?

Accepted Answer

A)  total direct material costs 
B)  a consultant paid £100 per hour with a maximum fee of £2,000 
C)  employees who are paid £15 per hour and guaranteed a minimum weekly wage of £300 
D)  rent on exhibit space at a convention 
A)  total direct material costs 
B)  a consultant paid £100 per hour with a maximum fee of £2,000 
C)  employees who are paid £15 per hour and guaranteed a minimum weekly wage of £300 
D)  rent on exhibit space at a convention

Question 18

All of Jill Enterprise's operations are housed in one building with the costs of occupying the building accumulated in a separate account. The total costs incurred in May amounted to £24,000. The company allocates these costs on the basis of square feet of floor space occupied. Administrative offices, sales offices, and factory operations occupy 9,000, 6,000, and 30,000 square feet, respectively. How much will be classified as a product cost for May?

Accepted Answer

A)  £4,800 
B)  £3,200 
C)  £16,000 
D)  £24,000 
A)  £4,800 
B)  £3,200 
C)  £16,000 
D)  £24,000

Question 19

Which of the following is an example of a variable cost?

Accepted Answer

A)  insurance on the production equipment 
B)  direct materials 
C)  the production supervisor's salary 
D)  depreciation of the factory building 
A)  insurance on the production equipment 
B)  direct materials 
C)  the production supervisor's salary 
D)  depreciation of the factory building

Question 20

Which of the following costs is a variable cost?

Accepted Answer

A)  supervisors' salaries 
B)  research and development 
C)  materials used in production 
D)  rent 
A)  supervisors' salaries 
B)  research and development 
C)  materials used in production 
D)  rent

Which of the following is an example of a fixed cost?

Which of the following costs is NOT recorded in the company's accounting system?

Direct costs

Which of the following costs would be classified as variable costs with respect to volume?

Which of the following is an example of a committed fixed expense?

Unit costs are critical for

Whether a cost is fixed or variable depends on the time horizon. In the long run, all costs are

_____ are expensed in the period in which they are incurred.

The wages of a production equipment operator would be classified as

Sunk costs are

The direct costs of operating a university computer centre would NOT include

In a traditional manufacturing company, product costs include

Adams Ltd. rents a truck for a flat fee plus an additional charge per mile. What type of cost is the rent?

The appropriate cost accounting system to use when inventory items are produced on an assembly line is

Prime product costs include

Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that starts at the origin and reaches a maximum value and beyond this point the line becomes parallel to the horizontal axis?

Which of the following is an example of a variable cost?

Which of the following costs is a variable cost?

Introduction to Management Accounting

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Performance Management

Filters

Exam 2: An Introduction to Cost Terms and Concepts

Which of the following is an example of a fixed cost?

Which of the following costs is NOT recorded in the company's accounting system?

Direct costs

Which of the following costs would be classified as variable costs with respect to volume?

Which of the following is an example of a committed fixed expense?

Unit costs are critical for

Whether a cost is fixed or variable depends on the time horizon. In the long run, all costs are

_____ are expensed in the period in which they are incurred.

The wages of a production equipment operator would be classified as

Sunk costs are

The direct costs of operating a university computer centre would NOT include

In a traditional manufacturing company, product costs include

Adams Ltd. rents a truck for a flat fee plus an additional charge per mile. What type of cost is the rent?

The appropriate cost accounting system to use when inventory items are produced on an assembly line is

Prime product costs include

Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that starts at the origin and reaches a maximum value and beyond this point the line becomes parallel to the horizontal axis?

Which of the following is an example of a variable cost?

Which of the following costs is a variable cost?

Introduction to Management Accounting

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Performance Management

Filters