Question 1

Service-sector companies report ________.

Accepted Answer

A)  work-in-process inventory, and finished goods inventory accounts 
B)  only finished goods inventory 
C)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts 
D)  no inventory accounts 
A)  work-in-process inventory, and finished goods inventory accounts 
B)  only finished goods inventory 
C)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts 
D)  no inventory accounts

Question 2

Butler Hospital wants to estimate the cost for each patient stay.It is a general health care facility offering only basic services and not specialized services such as organ transplants.
Required:
a.Classify each of the following costs as either direct or indirect with respect to each patient.
b.Classify each of the following costs as either fixed or variable with respect to hospital costs per day.
 $\begin{array} { l  }&\text { Direct  }& \text {Indirect }& \text { Fixed }& \text { Variable }\
 \text {Electronic monitoring }&\_\_\_&\_\_\_&\_\_\_&\_\_\_ \
 \text {Meals for patients }&\_\_\_&\_\_\_&\_\_\_&\_\_\_ \
 \text {Nurses' salaries }&\_\_\_&\_\_\_&\_\_\_&\_\_\_ \
 \text {Parking maintenance }&\_\_\_&\_\_\_&\_\_\_&\_\_\_ \
 \text {Security }&\_\_\_&\_\_\_&\_\_\_&\_\_\_ \
\end{array}$

Accepted Answer

The answer of Butler Hospital wants to estimate the cost...

Question 3

For an automobile manufacturer,period costs include the cost of ________.

Accepted Answer

A)  the dashboard 
B)  labor used for assembly 
C)  advertising 
D)  assembly-line equipment 
A)  the dashboard 
B)  labor used for assembly 
C)  advertising 
D)  assembly-line equipment

Question 4

Product costs used for external reporting generally include ________.

Accepted Answer

A)  manufacturing costs only 
B)  design costs plus manufacturing costs 
C)  all costs incurred along the value chain 
D)  research and development costs along with production costs 
A)  manufacturing costs only 
B)  design costs plus manufacturing costs 
C)  all costs incurred along the value chain 
D)  research and development costs along with production costs

Question 5

Answer the following questions using the information below:
Pederson Company reported the following:
 $\begin{array}{ll}
\text { Manufacturing costs } & \$ 150,000 \
\text { Units manufactured } & 5,000 \
\text { Units sold } & 4,700 \text { units sold for } \$ 75 \text { per unit } \
\text { Beginning inventory } & 100 \text { units }
\end{array}$
-What is the manufacturing cost for the ending finished goods inventory?

Accepted Answer

A)  $12,000 
B)  $8,000 
C)  $11,000 
D)  $5,000 
A)  $12,000 
B)  $8,000 
C)  $11,000 
D)  $5,000

Question 6

Overtime premium is normally considered as a component of direct labor.

Accepted Answer

A) True 
 B)False

Question 7

When 20,000 units are produced,variable costs are $8 per unit.Therefore,when 10,000 units are produced ________.

Accepted Answer

A)  variable costs will remain at $8 per unit 
B)  variable costs will total $60,000 
C)  variable unit costs will increase to $12 per unit 
D)  variable unit costs will decrease to $3 per unit 
A)  variable costs will remain at $8 per unit 
B)  variable costs will total $60,000 
C)  variable unit costs will increase to $12 per unit 
D)  variable unit costs will decrease to $3 per unit

Question 8

Insurance companies provide services or intangible products to their customers.

Accepted Answer

A) True 
 B)False

Question 9

A cost system determines the cost of a cost object by ________.

Accepted Answer

A)  accumulating and then assigning costs 
B)  accumulating costs 
C)  assigning and then accumulating costs 
D)  assigning costs 
A)  accumulating and then assigning costs 
B)  accumulating costs 
C)  assigning and then accumulating costs 
D)  assigning costs

Question 10

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 11

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

Accepted Answer

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

Question 12

Answer the following questions using the information below:
The East Company manufactures several different products. Unit costs associated with Product ORD210 are as follows:
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 54 \
\text { Direct manufacturing labor } & 8 \
\text { Variable manufacturing overhead } & 11 \
\text { Fixed manufacturing overhead } & 25 \
\text { Sales commissions ( } \% \text { of sales) } & 5 \
\text { Administrative salaries } & 12 \
\quad \text { Total } & \$ 115
\end{array}$$
-What is the percentage of the total fixed costs per unit associated with Product ORD105 with respect to total cost?

Accepted Answer

A)  32% 
B)  28% 
C)  26% 
D)  20% 
A)  32% 
B)  28% 
C)  26% 
D)  20%

Question 13

Designing,marketing,customer services,research and development expenses are operating costs.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following companies is part of the manufacturing sector of our economy?

Accepted Answer

A)  Nike 
B)  Barnes & Noble 
C)  Corvette Law Firm 
D)  Sears, Roebuck, and Company 
A)  Nike 
B)  Barnes & Noble 
C)  Corvette Law Firm 
D)  Sears, Roebuck, and Company

Question 15

Variable costs ________.

Accepted Answer

A)  are always indirect costs 
B)  increase in total when the actual level of activity increases 
C)  include most personnel costs and depreciation on machinery 
D)  are never considered a part of prime cost 
A)  are always indirect costs 
B)  increase in total when the actual level of activity increases 
C)  include most personnel costs and depreciation on machinery 
D)  are never considered a part of prime cost

Question 16

For external reporting purposes,indirect manufacturing costs must be allocated to individual units.

Accepted Answer

A) True 
 B)False

Question 17

Indirect costs such as rent,telephone,and depreciation are always costs of the period in which they are incurred and are not associated with inventories.

Accepted Answer

A) True 
 B)False

Question 18

Answer the following questions using the information below:
Buildz Manufacturing currently produces 1,000 tables per month. The following per unit data for 1,000 tables apply for sales to regular customers:
 $\begin{array}{lr}
\text { Direct materials } & \$ 50 \
\text { Direct manufacturing labor } & 10 \
\text { Variable manufacturing overhead } & 15 \
\text { Fixed manufacturing overhead } & \underline{30} \
{\text { Total manufacturing costs }} & \$ 105
\end{array}$
-What is the per unit cost when producing 3,000 tables?

Accepted Answer

A)  $58.33 
B)  $175.00 
C)  $85.00 
D)  $125.45 
A)  $58.33 
B)  $175.00 
C)  $85.00 
D)  $125.45

Question 19

A cost may be direct for one cost object and indirect for another cost object.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following is a variable cost for an insurance company?

Accepted Answer

A)  rent of the building 
B)  CEO's salary 
C)  electricity expenses 
D)  property taxes 
A)  rent of the building 
B)  CEO's salary 
C)  electricity expenses 
D)  property taxes

Service-sector companies report ________.

For an automobile manufacturer,period costs include the cost of ________.

Product costs used for external reporting generally include ________.

Overtime premium is normally considered as a component of direct labor.

When 20,000 units are produced,variable costs are $8 per unit.Therefore,when 10,000 units are produced ________.

Insurance companies provide services or intangible products to their customers.

A cost system determines the cost of a cost object by ________.

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

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

Designing,marketing,customer services,research and development expenses are operating costs.

Which of the following companies is part of the manufacturing sector of our economy?

Variable costs ________.

For external reporting purposes,indirect manufacturing costs must be allocated to individual units.

Indirect costs such as rent,telephone,and depreciation are always costs of the period in which they are incurred and are not associated with inventories.

A cost may be direct for one cost object and indirect for another cost object.

Which one of the following is a variable cost for an insurance company?

The Manager and Management Accounting

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

Filters

Exam 2: An Introduction to Cost Terms and Purposes

Service-sector companies report ________.

For an automobile manufacturer,period costs include the cost of ________.

Product costs used for external reporting generally include ________.

Overtime premium is normally considered as a component of direct labor.

When 20,000 units are produced,variable costs are $8 per unit.Therefore,when 10,000 units are produced ________.

Insurance companies provide services or intangible products to their customers.

A cost system determines the cost of a cost object by ________.

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

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

Designing,marketing,customer services,research and development expenses are operating costs.

Which of the following companies is part of the manufacturing sector of our economy?

Variable costs ________.

For external reporting purposes,indirect manufacturing costs must be allocated to individual units.

Indirect costs such as rent,telephone,and depreciation are always costs of the period in which they are incurred and are not associated with inventories.

A cost may be direct for one cost object and indirect for another cost object.

Which one of the following is a variable cost for an insurance company?

The Manager and Management Accounting

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

Filters