Question 1

Inventoriable costs are costs of a product that are ________.

Accepted Answer

A)  costs of a product that are considered assets in a company's balance sheet when the costs are incurred and that are expensed as cost of goods sold only when the product is sold 
B)  considered liabilities in a company's balance sheet when the costs are incurred and that are expensed only when the product is sold 
C)  considered as assets in a company's income statement when the costs are capitalized and that are expensed as cost of goods sold only when the product is sold 
D)  considered as liabilities in a company's income statement when the costs are capitalized and that are expensed only when the product is sold 
A)  costs of a product that are considered assets in a company's balance sheet when the costs are incurred and that are expensed as cost of goods sold only when the product is sold 
B)  considered liabilities in a company's balance sheet when the costs are incurred and that are expensed only when the product is sold 
C)  considered as assets in a company's income statement when the costs are capitalized and that are expensed as cost of goods sold only when the product is sold 
D)  considered as liabilities in a company's income statement when the costs are capitalized and that are expensed only when the product is sold

Question 2

Under GAAP,for the purposes of calculating inventory costs,product costs include ________.

Accepted Answer

A)  all costs incurred along the value chain 
B)  design costs 
C)  only inventoriable costs 
D)  only research and development costs 
A)  all costs incurred along the value chain 
B)  design costs 
C)  only inventoriable costs 
D)  only research and development costs

Question 3

Answer the following questions using the information below:
Zephyr Apparels is a clothing retailer. Unit costs associated with one of its products, Product DCT121, are as follows:
 $\begin{array}{lr}
\text { Direct materials } & \$ 70 \
\text { Direct manufacturing labor } & 20 \
\text { Variable manufacturing overhead } & 15 \
\text { Fixed manufacturing overhead } & 32 \
\text { Sales commissions (2\% of sales) } & 5 \
\text { Administrative salaries } & 16 \
\quad \text { Total } & \$ 158
\end{array}$
-What are the period costs per unit associated with Product DCT121?

Accepted Answer

A)  $4 
B)  $16 
C)  $21 
D)  $52 
A)  $4 
B)  $16 
C)  $21 
D)  $52

Question 4

A company reported revenues of $375,000,cost of goods sold of $118,000,selling expenses of $11,000,and total operating costs of $70,000.Gross margin for the year is ________.

Accepted Answer

A)  $257,000 
B)  $246,000 
C)  $176,000 
D)  $252,000 
A)  $257,000 
B)  $246,000 
C)  $176,000 
D)  $252,000

Question 5

Cost accumulation is ________.

Accepted Answer

A)  the collection of cost data in some organized way by means of an accounting system 
B)  anything for which a cost measurement is desired 
C)  anything for which a profit measurement is desired 
D)  the collection of profit data in some organized way by means of an accounting system 
A)  the collection of cost data in some organized way by means of an accounting system 
B)  anything for which a cost measurement is desired 
C)  anything for which a profit measurement is desired 
D)  the collection of profit data in some organized way by means of an accounting system

Question 6

Product costs for financial statements may refer to ________.

Accepted Answer

A)  inventoriable costs for external reporting purposes 
B)  exchange cost incurred during transportation 
C)  only the costs incurred along the supply chain 
D)  opportunity costs incurred for the decisions forgone 
A)  inventoriable costs for external reporting purposes 
B)  exchange cost incurred during transportation 
C)  only the costs incurred along the supply chain 
D)  opportunity costs incurred for the decisions forgone

Question 7

If a worker is paid for 40 hours,but is idle for 5 of those 40 hours,the 5 hour of idle time would be considered a component of direct labor.

Accepted Answer

A) True 
 B)False

Question 8

Classifying a cost as either direct or indirect depends upon ________.

Accepted Answer

A)  the behavior of the cost in response to volume changes 
B)  whether the cost is expensed in the period in which it is incurred 
C)  whether the cost can be easily traced with the cost object 
D)  whether a cost is fixed or variable 
A)  the behavior of the cost in response to volume changes 
B)  whether the cost is expensed in the period in which it is incurred 
C)  whether the cost can be easily traced with the cost object 
D)  whether a cost is fixed or variable

Question 9

Which of the following is true if the volume of sales increases?

Accepted Answer

A)  fixed cost increases 
B)  variable cost decreases 
C)  variable cost increases 
D)  fixed cost decreases 
A)  fixed cost increases 
B)  variable cost decreases 
C)  variable cost increases 
D)  fixed cost decreases

Question 10

Indirect manufacturing costs ________.

Accepted Answer

A)  can be traced to the product that created the costs 
B)  can be easily identified with the cost object 
C)  generally include the cost of material and the cost of labor 
D)  may include both variable and fixed costs 
A)  can be traced to the product that created the costs 
B)  can be easily identified with the cost object 
C)  generally include the cost of material and the cost of labor 
D)  may include both variable and fixed costs

Question 11

Which of the following is included in product cost for pricing and product-mix decisions?

Accepted Answer

A)  design costs 
B)  sunk costs 
C)  opportunity costs 
D)  cost of capital 
A)  design costs 
B)  sunk costs 
C)  opportunity costs 
D)  cost of capital

Question 12

For a manufacturing company,indirect manufacturing costs may be included in ________.

Accepted Answer

A)  direct materials inventory only 
B)  merchandise inventory only 
C)  both work-in-process inventory and finished goods inventory 
D)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts 
A)  direct materials inventory only 
B)  merchandise inventory only 
C)  both work-in-process inventory and finished goods inventory 
D)  direct materials inventory, work-in-process inventory, and finished goods inventory accounts

Question 13

Debated items that some companies include as direct manufacturing labor include ________.

Accepted Answer

A)  fringe benefits 
B)  overtime 
C)  idle time 
D)  plant supervisor's salary 
A)  fringe benefits 
B)  overtime 
C)  idle time 
D)  plant supervisor's salary

Question 14

Product costs used for government contracts generally include ________.

Accepted Answer

A)  marketing costs, and customer service costs 
B)  design costs and production costs 
C)  all the costs for pricing and product-mix decisions 
D)  production costs, distribution costs, marketing costs, and customer service costs 
A)  marketing costs, and customer service costs 
B)  design costs and production costs 
C)  all the costs for pricing and product-mix decisions 
D)  production costs, distribution costs, marketing costs, and customer service costs

Question 15

Conversion costs include all direct manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 16

Fixed cost per unit reduces with an increase in production volume.

Accepted Answer

A) True 
 B)False

Question 17

Answer the following questions using the information below:
Leslie Manufacturing reported the following:
 $$\begin{array} { | l | r | } 
\hline\text { Revenue } & \$ 450,000 \
\hline \text { Beginning inventory of direct materials, January 1, 2015 } & 20,000 \
\hline \text { Purchases of direct materials } & 156,000 \
\hline \text { Ending inventory of direct materials, December 31, 2015 } & 18,000 \
\hline \text { Direct manufacturing labor } & 21,000 \
\hline \text { Indirect manufacturing costs } & 42,000 \
\hline \text { Beginning inventory of finished goods, January 1, 2015 } & 40,000 \
\hline \text { Cost of goods manufactured } & 114,000 \
\hline \text { Ending inventory of finished goods, December 31, 2015 } & 45,000 \
\hline \text { Operating costs } & 150,000 \
\hline
\end{array}$$
-What is Leslie's cost of goods sold?

Accepted Answer

A)  $103,000 
B)  $109,000 
C)  $112,000 
D)  $118,000 
A)  $103,000 
B)  $109,000 
C)  $112,000 
D)  $118,000

Question 18

A unit cost is computed by ________.

Accepted Answer

A)  multiplying total cost by the number of units produced 
B)  dividing total cost by the number of units produced 
C)  dividing variable cost by the number of units produced 
D)  dividing fixed cost by the number of units produced 
A)  multiplying total cost by the number of units produced 
B)  dividing total cost by the number of units produced 
C)  dividing variable cost by the number of units produced 
D)  dividing fixed cost by the number of units produced

Question 19

A direct cost of one cost object can be an indirect cost of another cost object.

Accepted Answer

A) True 
 B)False

Question 20

When 20,000 units are produced,fixed costs are $16 per unit.Therefore,when 16,000 units are produced,fixed costs will ________.

Accepted Answer

A)  increase to $20 per unit 
B)  remain at $16 per unit 
C)  decrease to $10 per unit 
D)  total $160,000 
A)  increase to $20 per unit 
B)  remain at $16 per unit 
C)  decrease to $10 per unit 
D)  total $160,000

Exam 2: An Introduction to Cost Terms and Purposes

Inventoriable costs are costs of a product that are ________.

Under GAAP,for the purposes of calculating inventory costs,product costs include ________.

A company reported revenues of $375,000,cost of goods sold of $118,000,selling expenses of $11,000,and total operating costs of $70,000.Gross margin for the year is ________.

Cost accumulation is ________.

Product costs for financial statements may refer to ________.

If a worker is paid for 40 hours,but is idle for 5 of those 40 hours,the 5 hour of idle time would be considered a component of direct labor.

Classifying a cost as either direct or indirect depends upon ________.

Which of the following is true if the volume of sales increases?

Indirect manufacturing costs ________.

Which of the following is included in product cost for pricing and product-mix decisions?

For a manufacturing company,indirect manufacturing costs may be included in ________.

Debated items that some companies include as direct manufacturing labor include ________.

Product costs used for government contracts generally include ________.

Conversion costs include all direct manufacturing costs.

Fixed cost per unit reduces with an increase in production volume.

A unit cost is computed by ________.

A direct cost of one cost object can be an indirect cost of another cost object.

When 20,000 units are produced,fixed costs are $16 per unit.Therefore,when 16,000 units are produced,fixed costs will ________.

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

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