Question 1

Which of the following is an activity that causes changes in the amount of a cost pool?

Accepted Answer

A)  Cost element 
B)  Cost function 
C)  Cost driver 
D)  Cost allocation 
A)  Cost element 
B)  Cost function 
C)  Cost driver 
D)  Cost allocation

Question 2

Which of the following account balances is not reported on the balance sheet?

Accepted Answer

A)  Materials Inventory 
B)  Manufacturing Patents 
C)  Cost of Goods Sold 
D)  Work in Process Inventory 
A)  Materials Inventory 
B)  Manufacturing Patents 
C)  Cost of Goods Sold 
D)  Work in Process Inventory

Question 3

Cost of Goods Sold is decreased for underapplied overhead.

Accepted Answer

A) True 
 B)False

Question 4

Total manufacturing costs are equal to

Accepted Answer

A)  Direct Materials + Direct Labor + Selling Costs. 
B)  Direct Materials + Direct Labor + Overhead. 
C)  Direct Labor + Overhead + Selling Costs + Administrative Costs. 
D)  Product Costs + Period Costs. 
A)  Direct Materials + Direct Labor + Selling Costs. 
B)  Direct Materials + Direct Labor + Overhead. 
C)  Direct Labor + Overhead + Selling Costs + Administrative Costs. 
D)  Product Costs + Period Costs.

Question 5

Direct materials,direct labor,and overhead costs will most likely become part of the Cost of Goods Sold account balance in case of manufacturing companies.

Accepted Answer

A) True 
 B)False

Question 6

Conversion costs consist of

Accepted Answer

A)  direct materials and direct labor. 
B)  direct labor and overhead. 
C)  direct materials and overhead. 
D)  direct labor and indirect labor. 
A)  direct materials and direct labor. 
B)  direct labor and overhead. 
C)  direct materials and overhead. 
D)  direct labor and indirect labor.

Question 7

Fill in the missing data for Company B:
 $\begin{array}{|l|r|}
\hline&\text { Company B }\
\hline \text { Direct materials used } & \$ 9,000 \
\hline \text { Direct labor cost } & 4,000 \
\hline \text { Overhead } & \text { (a) } \
\hline \text { Total manufacturing costs } & 25,000 \
\hline \text { Work in process inventory, Jan. 1 } & 1,000 \
\hline \text { Work in process inventory, Dec. } 31 & 3,500 \
\hline \text { Sales revenue } & 40,000\
\hline \text { Finished goods inventory, Jan. } 1 & \text { (b) } \
\hline \text { Cost of goods manufactured } & \text { (c) } \
\hline \text { Cost of goods available for sale } & \text { (d) } \
\hline \text { Finished goods inventory, Dec. } 31 & 4,000 \
\hline \text { Cost of goods sold } & 26.500\
\hline \text { Gross margin } & \text { (e) } \
\hline \text { Operating expenses } & \text { (f) } \
\hline \text { Net operating income } &5,500\
\hline
\end{array}$

Accepted Answer

a.$12,000
b.$8,000
c

Question 8

Which of the following is not an example of indirect materials?

Accepted Answer

A)  Wood in a desk 
B)  Nails in a desk 
C)  Screws in a desk 
D)  Lubricants for machinery 
A)  Wood in a desk 
B)  Nails in a desk 
C)  Screws in a desk 
D)  Lubricants for machinery

Question 9

Job 29 consists of 300 units and has total manufacturing costs of direct materials,$4,500; direct labor,$7,500; and overhead,$3,600.
a. What is the unit product cost?
b. What are the prime costs per unit?
c. What are the conversion costs per unit?

Accepted Answer

a.($4,500 + $7,500 + $3,600)/ 300 units

Question 10

The costs of materials used in production are transferred from the Materials Inventory account directly to the Finished Goods Inventory account.

Accepted Answer

A) True 
 B)False

Question 11

Direct labor is a fixed cost because it always occurs.

Accepted Answer

A) True 
 B)False

Question 12

Sleney Company applies overhead on the basis of direct labor dollars,using a rate of $1.65 per labor dollar.How much overhead would be applied to products in January if $18,600 of labor costs were incurred and 2,200 labor hours were worked?

Accepted Answer

A)  $40,920 
B)  $30,690 
C)  $3,630 
D)  $18,600 
A)  $40,920 
B)  $30,690 
C)  $3,630 
D)  $18,600

Question 13

A cost driver is a cost pool that increases with activity.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a reason to classify costs as either product or period costs?

Accepted Answer

A)  To determine unit manufacturing costs 
B)  To determine if the costs are fixed or variable 
C)  To analyze costs for control purposes 
D)  To report production costs on the income statement 
A)  To determine unit manufacturing costs 
B)  To determine if the costs are fixed or variable 
C)  To analyze costs for control purposes 
D)  To report production costs on the income statement

Question 15

Period costs are not considered when costing products for inventory.

Accepted Answer

A) True 
 B)False

Question 16

Cost of goods manufactured appears on the income statement of a manufacturing company in a similar manner as purchases appear on the income statement of a merchandising company.

Accepted Answer

A) True 
 B)False

Question 17

Overhead costs are not

Accepted Answer

A)  allocated to the Work in Process Inventory account. 
B)  charged directly to the Finished Goods Inventory account. 
C)  assigned to specific products. 
D)  considered product costs. 
A)  allocated to the Work in Process Inventory account. 
B)  charged directly to the Finished Goods Inventory account. 
C)  assigned to specific products. 
D)  considered product costs.

Question 18

The following are costs for a selected period: direct materials put into production,$94,000; direct labor cost of converting materials into product,$200,000; total indirect costs of manufacturing the product,$40,000.What is the per unit cost of manufacturing 20,000 units in this period?

Accepted Answer

A)  $4.70 
B)  $16.70 
C)  $8.70 
D)  $12.70 
A)  $4.70 
B)  $16.70 
C)  $8.70 
D)  $12.70

Question 19

Sugar is an indirect cost in the manufacture of candy.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not included in the purchase cost of merchandise inventory?

Accepted Answer

A)  Purchase discounts 
B)  Overhead costs 
C)  Freight-in costs 
D)  Purchase returns and allowances 
A)  Purchase discounts 
B)  Overhead costs 
C)  Freight-in costs 
D)  Purchase returns and allowances

Exam 16: Cost Concepts and Cost Allocation

Which of the following is an activity that causes changes in the amount of a cost pool?

Which of the following account balances is not reported on the balance sheet?

Cost of Goods Sold is decreased for underapplied overhead.

Total manufacturing costs are equal to

Direct materials,direct labor,and overhead costs will most likely become part of the Cost of Goods Sold account balance in case of manufacturing companies.

Conversion costs consist of

Which of the following is not an example of indirect materials?

Job 29 consists of 300 units and has total manufacturing costs of direct materials,$4,500; direct labor,$7,500; and overhead,$3,600. a. What is the unit product cost? b. What are the prime costs per unit? c. What are the conversion costs per unit?

The costs of materials used in production are transferred from the Materials Inventory account directly to the Finished Goods Inventory account.

Direct labor is a fixed cost because it always occurs.

Sleney Company applies overhead on the basis of direct labor dollars,using a rate of $1.65 per labor dollar.How much overhead would be applied to products in January if $18,600 of labor costs were incurred and 2,200 labor hours were worked?

A cost driver is a cost pool that increases with activity.

Which of the following is not a reason to classify costs as either product or period costs?

Period costs are not considered when costing products for inventory.

Cost of goods manufactured appears on the income statement of a manufacturing company in a similar manner as purchases appear on the income statement of a merchandising company.

Overhead costs are not

The following are costs for a selected period: direct materials put into production,$94,000; direct labor cost of converting materials into product,$200,000; total indirect costs of manufacturing the product,$40,000.What is the per unit cost of manufacturing 20,000 units in this period?

Sugar is an indirect cost in the manufacture of candy.

Which of the following is not included in the purchase cost of merchandise inventory?

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Contributed Capital

Investments

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

The Changing Business Environment - a Managers Perspective

Costing Systems- Job Order Costing

Costing Systems- Process Costing

Value-Based Systems- Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

Pricing Decisions,incltarget Costing and Transfer Pricing

Quality Management and Measurement

Financial Analysis of Performance

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