Question 1

Manufacturing sector firms normally hold three types of inventory: direct materials inventory,work-in-process inventory,and finished goods inventory.

Accepted Answer

A) True 
 B)False

Question 2

What is the gross margin for 2018?

Accepted Answer

A) $135,000 
B) $46,000 
C) $163,000 
D) $149,000 
A) $135,000 
B) $46,000 
C) $163,000 
D) $149,000

Question 3

Which of the following statements is true of direct costs?

Accepted Answer

A) A direct cost of one cost object is a true sense of the budgeted costs. 
B) All variable costs are direct costs. 
C) A direct cost of one cost object can be an indirect cost of another cost object. 
D) All fixed costs are direct costs. 
A) A direct cost of one cost object is a true sense of the budgeted costs. 
B) All variable costs are direct costs. 
C) A direct cost of one cost object can be an indirect cost of another cost object. 
D) All fixed costs are direct costs.

Question 4

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 5

Pederson Company reported the following:
 
What is the average manufacturing cost per unit? (Round the answer to the nearest dollar. )

Accepted Answer

A) $48.00 
B) $80.00 
C) $60.00 
D) $64.00 
A) $48.00 
B) $80.00 
C) $60.00 
D) $64.00

Question 6

Which of the following is true if the production volume decreases?

Accepted Answer

A) fixed cost per unit increases 
B) average cost per unit decreases 
C) variable cost per unit increases 
D) variable cost per unit decreases 
A) fixed cost per unit increases 
B) average cost per unit decreases 
C) variable cost per unit increases 
D) variable cost per unit decreases

Question 7

A direct cost of one cost object cannot be an indirect cost of another cost object.

Accepted Answer

A) True 
 B)False

Question 8

A common classification of costs is by business function.Which of the following classifications is not by business function?

Accepted Answer

A) cost object 
B) research and development 
C) distribution 
D) production 
A) cost object 
B) research and development 
C) distribution 
D) production

Question 9

Indirect manufacturing costs such as rent,factory supervisor salary,and depreciation on production equipment are always costs of the period in which they are
incurred and are not associated with inventories.

Accepted Answer

A) True 
 B)False

Question 10

When costs can be traced to a particular cost object in an economically feasible way,the cost is a:

Accepted Answer

A) direct cost 
B) indirect cost 
C) allocated cost 
D) budgeted cost 
A) direct cost 
B) indirect cost 
C) allocated cost 
D) budgeted cost

Question 11

In the cost classification system used by manufacturing firms,assembly workers' wages would be included in ________.

Accepted Answer

A) irrelevant cost 
B) direct manufacturing costs 
C) indirect manufacturing costs 
D) period cost 
A) irrelevant cost 
B) direct manufacturing costs 
C) indirect manufacturing costs 
D) period cost

Question 12

Since budgeting is a financial function and mostly an analytical and quantitative exercise,it generally has no impact on human behavior,motivation and decision making.

Accepted Answer

A) True 
 B)False

Question 13

Pederson Company reported the following:
 
What is the amount of gross profit margin?

Accepted Answer

A) $1,750,000 
B) $3,150,000 
C) $4,725,000 
D) $1,575,000 
A) $1,750,000 
B) $3,150,000 
C) $4,725,000 
D) $1,575,000

Question 14

A unit cost is computed by dividing total cost by the number of units.

Accepted Answer

A) True 
 B)False

Question 15

Cost behavior refers to ________.

Accepted Answer

A) how costs react to a change in the level of activity 
B) whether a cost is incurred in a manufacturing,merchandising,or service company 
C) classifying costs as either perpetual or period costs 
D) whether a particular expense is expensed in the same or the following period 
A) how costs react to a change in the level of activity 
B) whether a cost is incurred in a manufacturing,merchandising,or service company 
C) classifying costs as either perpetual or period costs 
D) whether a particular expense is expensed in the same or the following period

Question 16

When should an overtime premium of direct manufacturing labor be considered an indirect manufacturing cost? A direct manufacturing cost?

Accepted Answer

The overtime premium of direct manufactu

Question 17

For merchandising companies,inventoriable costs include ________.

Accepted Answer

A) selling expenses 
B) shipping (incoming)costs to acquire merchandise 
C) distribution costs 
D) outgoing freight and handling costs 
A) selling expenses 
B) shipping (incoming)costs to acquire merchandise 
C) distribution costs 
D) outgoing freight and handling costs

Question 18

Describe both variable and fixed costs.Explain why the distinction between variable and fixed costs is important in cost accounting.

Accepted Answer

Total variable costs increase with incre

Question 19

Which of the following is a manufacturing overhead cost?

Accepted Answer

A) the use of direct materials in the making of a finished good 
B) labor cost of plant workers that can be traced accurately and easily to a particular product 
C) cost of materials that can be traced to individual products in an economically feasible manner 
D) overtime premiums paid to plant workers 
A) the use of direct materials in the making of a finished good 
B) labor cost of plant workers that can be traced accurately and easily to a particular product 
C) cost of materials that can be traced to individual products in an economically feasible manner 
D) overtime premiums paid to plant workers

Question 20

Atlas Manufacturing produces a unique valve,and has the capacity to produce 50,000 valves annually.Currently Atlas produces 40,000 valves and is thinking about increasing production to 45,000 valves next year.What is the most likely behavior of total manufacturing costs and unit manufacturing costs given this change?

Accepted Answer

A) Total manufacturing costs will increase and unit manufacturing costs will stay the same. 
B) Total manufacturing costs will increase and unit manufacturing costs will decrease. 
C) Total manufacturing costs will stay the same and unit manufacturing costs will stay the same. 
D) Total manufacturing costs will increase and unit manufacturing costs will also increase. 
A) Total manufacturing costs will increase and unit manufacturing costs will stay the same. 
B) Total manufacturing costs will increase and unit manufacturing costs will decrease. 
C) Total manufacturing costs will stay the same and unit manufacturing costs will stay the same. 
D) Total manufacturing costs will increase and unit manufacturing costs will also increase.

Exam 2: An Introduction to Cost Terms and Purposes

Manufacturing sector firms normally hold three types of inventory: direct materials inventory,work-in-process inventory,and finished goods inventory.

What is the gross margin for 2018?

Which of the following statements is true of direct costs?

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

Pederson Company reported the following: What is the average manufacturing cost per unit? (Round the answer to the nearest dollar. )

Which of the following is true if the production volume decreases?

A direct cost of one cost object cannot be an indirect cost of another cost object.

A common classification of costs is by business function.Which of the following classifications is not by business function?

Indirect manufacturing costs such as rent,factory supervisor salary,and depreciation on production equipment are always costs of the period in which they are incurred and are not associated with inventories.

When costs can be traced to a particular cost object in an economically feasible way,the cost is a:

In the cost classification system used by manufacturing firms,assembly workers' wages would be included in ________.

Since budgeting is a financial function and mostly an analytical and quantitative exercise,it generally has no impact on human behavior,motivation and decision making.

Pederson Company reported the following: What is the amount of gross profit margin?

A unit cost is computed by dividing total cost by the number of units.

Cost behavior refers to ________.

When should an overtime premium of direct manufacturing labor be considered an indirect manufacturing cost? A direct manufacturing cost?

For merchandising companies,inventoriable costs include ________.

Describe both variable and fixed costs.Explain why the distinction between variable and fixed costs is important in cost accounting.

Which of the following is a manufacturing overhead cost?

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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