Question 1

Which of the following is a fixed cost for an automobile manufacturing plant?

Accepted Answer

A) administrative salaries 
B) electricity used by assembly-line machines 
C) sales commissions 
D) tires 
A) administrative salaries 
B) electricity used by assembly-line machines 
C) sales commissions 
D) tires

Question 2

The smaller the amount of a cost the more likely it is economically feasible to trace it to a particular cost object.

Accepted Answer

A) True 
 B)False

Question 3

Indirect manufacturing costs are also referred to as manufacturing overhead costs or factory overhead costs.

Accepted Answer

A) True 
 B)False

Question 4

Idle time wages consists of the wages paid to all workers (for both direct labor and indirect labor)in excess of their straight-time wage rates.

Accepted Answer

A) True 
 B)False

Question 5

A fixed cost is fixed only in relation to a given wide range of total activity or volume and only for a given
time span,usually a particular budget period.

Accepted Answer

A) True 
 B)False

Question 6

________ sector companies purchase materials and components and convert them into finished goods.

Accepted Answer

A) Merchandising 
B) Service 
C) Manufacturing 
D) Professional 
A) Merchandising 
B) Service 
C) Manufacturing 
D) Professional

Question 7

A cost driver is a variable,such as the level of activity or volume that causally affects costs over a given time span.

Accepted Answer

A) True 
 B)False

Question 8

Conversion costs include ________.

Accepted Answer

A) direct materials and direct manufacturing labor costs 
B) direct manufacturing labor and manufacturing overhead costs 
C) direct materials and manufacturing overhead costs 
D) only direct materials 
A) direct materials and direct manufacturing labor costs 
B) direct manufacturing labor and manufacturing overhead costs 
C) direct materials and manufacturing overhead costs 
D) only direct materials

Question 9

All manufacturing costs are period costs.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following factors affect the direct/indirect classification of a cost?

Accepted Answer

A) the level of budgeted profit for the next year 
B) the estimation of time required to complete the order 
C) the ability to execute an order in the most cost-efficient manner 
D) the design where a particular area is dedicated to a specific cost object 
A) the level of budgeted profit for the next year 
B) the estimation of time required to complete the order 
C) the ability to execute an order in the most cost-efficient manner 
D) the design where a particular area is dedicated to a specific cost object

Question 11

Merchandising companies purchase products and sell them to customers without changing their basic form.

Accepted Answer

A) True 
 B)False

Question 12

The most likely cost driver of direct labor costs is the ________.

Accepted Answer

A) number of machine setups for the product 
B) number of miles driven 
C) number of production hours 
D) number of machine hours 
A) number of machine setups for the product 
B) number of miles driven 
C) number of production hours 
D) number of machine hours

Question 13

Merchandising-sectors ________.

Accepted Answer

A) purchase and then sell tangible products without changing their basic form 
B) provide intangible products 
C) purchase materials and components and convert them into finished goods 
D) purchase and then sell tangible products by changing their basic form 
A) purchase and then sell tangible products without changing their basic form 
B) provide intangible products 
C) purchase materials and components and convert them into finished goods 
D) purchase and then sell tangible products by changing their basic form

Question 14

A company is considering buying a product at $15 per unit,the in-house manufacturing of the same product is $17.The fixed cost per unit is $3 is included in the $17 in-house product manufacturing cost.What should the company do in this scenario?

Accepted Answer

If the company purchases the product fro

Question 15

Which of the following statements is true?

Accepted Answer

A) Product costs and design costs are interchangeable terms. 
B) Inventoriable costs are assigned to inventories under GAAP. 
C) Manufacturing costs are a special case of period costs. 
D) Intangible costs refer to a particular cost of a product. 
A) Product costs and design costs are interchangeable terms. 
B) Inventoriable costs are assigned to inventories under GAAP. 
C) Manufacturing costs are a special case of period costs. 
D) Intangible costs refer to a particular cost of a product.

Question 16

Costs that are initially recorded as assets and expensed when goods sold are called ________.

Accepted Answer

A) period costs 
B) inventoriable costs 
C) irrelevant costs 
D) research and development costs 
A) period costs 
B) inventoriable costs 
C) irrelevant costs 
D) research and development costs

Question 17

Period costs ________.

Accepted Answer

A) are treated as expenses in the period they are incurred 
B) are directly traceable to products 
C) are treated as expenses in the following period they are incurred 
D) are also referred to as manufacturing overhead costs 
A) are treated as expenses in the period they are incurred 
B) are directly traceable to products 
C) are treated as expenses in the following period they are incurred 
D) are also referred to as manufacturing overhead costs

Question 18

The collection of cost data in an organized way,such as in various categories such as materials,labor,and manufacturing overhead,is called:

Accepted Answer

A) cost application 
B) cost accumulation 
C) cost assignment 
D) cost reporting 
A) cost application 
B) cost accumulation 
C) cost assignment 
D) cost reporting

Question 19

Improvements in information-gathering technologies are making it possible to trace more costs as direct.

Accepted Answer

A) True 
 B)False

Question 20

In the manufacturing plant,Alex is paid $40 an hour for straight-time and $60 an hour for overtime.One week she worked 54 hours,which included 8 hours of overtime,and 6 hours of idle time caused by material shortages.
Required:
a.What is Alex's total compensation for the week?
b.What amount of compensation would be reported as direct manufacturing labor?
c.What amount of compensation would be reported as manufacturing overhead?

Accepted Answer

a.Total compensation (48 hours × $40)+ I

Exam 2: An Introduction to Cost Terms and Purposes

Which of the following is a fixed cost for an automobile manufacturing plant?

The smaller the amount of a cost the more likely it is economically feasible to trace it to a particular cost object.

Indirect manufacturing costs are also referred to as manufacturing overhead costs or factory overhead costs.

Idle time wages consists of the wages paid to all workers (for both direct labor and indirect labor)in excess of their straight-time wage rates.

A fixed cost is fixed only in relation to a given wide range of total activity or volume and only for a given time span,usually a particular budget period.

________ sector companies purchase materials and components and convert them into finished goods.

A cost driver is a variable,such as the level of activity or volume that causally affects costs over a given time span.

Conversion costs include ________.

All manufacturing costs are period costs.

Which of the following factors affect the direct/indirect classification of a cost?

Merchandising companies purchase products and sell them to customers without changing their basic form.

The most likely cost driver of direct labor costs is the ________.

Merchandising-sectors ________.

A company is considering buying a product at $15 per unit,the in-house manufacturing of the same product is $17.The fixed cost per unit is $3 is included in the $17 in-house product manufacturing cost.What should the company do in this scenario?

Which of the following statements is true?

Costs that are initially recorded as assets and expensed when goods sold are called ________.

Period costs ________.

The collection of cost data in an organized way,such as in various categories such as materials,labor,and manufacturing overhead,is called:

Improvements in information-gathering technologies are making it possible to trace more costs as direct.

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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