Question 1

Which of the following statements is(are) correct?

Accepted Answer

A)  Overtime premiums should be treated as a component of manufacturing overhead. 
B)  Overtime premiums should be treated as a component of direct labor. 
C)  Idle time should be treated as a component of direct labor. 
D)  Idle time should be accounted for as a special type of loss. 
E)  Overtime premiums should be treated as a component of direct labor and idle time should be treated as a component of direct labor. 
A)  Overtime premiums should be treated as a component of manufacturing overhead. 
B)  Overtime premiums should be treated as a component of direct labor. 
C)  Idle time should be treated as a component of direct labor. 
D)  Idle time should be accounted for as a special type of loss. 
E)  Overtime premiums should be treated as a component of direct labor and idle time should be treated as a component of direct labor. A

Question 2

The following selected information was extracted from the 20x3 accounting records of Medina Products $$\begin{array} { l r } 
\text { Raw materials used } & \$ 284,000 \
\text { Direct labor } & 178,000 \
\text { Indirect labor } & 35,000 \
\text { Selling and administrative salaries } & 250,000 \
\text { Building depreciation* } & 330,000 \
\text { Other selling and administrative expenses } & 80,000 \
\text { Other factory costs } & 620,000
\end{array}$$ 
*Seventy percent of the company's building was devoted to production activities; the remaining 30% was used for selling and administrative functions.
Medina's beginning and ending work-in-process inventories amounted to $306,000 and $245,000, respectively. The company's beginning and ending finished-goods inventories were $450,000 and $440,000, respectively.
Required: 
A. Calculate Medina's manufacturing overhead for the year.
B. Calculate Medina's cost of goods manufactured.
C. Compute Medina's cost of goods sold.

Accepted Answer

The answer of The following selected information was extracted from...

Question 3

Variable costs are costs that:

Accepted Answer

A)  vary inversely with changes in activity. 
B)  vary directly with changes in activity. 
C)  remain constant as activity changes. 
D)  decrease on a per-unit basis as activity increases. 
E)  increase on a per-unit basis as activity increases. 
A)  vary inversely with changes in activity. 
B)  vary directly with changes in activity. 
C)  remain constant as activity changes. 
D)  decrease on a per-unit basis as activity increases. 
E)  increase on a per-unit basis as activity increases. B

Question 4

Finished goods inventory is ordinarily held for sale by a manufacturing company.

Accepted Answer

A) True 
 B)False

Question 5

Selling and administrative expenses would likely appear on the balance sheet of:

Accepted Answer

A)  The Gap. 
B)  Texas Instruments. 
C)  Turner Broadcasting System. 
D)  All of these firms. 
E)  None of these firms. 
A)  The Gap. 
B)  Texas Instruments. 
C)  Turner Broadcasting System. 
D)  All of these firms. 
E)  None of these firms.

Question 6

Which type of production process is ideal for a low production volume and one of a kind products?

Accepted Answer

A)  Batch. 
B)  Continuous Flow. 
C)  Job Shop. 
D)  Assembly. 
A)  Batch. 
B)  Continuous Flow. 
C)  Job Shop. 
D)  Assembly.

Question 7

Which of the following is not a period cost?

Accepted Answer

A)  Legal costs. 
B)  Public relations costs. 
C)  Sales commissions. 
D)  Wages of assembly-line workers. 
E)  The salary of a company's chief financial officer (CFO). 
A)  Legal costs. 
B)  Public relations costs. 
C)  Sales commissions. 
D)  Wages of assembly-line workers. 
E)  The salary of a company's chief financial officer (CFO).

Question 8

Prime costs are comprised of:

Accepted Answer

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

Question 9

The choices below depict five costs of Benton Corporation and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver?

Accepted Answer

A)  Gasoline consumed; number of miles driven. 
B)  Manufacturing overhead incurred in a heavily automated facility; direct labor hours. 
C)  Sales commissions; gross sales revenue. 
D)  Building maintenance cost; building square footage. 
E)  Human resources department cost; number of employees. 
A)  Gasoline consumed; number of miles driven. 
B)  Manufacturing overhead incurred in a heavily automated facility; direct labor hours. 
C)  Sales commissions; gross sales revenue. 
D)  Building maintenance cost; building square footage. 
E)  Human resources department cost; number of employees.

Question 10

Product costs are:

Accepted Answer

A)  expensed when incurred. 
B)  inventoried. 
C)  treated in the same manner as period costs. 
D)  treated in the same manner as advertising costs. 
E)  subtracted from cost of goods sold. 
A)  expensed when incurred. 
B)  inventoried. 
C)  treated in the same manner as period costs. 
D)  treated in the same manner as advertising costs. 
E)  subtracted from cost of goods sold.

Question 11

Hamilton Company had the following inventory balances at the beginning and end of the year: $$\begin{array} { l c c } 
&\text { January 1 }  & \text { December 31 } \
\text { Raw material } & \$ 50,000 & \$ 35,000 \
\text { Work in process } & 130,000 & 170,000 \
\text { Finished goods } & 280,000 & 255,000
\end{array}$$ 
During the year, the company purchased $100,000 of raw material and incurred $340,000 of direct labor costs. Other data: manufacturing overhead incurred, $450,000; sales, $1,560,000; selling and administrative expenses, $90,000; income tax rate, 30%.
Required: 
A. Calculate cost of goods manufactured.
B. Calculate cost of goods sold.
C. Determine Hamilton's net income.

Accepted Answer

The answer of Hamilton Company had the following inventory balances...

Question 12

Pumpkin Enterprises began operations on January 1, 20x1, with all of its activities conducted from a single facility. The company's accountant concluded that the year's building depreciation should be allocated as follows: selling activities, 20%; administrative activities, 35%; and manufacturing activities, 45%. If Pumpkin sold 60% of 20x1 production during that year, what percentage of the depreciation would appear (either directly or indirectly) on the 20x1 income statement?

Accepted Answer

A)  27%. 
B)  45%. 
C)  55%. 
D)  82%. 
E)  100%. 
A)  27%. 
B)  45%. 
C)  55%. 
D)  82%. 
E)  100%.

Question 13

Lake Appliance produces washers and dryers in an assembly-line process. Labor costs incurred during a recent period were: corporate executives, $500,000; assembly-line workers, $180,000; security guards, $45,000; and plant supervisor, $110,000. The total of Lake's direct labor cost was:

Accepted Answer

A)  $110,000. 
B)  $180,000. 
C)  $155,000. 
D)  $235,000. 
E)  $735,000. 
A)  $110,000. 
B)  $180,000. 
C)  $155,000. 
D)  $235,000. 
E)  $735,000.

Question 14

Which of the following equations is used to calculate cost of goods sold during the period?

Accepted Answer

A)  Beginning finished goods + cost of goods manufactured + ending finished goods. 
B)  Beginning finished goods - ending finished goods. 
C)  Beginning finished goods + cost of goods manufactured. 
D)  Beginning finished goods + cost of goods manufactured - ending finished goods. 
E)  Beginning finished goods + ending finished goods - cost of goods manufactured. 
A)  Beginning finished goods + cost of goods manufactured + ending finished goods. 
B)  Beginning finished goods - ending finished goods. 
C)  Beginning finished goods + cost of goods manufactured. 
D)  Beginning finished goods + cost of goods manufactured - ending finished goods. 
E)  Beginning finished goods + ending finished goods - cost of goods manufactured.

Question 15

The variable costs per unit are $6 when a company produces 12,000 units of product. What are the variable costs per unit when 14,000 units are produced?

Accepted Answer

A)  $4.50. 
B)  $5.00. 
C)  $5.50. 
D)  $6.00. 
E)  None of the other answers are correct. 
A)  $4.50. 
B)  $5.00. 
C)  $5.50. 
D)  $6.00. 
E)  None of the other answers are correct.

Question 16

The accounting records of Brownwood Company revealed the following information: $$\begin{array} { l r } 
\text { Work-in-process inventory, Jan. 1 } & \$ 58,000 \
\text { Work-in-process inventory, Dec. } 31 & 49,000 \
\text { Finished-goods inventory, Jan. 1 } & 125,000 \
\text { Finished-goods inventory, Dec. } 31 & 158,000 \
\text { Cost of goods manufactured } & 754,000
\end{array}$$ Brownwood's cost of goods sold is:

Accepted Answer

A)  $721,000. 
B)  $730,000. 
C)  $778,000. 
D)  $787,000. 
E)  None of the other answers are correct. 
A)  $721,000. 
B)  $730,000. 
C)  $778,000. 
D)  $787,000. 
E)  None of the other answers are correct.

Question 17

Costs that can be easily traced to a specific department are called:

Accepted Answer

A)  direct costs. 
B)  indirect costs. 
C)  product costs. 
D)  manufacturing costs. 
E)  processing costs. 
A)  direct costs. 
B)  indirect costs. 
C)  product costs. 
D)  manufacturing costs. 
E)  processing costs.

Question 18

Which of the following statements is true?

Accepted Answer

A)  The word "cost" has the same meaning in all situations in which it is used. 
B)  Cost data, once classified and recorded for a specific application, are appropriate for use in any application. 
C)  Different cost concepts and classifications are used for different purposes. 
D)  All organizations incur the same types of costs. 
E)  Costs incurred in one year are always meaningful in the following year. 
A)  The word "cost" has the same meaning in all situations in which it is used. 
B)  Cost data, once classified and recorded for a specific application, are appropriate for use in any application. 
C)  Different cost concepts and classifications are used for different purposes. 
D)  All organizations incur the same types of costs. 
E)  Costs incurred in one year are always meaningful in the following year.

Question 19

The fixed cost per unit:

Accepted Answer

A)  will increase as activity increases. 
B)  will increase as activity decreases. 
C)  will decrease as activity increases. 
D)  will remain constant. 
E)  will increase as activity decreases and will decrease as activity increases. 
A)  will increase as activity increases. 
B)  will increase as activity decreases. 
C)  will decrease as activity increases. 
D)  will remain constant. 
E)  will increase as activity decreases and will decrease as activity increases.

Question 20

Which of the following costs should be ignored when choosing among alternatives?

Accepted Answer

A)  Opportunity costs. 
B)  Sunk costs. 
C)  Out-of-pocket costs. 
D)  Differential costs. 
E)  None of the other answers are correct. 
A)  Opportunity costs. 
B)  Sunk costs. 
C)  Out-of-pocket costs. 
D)  Differential costs. 
E)  None of the other answers are correct.

Which of the following statements is(are) correct?

Variable costs are costs that:

Finished goods inventory is ordinarily held for sale by a manufacturing company.

Selling and administrative expenses would likely appear on the balance sheet of:

Which type of production process is ideal for a low production volume and one of a kind products?

Which of the following is not a period cost?

Prime costs are comprised of:

The choices below depict five costs of Benton Corporation and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver?

Product costs are:

Lake Appliance produces washers and dryers in an assembly-line process. Labor costs incurred during a recent period were: corporate executives, $500,000; assembly-line workers, $180,000; security guards, $45,000; and plant supervisor, $110,000. The total of Lake's direct labor cost was:

Which of the following equations is used to calculate cost of goods sold during the period?

The variable costs per unit are $6 when a company produces 12,000 units of product. What are the variable costs per unit when 14,000 units are produced?

Costs that can be easily traced to a specific department are called:

Which of the following statements is true?

The fixed cost per unit:

Which of the following costs should be ignored when choosing among alternatives?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 2: Basic Cost Management Concepts

Which of the following statements is(are) correct?

Variable costs are costs that:

Finished goods inventory is ordinarily held for sale by a manufacturing company.

Selling and administrative expenses would likely appear on the balance sheet of:

Which type of production process is ideal for a low production volume and one of a kind products?

Which of the following is not a period cost?

Prime costs are comprised of:

The choices below depict five costs of Benton Corporation and a possible driver for each cost. Which of these choices likely contains an inappropriate cost driver?

Product costs are:

Lake Appliance produces washers and dryers in an assembly-line process. Labor costs incurred during a recent period were: corporate executives, $500,000; assembly-line workers, $180,000; security guards, $45,000; and plant supervisor, $110,000. The total of Lake's direct labor cost was:

Which of the following equations is used to calculate cost of goods sold during the period?

The variable costs per unit are $6 when a company produces 12,000 units of product. What are the variable costs per unit when 14,000 units are produced?

Costs that can be easily traced to a specific department are called:

Which of the following statements is true?

The fixed cost per unit:

Which of the following costs should be ignored when choosing among alternatives?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Compound Interest and the Concept of Present Value

Inventory Management

Filters