Question 1

Traditional format income statements are prepared primarily for external reporting purposes.

Accepted Answer

A) True 
 B)False

Question 2

Each of the following would be a period cost except:

Accepted Answer

A) the salary of the company president's secretary. 
B) the cost of a general accounting office. 
C) depreciation of a machine used in manufacturing. 
D) sales commissions. 
A) the salary of the company president's secretary. 
B) the cost of a general accounting office. 
C) depreciation of a machine used in manufacturing. 
D) sales commissions.

Question 3

Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product.   
-The best estimate of the total variable manufacturing cost per unit is:

Accepted Answer

A) $82.00 
B) $70.20 
C) $56.70 
D) $11.80 
A) $82.00 
B) $70.20 
C) $56.70 
D) $11.80

Question 4

Which one of the following costs should NOT be considered a direct cost of serving a particular customer who orders a customized personal computer by phone directly from the manufacturer?

Accepted Answer

A) The cost of the hard disk drive installed in the computer. 
B) The cost of shipping the computer to the customer. 
C) The cost of leasing a machine on a monthly basis that automatically tests hard disk drives before they are installed in computers. 
D) The cost of packaging the computer for shipment. 
A) The cost of the hard disk drive installed in the computer. 
B) The cost of shipping the computer to the customer. 
C) The cost of leasing a machine on a monthly basis that automatically tests hard disk drives before they are installed in computers. 
D) The cost of packaging the computer for shipment.

Question 5

In external financial reports,factory utilities costs may be included in an asset account on the balance sheet at the end of the period.

Accepted Answer

A) True 
 B)False

Question 6

Selling and administrative expenses are product costs under generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 7

Manufacturing overhead consists of:

Accepted Answer

A) all manufacturing costs. 
B) indirect materials but not indirect labor. 
C) all manufacturing costs,except direct materials and direct labor. 
D) indirect labor but not indirect materials. 
A) all manufacturing costs. 
B) indirect materials but not indirect labor. 
C) all manufacturing costs,except direct materials and direct labor. 
D) indirect labor but not indirect materials.

Question 8

Fiene Sales, Inc., a merchandising company, reported sales of 2,200 units in June at a selling price of $600 per unit. Cost of goods sold, which is a variable cost, was $364 per unit. Variable selling expenses were $23 per unit and variable administrative expenses were $33 per unit. The total fixed selling expenses were $30,500 and the total administrative expenses were $55,300.
-The gross margin for June was:

Accepted Answer

A) $310,200 
B) $1,234,200 
C) $396,000 
D) $519,200 
A) $310,200 
B) $1,234,200 
C) $396,000 
D) $519,200

Question 9

The following costs were incurred in September: $\begin{array}{ll}
\text { Direct materials } & \$ 39,000 \
\text { Direct labor } & \$ 23,000 \
\text { Manufacturing overhead } & \$ 17,000 \
\text { Selling expenses } & \$ 14,000 \
\text { Administrative expenses } & \$ 27,000
\end{array}$ Prime costs during the month totaled:

Accepted Answer

A) $79,000 
B) $120,000 
C) $62,000 
D) $40,000 
A) $79,000 
B) $120,000 
C) $62,000 
D) $40,000

Question 10

A partial listing of costs incurred during December at Gagnier Corporation appears below:   
-The total of the product costs listed above for December is:

Accepted Answer

A) $310,000 
B) $89,000 
C) $635,000 
D) $325,000 
A) $310,000 
B) $89,000 
C) $635,000 
D) $325,000

Question 11

Advertising costs are considered product costs for external financial reports because they are incurred in order to promote specific products.

Accepted Answer

A) True 
 B)False

Question 12

In any decision making situation,sunk costs are irrelevant and should be ignored.

Accepted Answer

A) True 
 B)False

Question 13

In a traditional format income statement for a merchandising company,the cost of goods sold reports the product costs attached to the merchandise sold during the period.

Accepted Answer

A) True 
 B)False

Question 14

In October,Patnode Inc. ,a merchandising company,had sales of $294,000,selling expenses of $27,000,and administrative expenses of $35,000.The cost of merchandise purchased during the month was $211,000.The beginning balance in the merchandise inventory account was $38,000 and the ending balance was $34,000.
Required: 
Prepare a traditional format income statement for October.

Accepted Answer

The answer of In October,Patnode Inc. ,a merchandising company,had sales...

Question 15

Aberge Company's manufacturing overhead is 60% of its total conversion costs.If direct labor is $38,000 and if direct materials are $21,000,the manufacturing overhead is:

Accepted Answer

A) $57,000 
B) $88,500 
C) $25,333 
D) $31,500 
A) $57,000 
B) $88,500 
C) $25,333 
D) $31,500

Question 16

All costs incurred in a merchandising firm are considered to be period costs.

Accepted Answer

A) True 
 B)False

Question 17

Dabney Corporation has provided the following production and total cost data for two levels of monthly production volume.The company produces a single product.   The best estimate of the total monthly fixed manufacturing cost is:

Accepted Answer

A) $778,400 
B) $1,457,400 
C) $1,505,900 
D) $1,554,400 
A) $778,400 
B) $1,457,400 
C) $1,505,900 
D) $1,554,400

Question 18

In describing the cost formula equation Y = a + bX,which of the following statements is correct?

Accepted Answer

A) "X" is the dependent variable. 
B) "a" is the fixed component. 
C) In the high-low method,"b" equals change in activity divided by change in costs. 
D) As "X" increases "Y" decreases. 
A) "X" is the dependent variable. 
B) "a" is the fixed component. 
C) In the high-low method,"b" equals change in activity divided by change in costs. 
D) As "X" increases "Y" decreases.

Question 19

Gambarini Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $197.80 per unit. $\begin{array}{lrr}
\text { Sales volume (units).}&6,000 & 7,000 \
\text {Cost of sales }&\$ 486,600 & \$ 567,700 \
\text {Selling and administrative costs. }&\$ 612,600 & \$ 624,400
\end{array}$ The best estimate of the total monthly fixed cost is:

Accepted Answer

A) $541,800 
B) $1,192,100 
C) $1,099,200 
D) $1,145,650 
A) $541,800 
B) $1,192,100 
C) $1,099,200 
D) $1,145,650

Question 20

Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?

Accepted Answer

A) Sheet steel in a file cabinet made by the company. 
B) Manufacturing equipment depreciation. 
C) Idle time for direct labor. 
D) Taxes on a factory building. 
A) Sheet steel in a file cabinet made by the company. 
B) Manufacturing equipment depreciation. 
C) Idle time for direct labor. 
D) Taxes on a factory building.

Exam 1: Managerial Accounting and Cost Concepts

Traditional format income statements are prepared primarily for external reporting purposes.

Each of the following would be a period cost except:

Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. -The best estimate of the total variable manufacturing cost per unit is:

Which one of the following costs should NOT be considered a direct cost of serving a particular customer who orders a customized personal computer by phone directly from the manufacturer?

In external financial reports,factory utilities costs may be included in an asset account on the balance sheet at the end of the period.

Selling and administrative expenses are product costs under generally accepted accounting principles.

Manufacturing overhead consists of:

The following costs were incurred in September: Direct materials \ 39,000 Direct labor \ 23,000 Manufacturing overhead \ 17,000 Selling expenses \ 14,000 Administrative expenses \ 27,000 Prime costs during the month totaled:

A partial listing of costs incurred during December at Gagnier Corporation appears below: -The total of the product costs listed above for December is:

Advertising costs are considered product costs for external financial reports because they are incurred in order to promote specific products.

In any decision making situation,sunk costs are irrelevant and should be ignored.

In a traditional format income statement for a merchandising company,the cost of goods sold reports the product costs attached to the merchandise sold during the period.

Aberge Company's manufacturing overhead is 60% of its total conversion costs.If direct labor is $38,000 and if direct materials are $21,000,the manufacturing overhead is:

All costs incurred in a merchandising firm are considered to be period costs.

Dabney Corporation has provided the following production and total cost data for two levels of monthly production volume.The company produces a single product. The best estimate of the total monthly fixed manufacturing cost is:

In describing the cost formula equation Y = a + bX,which of the following statements is correct?

Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?

Job-Order Costing

Process Costing

Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Activity-Based Costing: a Tool to Aid Decision Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Variances

Performance Measurement in Decentralized Organizations

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Statement of Cash Flows

Financial Statement Analysis

Least-Squares Regression Computations

Appendix B: Cost of Quality

The Predetermined Overhead Rate and Capacity

Further Classification of Labor Costs

Fifo Method

Service Department Allocations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to Determine Product Costs for External Reports

Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

The Direct Method of Determining the Net Cash Provided by Operating Activities

Pricing Products and Services

Profitability Analysis

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