Question 1

An indirect cost can be easily traced to a cost object.

Accepted Answer

A) True 
 B)False  False

Question 2

The distinction between direct and indirect costs depends on whether a cost

Accepted Answer

A)  is controllable or non-controllable.
B)  is variable or fixed.
C)  can be conveniently and physically traced to a cost object under consideration.
D)  will increase with changes in levels of activity. C

Question 3

Which of the following defines variable cost behavior?

Accepted Answer

A)  remains constant remains constant
B)  remains constant increases
C)  increases increases
D)  increases remains constant D

Question 4

Marley Company manufactures tables.If raw material used was $80,000 and Raw Material Inventory at the beginning and end of the period,respectively,was $17,000 and $21,000,what was amount of raw material was purchased?

Accepted Answer

A)  $76,000
B)  $118,000
C)  $84,000
D)  $101,000

Question 5

A cost that has both fixed and variable components is known as a ____________________ cost.

Accepted Answer

The answer of A cost that has both fixed and...

Question 6

Costs that can be conveniently traced to a cost object are referred to as ____________________ costs.

Accepted Answer

The answer of Costs that can be conveniently traced to...

Question 7

Perry Company. Perry Company manufactures wood file cabinets.The following information is available for June of the current year.
 The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Perry Company.Compute total manufacturing costs for June,if there were 1,500 direct labor hours and $21,000 of raw material was purchased.

Accepted Answer

A)  $58,500
B)  $46,500
C)  $43,500
D)  $43,100

Question 8

Define a variable cost and a fixed cost.What causes changes in these costs? Give two examples of each.

Accepted Answer

The answer of Define a variable cost and a fixed...

Question 9

Given the following information for Graves Corporation,prepare the necessary journal entries,assuming that the Raw Material Inventory account contains both direct and indirect material.

Accepted Answer

The answer of Given the following information for Graves Corporation,prepare...

Question 10

Prime cost consists of

Accepted Answer

A)  no yes no
B)  yes yes no
C)  yes no yes
D)  no yes yes

Question 11

A selling cost is a(n)

Accepted Answer

A)  yes yes no
B)  yes no no
C)  no yes no
D)  no yes yes

Question 12

Costs that are incurred for monitoring and inspecting are:

Accepted Answer

A)  prevention costs
B)  detection costs
C)  appraisal costs
D)  failure costs

Question 13

Expired costs are reflected on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 14

A cost that varies in total in direct proportion to changes in activity is known as a ____________________ cost

Accepted Answer

The answer of A cost that varies in total in...

Question 15

Gallagher Company manufactures tables.The beginning balance of Raw Material Inventory was $5,500; raw material purchases of $31,500 were made during the month.At month end,$8,200 of raw material was on hand.Raw material used during the month was

Accepted Answer

A)  $28,800
B)  $31,500
C)  $37,000.
D)  $39,200

Question 16

Unexpired costs are reflected on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

An example of a fixed cost is

Accepted Answer

A)  total indirect material cost.
B)  total hourly wages.
C)  cost of electricity.
D)  straight-line depreciation.

Question 18

Conversion of inputs to outputs is recorded in the

Accepted Answer

A)  Work in Process Inventory account.
B)  Finished Goods Inventory account.
C)  Raw Material Inventory account.
D)  both a and b.

Question 19

From the following information for the Norman Company,compute prime costs and conversion costs.
  Raw material purchased during the period cost $40,800; overhead incurred and paid or accrued for the period was $21,750; and 23,600 direct labor hours were incurred at a rate of $13.75 per hour.

Accepted Answer

The answer of From the following information for the Norman...

Question 20

Which of the following is not a product cost component?

Accepted Answer

A)  rent on a factory building
B)  indirect production labor wages
C)  janitorial supplies used in a factory
D)  commission on the sale of a product

Exam 2: Cost Terminology and Cost Behaviors