Question 1

Product costs are often referred to as inventoriable costs because these are the costs that firms attach to inventories of work in process and finished goods.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following items is reported on the balance sheet prior to being expensed on the income statement as a product cost? a. Inventory.
B) Insurance.
C) Sales commissions.
D) Utility charges.

Accepted Answer

The answer of Which of the following items is reported...

Question 3

The costs of management salaries that are not a part of the costs of providing programs or services are referred to as:

Accepted Answer

A)  Period costs 
B)  Product costs. 
C)  Cost of goods sold. 
D)  Conversion costs. 
E)  None of the above.

Question 4

In a typical production process, the physical flows for a manufacturer are: a. Work-in-Process Inventory→Material Inventory→Finished Goods Inventory→Cost of Goods Sold.
B) Material Inventory→Cost of Goods Sold→Finished Goods.
C) Material Inventory→Work-in-Process inventory→Finished Goods Inventory→Cost of Goods Sold.
D) Finished Goods Inventory→Cost of Goods Sold→Material Inventory
E) None of the above.

Accepted Answer

The answer of In a typical production process, the physical...

Question 5

The Peterson Company incurred the following costs in the month of May:  The company's product costs total:

Accepted Answer

A)  $45,000 
B)  $47,000 
C)  $40,000 
D)  $42,000

Question 6

The GAAP income statement combines controllable with non-controllable costs and fixed costs with variable costs.

Accepted Answer

A) True 
 B)False

Question 7

Product costs are also known as: a. Prime costs.
B) Conversion costs.
C) Period costs.
D) Inventoriable costs

Accepted Answer

The answer of Product costs are also known as: a....

Question 8

Bass Boss Manufacturing Company manufactures two types of bass boats. Bass Boss provides the following data, pertinent to allocating its annual overhead cost of $435,000:  What are the cost drivers?

Accepted Answer

A)  Overhead costs; Units per year. 
B)  Boss Hog; Boss Bear. 
C)  Overhead costs; Machine hours/unit. 
D)  Machine hours/unit; Material cost/unit; Labor cost/unit 
E)  Units per year.

Question 9

As with service firms, period costs appear below the line for gross margin.

Accepted Answer

A) True 
 B)False

Question 10

Grand Rapids Rafting Company recorded the following data for the month of October:  Inventory purchases for the month of October total: a. $108,000
B) $136,000
C) $200,000
D) $44,000

Accepted Answer

The answer of Grand Rapids Rafting Company recorded the following...

Question 11

Manufacturing overhead includes which of the following costs? a. Fixed costs only.
B) Variable costs only.
C) Conversion costs and direct labor.
D) Variable overhead and fixed overhead.
E) Common costs and special costs.

Accepted Answer

The answer of Manufacturing overhead includes which of the following...

Question 12

Bass Boss Manufacturing Company manufactures two types of bass boats. Bass Boss provides the following data, pertinent to allocating its annual overhead cost of $435,000:  What is the cost pool for Bass Boss?

Accepted Answer

A)  Annual overhead costs. 
B)  Units per year. 
C)  Machine hours/unit. 
D)  Material costs/unit. 
E)  Labor costs/unit.

Question 13

Bass Boss Manufacturing Company manufactures two types of bass boats. Bass Boss provides the following data, pertinent to allocating its annual overhead cost of $435,000:  Determine the allocation rate for assuming the cost driver is machine hours/unit.

Accepted Answer

A)  $3 per machine hour 
B)  $12.43 per machine hour 
C)  $54,375 per machine hour 
D)  $4.35 per machine hour 
E)  $$5,000 per machine hour

Question 14

Which of the following is the best example of prime costs for Sharp Edge Mowers? a. Sales commissions and maintenance on the machine that tightens bolts on lawn mowers during production.
B) Assembly line wages and the cost of tires to be installed on newly assembled lawnmowers.
C) The general manager's salary and the janitorial expense for executives' offices.
D) The interest cost on the manufacturing building and the wages paid for the quality control inspector for the assembly line

Accepted Answer

The answer of Which of the following is the best...

Question 15

Which of the following statements relating to period costs is not correct?

Accepted Answer

A)  Period costs are all costs that are not product costs. 
B)  Period costs always appear below the line for gross margin. 
C)  Period costs are not separated from product costs in GAAP income statements. 
D)  Both A and B are incorrect. 
E)  A, B, and C are incorrect.

Question 16

Which of the following costs are added to work-in-process during the period? a. Raw materials.
B) Labor.
C) Administrative costs.
D) Both A and
B) e. A, B, and C

Accepted Answer

The answer of Which of the following costs are added...

Question 17

GAAP provides considerable flexibility regarding reporting formats.

Accepted Answer

A) True 
 B)False

Question 18

Product costs include which of the following costs? a. Manufacturing overhead costs and selling and administrative costs.
B) Variable manufacturing costs and manufacturing overhead costs.
C) Common costs and special costs.
D) Period costs and common costs.
E) Variable costs only.

Accepted Answer

The answer of Product costs include which of the following...

Question 19

The cost of purchasing goods from suppliers does not include the cost of transportation.

Accepted Answer

A) True 
 B)False

Question 20

Period costs contain controllable, but not non-controllable costs.

Accepted Answer

A) True 
 B)False

Exam 3: Cost Flows and Cost Terminology

Product costs are often referred to as inventoriable costs because these are the costs that firms attach to inventories of work in process and finished goods.

Which of the following items is reported on the balance sheet prior to being expensed on the income statement as a product cost? a. Inventory. B) Insurance. C) Sales commissions. D) Utility charges.

The costs of management salaries that are not a part of the costs of providing programs or services are referred to as:

The Peterson Company incurred the following costs in the month of May: The company's product costs total:

The GAAP income statement combines controllable with non-controllable costs and fixed costs with variable costs.

Product costs are also known as: a. Prime costs. B) Conversion costs. C) Period costs. D) Inventoriable costs

Bass Boss Manufacturing Company manufactures two types of bass boats. Bass Boss provides the following data, pertinent to allocating its annual overhead cost of $435,000: What are the cost drivers?

As with service firms, period costs appear below the line for gross margin.

Grand Rapids Rafting Company recorded the following data for the month of October: Inventory purchases for the month of October total: a. $108,000 B) $136,000 C) $200,000 D) $44,000

Manufacturing overhead includes which of the following costs? a. Fixed costs only. B) Variable costs only. C) Conversion costs and direct labor. D) Variable overhead and fixed overhead. E) Common costs and special costs.

Bass Boss Manufacturing Company manufactures two types of bass boats. Bass Boss provides the following data, pertinent to allocating its annual overhead cost of $435,000: What is the cost pool for Bass Boss?

Bass Boss Manufacturing Company manufactures two types of bass boats. Bass Boss provides the following data, pertinent to allocating its annual overhead cost of $435,000: Determine the allocation rate for assuming the cost driver is machine hours/unit.

Which of the following statements relating to period costs is not correct?

Which of the following costs are added to work-in-process during the period? a. Raw materials. B) Labor. C) Administrative costs. D) Both A and B) e. A, B, and C

GAAP provides considerable flexibility regarding reporting formats.

Product costs include which of the following costs? a. Manufacturing overhead costs and selling and administrative costs. B) Variable manufacturing costs and manufacturing overhead costs. C) Common costs and special costs. D) Period costs and common costs. E) Variable costs only.

The cost of purchasing goods from suppliers does not include the cost of transportation.

Period costs contain controllable, but not non-controllable costs.