Question 1

Fixed costs appear to vary on a per-unit basis but are fixed in total.

Accepted Answer

A) True 
 B)False

Question 2

Manufacturing costs that cannot be classified as direct material or direct labour are classified as operating expenses.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is true?

Accepted Answer

A) In real life, the curvilinear nature of variable costs is questionable. 
B) In real life, fixed costs are fixed in total and do not change at various activity levels. 
C) Within the relevant range, there is rarely a straight-line relationship for both variable and fixed costs. 
D) Within the relevant range the linear assumption is valid and useful for cost behaviour analysis.

Question 4

Cost behaviour analysis is the study of how total costs, concurrently are affected by changes in the level of business activity.

Accepted Answer

A) True 
 B)False

Question 5

In calculating gross profit for a manufacturing company, the cost of goods sold is deducted from net sales.

Accepted Answer

A) True 
 B)False

Question 6

The cost of the management accountant working in the front office of a company is a

Accepted Answer

A) Direct, variable, product cost. 
B) Fixed period cost. 
C) Fixed product cost. 
D) Indirect period cost.

Question 7

As production manager, Mr.B is asked to track the manufacturing cost per unit on the factory floor.Total manufacturing costs were $100,000 before considering factory maintenance salaries of $12,000 and $50,000 of factory depreciation.How much is the calculation of manufacturing cost per unit if 500 units had been produced in the current quarter?

Accepted Answer

A) $224 
B) $300 
C) $200 
D) $324

Question 8

Raw materials inventory is not an asset until it is used to make a product.

Accepted Answer

A) True 
 B)False

Question 9

Which one of the following would not be classified as manufacturing overhead?

Accepted Answer

A) Indirect materials 
B) Insurance on factory building 
C) Indirect labour 
D) Direct materials

Question 10

Fees for office cleaning and maintenance are

Accepted Answer

A) Neither direct nor indirect. 
B) Fixed product costs. 
C) Variable product costs. 
D) Fixed or variable product costs.

Question 11

What criteria must be met in order to consider the work of factory employees to be direct labour?

Accepted Answer

A) It must be promptly associated with converting materials into products. 
B) It must be physically associated with converting materials into products. 
C) It must be materially associated with converting materials into products. 
D) It must be periodically associated with converting materials into products.

Question 12

The high-low method is a quick means of separating fixed and variable costs.

Accepted Answer

A) True 
 B)False

Question 13

Critical inputs in using the high-low method include all of the following except:

Accepted Answer

A) Actual activity levels (production levels) for an operating period. 
B) Actual mixed costs (total costs) corresponding to the various activity levels. 
C) A calculator. 
D) An hypothesis for the slope.

Question 14

The total cost of a finished product generally contains equal amounts of material, labour, and manufacturing overhead costs.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would most likely be considered direct labour?

Accepted Answer

A) A worker installing components in a computer 
B) A maintenance worker 
C) A security guard 
D) A sales person

Question 16

To be useful to management accountants for planning and predictive purposes, mixed costs

Accepted Answer

A) Must be classified into their fixed and variable elements. 
B) Must be classified into their direct and indirect elements. 
C) Must be classified into their product and period elements. 
D) None of these.

Question 17

Which one of the following is not considered a 'material' cost?

Accepted Answer

A) Partially completed motor engines for a motorcycle plant 
B) Bolts used in manufacturing the compressor of an engine 
C) Rivets for the wings of a new commercial jet aircraft 
D) Lumber used to build tables

Question 18

Manufacturing overhead is a

Accepted Answer

A) Direct, variable, product cost. 
B) Direct, variable period costs. 
C) Indirect, variable, product cost. 
D) Indirect, fixed or variable product cost.

Question 19

Zirk, Inc.incurred cost of goods manufactured totalling $700,000, manufacturing overhead of $320,000, and direct materials totalling $40,000.How much is the amount of direct labour?

Accepted Answer

A) Cannot be determined from the information provided. 
B) $340,000 
C) $660,000 
D) $700,000

Question 20

Which product cost is most difficult to associate with a product?

Accepted Answer

A) Direct labour 
B) Advertising 
C) Direct materials 
D) Manufacturing overhead

Exam 2: Managerial Cost Concepts and Cost Behaviour Analysis

Fixed costs appear to vary on a per-unit basis but are fixed in total.

Manufacturing costs that cannot be classified as direct material or direct labour are classified as operating expenses.

Which of the following statements is true?

Cost behaviour analysis is the study of how total costs, concurrently are affected by changes in the level of business activity.

In calculating gross profit for a manufacturing company, the cost of goods sold is deducted from net sales.

The cost of the management accountant working in the front office of a company is a

Raw materials inventory is not an asset until it is used to make a product.

Which one of the following would not be classified as manufacturing overhead?

Fees for office cleaning and maintenance are

What criteria must be met in order to consider the work of factory employees to be direct labour?

The high-low method is a quick means of separating fixed and variable costs.

Critical inputs in using the high-low method include all of the following except:

The total cost of a finished product generally contains equal amounts of material, labour, and manufacturing overhead costs.

Which of the following would most likely be considered direct labour?

To be useful to management accountants for planning and predictive purposes, mixed costs

Which one of the following is not considered a 'material' cost?

Manufacturing overhead is a

Zirk, Inc.incurred cost of goods manufactured totalling $700,000, manufacturing overhead of $320,000, and direct materials totalling $40,000.How much is the amount of direct labour?

Which product cost is most difficult to associate with a product?