Question 1

Which of the following replaces the retailing component "Purchases" in computing Cost of Goods Sold for a manufacturing company?

Accepted Answer

A)  direct material used 
B)  cost of goods manufactured 
C)  total prime cost 
D)  cost of goods available for sale

Question 2

Distribution costs are an example of product costs.

Accepted Answer

A) True 
 B)False

Question 3

Costs that are incurred to preclude defects and improper processing are:

Accepted Answer

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

Question 4

In a service industry, direct materials are usually significant in amount and can be easily traced to a cost object.

Accepted Answer

A) True 
 B)False

Question 5

Product costs are deducted from revenue

Accepted Answer

A)  as expenditures are made. 
B)  when production is completed. 
C)  as goods are sold. 
D)  to minimize taxable income.

Question 6

The indirect costs of converting raw material into finished goods are called

Accepted Answer

A)  period costs. 
B)  prime costs. 
C)  overhead costs. 
D)  conversion costs.

Question 7

Expired costs are reflected on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 8

A cost that remains constant in total but varies on a per-unit basis with changes in activity is called a(n)

Accepted Answer

A)  expired cost. 
B)  fixed cost. 
C)  variable cost. 
D)  mixed cost.

Question 9

It is not necessary to prepare the Cost of Goods Manufactured statement prior to preparing the Cost of Goods Sold statement.

Accepted Answer

A) True 
 B)False

Question 10

Costs that are incurred to improve quality by precluding defects and improper processing are referred to as ____________________ costs.

Accepted Answer

The answer of Costs that are incurred to improve quality...

Question 11

List and explain three types of quality costs.

Accepted Answer

The answer of List and explain three types of quality...

Question 12

A cost driver

Accepted Answer

A)  causes fixed costs to rise because of production changes. 
B)  has a direct cause-effect relationship to a cost. 
C)  can predict the cost behavior of a variable, but not a fixed, cost. 
D)  is an overhead cost that causes distribution costs to change in distinct increments with changes in production volume.

Question 13

Which of the following would need to be allocated to a cost object?

Accepted Answer

A)  direct material 
B)  direct labor 
C)  direct production costs 
D)  indirect production costs

Question 14

Retailers generally have a much higher degree of conversion than do manufacturing or professional firms.

Accepted Answer

A) True 
 B)False

Question 15

Morris Company manufacturers computer stands. What is the beginning balance of Finished Goods Inventory if Cost of Goods Sold is $107,000; the ending balance of Finished Goods Inventory is $20,000; and Cost of Goods Manufactured is $50,000 less than Cost of Goods Sold?

Accepted Answer

A)  $70,000 
B)  $77,000 
C)  $157,000 
D)  $127,000

Question 16

A cost that remains unchanged in total within the relevant range is known as a ____________________ cost.

Accepted Answer

The answer of A cost that remains unchanged in total...

Question 17

Which of the following would generally be considered a fixed factory overhead cost? $\begin{array}{ll}
\text { Straight-line}&\text { Factory } & \text { Units-of-production } \
\underline{\text { depreciation}}&\underline{\text { insurance} } &\underline{ \text { depreciation }}
\end{array}$

Accepted Answer

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

Question 18

Mitchell Company The following information has been taken from the cost records of Mitchell Company for the past year:
 $\begin{array}{ll}
\underline{\text {Inventries}}&\underline{\text { Beginning }} &\underline{ \text { Ending }} \
\text {Raw Material}&\$ 75 & \$ 85 \
\text {Wotk in Process}&80 & 30 \
\text { Finished Goods }&90 & 110
\end{array}$

Refer to Mitchell Company. Cost of Goods Sold was

Accepted Answer

A)  $691. 
B)  $716. 
C)  $736. 
D)  $801.

Question 19

A production plant could be a cost object.

Accepted Answer

A) True 
 B)False

Question 20

Costs that cannot be conveniently traced to a cost object are known as ____________________ costs.

Accepted Answer

The answer of Costs that cannot be conveniently traced to...

Exam 1: Cost Terminology and Cost Behaviors

Which of the following replaces the retailing component "Purchases" in computing Cost of Goods Sold for a manufacturing company?

Distribution costs are an example of product costs.

Costs that are incurred to preclude defects and improper processing are:

In a service industry, direct materials are usually significant in amount and can be easily traced to a cost object.

Product costs are deducted from revenue

The indirect costs of converting raw material into finished goods are called

Expired costs are reflected on the balance sheet.

A cost that remains constant in total but varies on a per-unit basis with changes in activity is called a(n)

It is not necessary to prepare the Cost of Goods Manufactured statement prior to preparing the Cost of Goods Sold statement.

Costs that are incurred to improve quality by precluding defects and improper processing are referred to as ____________________ costs.

List and explain three types of quality costs.

A cost driver

Which of the following would need to be allocated to a cost object?

Retailers generally have a much higher degree of conversion than do manufacturing or professional firms.

Morris Company manufacturers computer stands. What is the beginning balance of Finished Goods Inventory if Cost of Goods Sold is $107,000; the ending balance of Finished Goods Inventory is $20,000; and Cost of Goods Manufactured is $50,000 less than Cost of Goods Sold?

A cost that remains unchanged in total within the relevant range is known as a ____________________ cost.

Which of the following would generally be considered a fixed factory overhead cost? $\begin{array}{ll}\text { Straight-line}&\text { Factory } & \text { Units-of-production } \\\underline{\text { depreciation}}&\underline{\text { insurance} } &\underline{ \text { depreciation }}\end{array}$

A production plant could be a cost object.

Costs that cannot be conveniently traced to a cost object are known as ____________________ costs.