Question 1

Page's sells books. The following information summarizes the company's operating expenses for the year:  What is operating income?

Accepted Answer

A) $12,000 
B) $102,000 
C) $108,000 
D) $9,000

Question 2

In the United States, the fastest growing type of company is

Accepted Answer

A) merchandising. 
B) service. 
C) manufacturing. 
D) none of the above.

Question 3

Match between columns
                        Premises: Costs that can be traced to the cost object.
The combination of direct labor and manufacturing overhead costs.
The difference in cost between two alternative courses of action.
The cost of producing one more unit.
The total cost divided by the total volume.

Accepted Answer

The Answer of Sunk cost and Variable costs and Differential is...

Question 4

Match between columns
                        Premises: wages of assembly line personnel
utilities incurred in the office
indirect materials used
advertising expense
cost of primary material used to make product
rent expense on office facilities
sales supplies used
taxes paid on factory building
rent expense on factory building
insurance expired on factory equipment
factory supplies used
depreciation expense on office equipment

Accepted Answer

The Answer of direct labor and selling and general expenses is...

Question 5

Indirect materials, indirect labor, and indirect manufacturing costs are what type of manufacturing cost?

Accepted Answer

A) Direct labor 
B) Direct materials 
C) Manufacturing overhead 
D) Prime costs

Question 6

The income statements of manufacturing companies are more complex than those of service or merchandising companies.

Accepted Answer

A) True 
 B)False

Question 7

London Plastics sells a product for $15.00 per unit. The product requires $4.00 per unit in variable costs to produce it. The company plans on selling 12,000 units of this product. If the monthly fixed costs are $84,000, the company's total variable costs will be

Accepted Answer

A) $184,000. 
B) $154,000. 
C) $210,000. 
D) $48,000.

Question 8

Describe service, merchandising, and manufacturing companies.

Accepted Answer

The answer of Describe service, merchandising, and manufacturing companies....

Question 9

Kramer Manufacturing produces blenders. Its total fixed costs are $30,000. Its variable costs are $55.00 per blender. As production of blenders increases (within the relevant range), fixed costs will

Accepted Answer

A) stay the same per unit. 
B) decrease as production increases. 
C) decrease per unit as production increases. 
D) increase as production decreases.

Question 10

Manufacturing overhead costs for a product include

Accepted Answer

A) direct material. 
B) operating expenses. 
C) indirect manufacturing costs. 
D) prime costs.

Question 11

The balance sheet of a service company has

Accepted Answer

A) raw materials inventory. 
B) little or no inventory. 
C) three categories of inventory. 
D) two categories of inventory.

Question 12

When deciding to buy a new computer, all of the following should be considered except for the

Accepted Answer

A) cost of the new computer. 
B) cost of the old computer. 
C) games that come with the new computer. 
D) warranty on the new computer.

Question 13

Lucky Cow Dairy provided the following expense information for May:  What is the total cost for the design category of the value chain?

Accepted Answer

A) $267,000 
B) $188,000 
C) $197,000 
D) $125,000

Question 14

A company is deciding whether to purchase production equipment which can produce units more quickly than the current equipment. Which of the following costs would be relevant to its decision?

Accepted Answer

A) The cost of the new equipment 
B) The salary of the factory manager 
C) The cost of raw materials 
D) The original purchase price of the current machinery

Question 15

Which of the following is an example of a fixed cost for a manufacturer?

Accepted Answer

A) Income Taxes 
B) Machine Repair Expense 
C) Fire Insurance on buildings 
D) Delivery Fuel Expense

Question 16

Selected information regarding a company's most recent quarter follows (all data in thousands).  What was direct materials used for the quarter?

Accepted Answer

A) $790 
B) $1,280 
C) $390 
D) $140

Question 17

All of the following relate to part of the value chain for a clothing company except

Accepted Answer

A) cost of advertising the new products. 
B) administrative costs. 
C) cost of shipping to retailers. 
D) salaries of clothing designers.

Question 18

Which of the following describes the way in which total fixed costs behave?

Accepted Answer

A) They will decrease as production increases. 
B) They will decrease as production decreases. 
C) They will remain the same throughout production levels within the relevant range. 
D) They will increase as production decreases.

Question 19

London Plastics sells a product for $15.00 per unit. The product requires $4.00 per unit in variable costs to produce it. The company plans on selling 12,000 units of this product. If the monthly fixed costs are $84,000, the company's average fixed costs per unit will be

Accepted Answer

A) $4.00 per unit. 
B) $7.00 per unit. 
C) $10.00 per unit. 
D) $11.00 per unit.

Exam 2: Building Blocks of Managerial Accounting

Page's sells books. The following information summarizes the company's operating expenses for the year: What is operating income?