Question 1

Direct labor for a company was $145,800; manufacturing overhead was $300,400; and direct materials were $270,600. Prime costs would total

Accepted Answer

A) $716,800. 
B) $446,200. 
C) $416,400. 
D) $571,000.

Question 2

Certain materials used in a manufacturing plant cannot be traced to a specific unit. What are these materials called?

Accepted Answer

A) General materials 
B) Direct materials 
C) Indirect materials 
D) Finished materials

Question 3

A company has monthly fixed costs of $96,000. The variable costs are $8.00 per unit. If the sales price of a unit is $14.00 and we sell $8000 units, the total sales revenue will be

Accepted Answer

A) $48. 
B) $96,000. 
C) $112,000. 
D) $95,950.

Question 4

Which element of the value chain would a technical support hotline for customers be considered?

Accepted Answer

A) Design 
B) Customer service 
C) Distribution 
D) Marketing

Question 5

The costs incurred to transport merchandise to a company's retail store would be considered to be what element of the value chain?

Accepted Answer

A) Marketing 
B) Customer service 
C) Production or purchases 
D) Research and development

Question 6

Marginal cost is essentially variable cost because fixed costs do not change in total.

Accepted Answer

A) True 
 B)False

Question 7

Direct labor for a company was $145,100; manufacturing overhead was $300,300; and direct materials were $270,800. Conversion costs would total

Accepted Answer

A) $571,100 
B) $716,200 
C) $415,900 
D) $445,400

Question 8

Country Furniture Company manufactures furniture at its Akron, Ohio, factory. Some of its costs from the past year include:  Prime costs for Country Furniture Company totaled

Accepted Answer

A) $93,100. 
B) $209,000. 
C) $212,200. 
D) $378,600.

Question 9

The value chain concept helps companies control costs over the value chain as a whole.

Accepted Answer

A) True 
 B)False

Question 10

Prime costs consist of

Accepted Answer

A) direct materials and direct labor. 
B) direct labor and manufacturing overhead. 
C) direct materials and manufacturing overhead. 
D) direct materials, direct labor and manufacturing overhead.

Question 11

Winner's Sporting Equipment manufactures sporting goods. Selected costs from the past year include:  Period costs for Winner's Sporting Equipment totaled

Accepted Answer

A) $94,934. 
B) $91,900. 
C) $189,600. 
D) $112,000.

Question 12

London Plastics has monthly fixed costs of $84,000, while its variable costs are $4.70 per unit. If the sales price of a unit is $15.50 and London Plastics sell $14,000 units, the company's total variable costs will be

Accepted Answer

A) $151,200. 
B) $65,800. 
C) $217,000. 
D) $84,000.

Question 13

Selected financial information for Brookeville Manufacturing is presented in the following table (000s omitted).  What was operating income?

Accepted Answer

A) $2730 
B) $4700 
C) $3970 
D) $2360

Question 14

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

Accepted Answer

A) $110 
B) $400 
C) $690 
D) $510

Question 15

Average variable costs

Accepted Answer

A) remain the same as production decreases. 
B) remain the same as production increases. 
C) remain the same no matter if production increases or decreases. 
D) go down as production decreases.

Question 16

Selected financial information for Brookeville Manufacturing is presented in the following table (000s omitted).  What was the cost of goods manufactured?

Accepted Answer

A) $1840 
B) $1590 
C) 1680 
D) $1760

Question 17

Which of the following types of information differs between alternatives and can affect the future?

Accepted Answer

A) Historical 
B) Irrelevant 
C) Relevant 
D) Predictable

Question 18

Manufacturing overhead costs for a product include

Accepted Answer

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

Question 19

Product costs include

Accepted Answer

A) direct materials. 
B) indirect materials. 
C) direct labor. 
D) all of the above are included in product costs.

Question 20

If a frozen pizza plant is the cost object, classify each of the following costs as direct or indirect, respectively: property insurance, cafeteria workers wages, and janitorial supplies.

Accepted Answer

A) direct, indirect, and indirect 
B) direct, indirect, and direct 
C) all are direct 
D) all are indirect

Exam 2: Building Blocks of Managerial Accounting