Question 1

Use the information below to answer the following question(s).Frazer Inc.had the following activities in the year:
 
-Which of the following formulas determine cost of goods sold in a manufacturing entity?

Accepted Answer

A) Beginning work-in-process inventory + Cost of goods manufactured - Ending work-in-process inventory = Cost of goods sold 
B) Beginning work-in-process inventory + Cost of goods manufactured + Ending work-in-process inventory = Cost of goods sold 
C) Cost of goods manufactured - Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
D) Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold 
E) Beginning work-in-process inventory - Cost of goods manufactured + Ending work-in-process inventory = Cost of goods sold

Question 2

Conversion costs are all manufacturing costs other than direct materials.

Accepted Answer

A) True 
 B)False

Question 3

Use the information below to answer the following question(s).Ontario Industries Inc.had the following activities during the year:
 
-What is the amount of Ontario Industries Inc.'s ending finished goods inventory?

Accepted Answer

A) $55,000 
B) $75,000 
C) $70,000 
D) $65,000 
E) $60,000

Question 4

Macadamia Co.produced and sold 40,000 units last year.Per unit revenue and costs were as follows:
  The Fixed Manufacturing Overhead provides a capacity of 50,000 units.The Production Manager has proposed leasing a new machine at a cost of $80,000 per year.This will reduce Direct Labour by 30% and improve quality so the the selling price per unit can be increased by $10.Production and sales are expected to remain the same as last year.Required:
Prepare a statement of operating income assuming the leasing proposal is accepted.

Accepted Answer

The answer of Macadamia Co.produced and sold 40,000 units last...

Question 5

Operating income does not include interest expense and income taxes.

Accepted Answer

A) True 
 B)False

Question 6

Prime costs can include

Accepted Answer

A) conversion costs. 
B) direct material costs. 
C) indirect manufacturing labour. 
D) machine set up costs. 
E) advertizing costs.

Question 7

Cost tracing is

Accepted Answer

A) the assignment of direct costs to the chosen cost object. 
B) a function of cost allocation. 
C) the process of tracking both direct and indirect costs associated with a cost object. 
D) the process of determining the actual cost of the cost object. 
E) the assignment of both direct and indirect costs associated with a cost object.

Question 8

Each of the following items pertains to one of these companies: Bedell Electronics (a manufacturing company), Gregory Food Retailers (a merchandising company), and Larson Real Estate (a service sector company).Match each item with either an inventoriable cost or a period cost.
A)inventoriable
B)period
-depreciation on a computer at Larson Real Estate

Accepted Answer

The answer of Each of the following items pertains to...

Question 9

Costs are accounted for in two basic stages: assignment followed by accumulation.

Accepted Answer

A) True 
 B)False

Question 10

Changes in particular cost drivers automatically result in decreases in overall costs.

Accepted Answer

A) True 
 B)False

Question 11

If a worker is paid for 8 hours, but is idle for 1 of those 8 hours, the 1 hour of idle time would be considered a component of direct labour.

Accepted Answer

A) True 
 B)False

Question 12

Eichhorn Company's Process Engineering department has the responsibility of rearranging the individual work tasks for each assembly line worker, with the goal of utilizing each worker as much as possible.Currently, on average, each assembly line worker only has tasks that require 47 minutes per hour, and the plant manager wants this increased by at least 10 %.The company builds the Eichhorn Rocket Roadster, which is selling out of dealers' showrooms faster than the company's assembly plants can produce them.If production can't be increased, then sales will soon suffer.Required:
Explain the effect on total costs of production, using the number of engineering changes (from Process Engineering)and at least two other cost drivers.Choose the cost driver that you think is most logical in the circumstances, and begin your answer with a brief explanation of a cost driver.

Accepted Answer

The answer of Eichhorn Company's Process Engineering department has the...

Question 13

Use the information below to answer the following question(s).Toronto Industries Inc.had the following activities during the year:
 
-Manufacturing-sector companies

Accepted Answer

A) purchase materials and convert them to finished goods. 
B) buy goods and resell them. 
C) provide services or intangible products. 
D) have only period costs. 
E) have one classification of inventory.

Question 14

Use the information below to answer the following question(s).Toronto Industries Inc.had the following activities during the year:
 
-What is Toronto's cost of direct materials used during the year?

Accepted Answer

A) $122,000 
B) $126,000 
C) $130,000 
D) $166,000 
E) $162,000

Question 15

When should the overtime premium of direct manufacturing labour be considered an indirect manufacturing cost? A direct manufacturing cost?

Accepted Answer

The answer of When should the overtime premium of direct...

Question 16

Product costs are the sum of the costs assigned to a product for a specific purpose.

Accepted Answer

A) True 
 B)False

Question 17

A relevant range is the range of the cost driver in which a specific relationship between cost and driver is valid.

Accepted Answer

A) True 
 B)False

Question 18

Use the information below to answer the following question(s).Macadamia Co.produced and sold 40,000 units last year.Per unit revenue and costs were as follows:
  Fixed manufacturing overhead and administrative salaries are fixed costs.The per unit amounts are based on last year's production.
-Calculate this year's operating income if the company plans to produce and sell 60,000 units.

Accepted Answer

A) $150,000 
B) $0 
C) $ 
D) $ 
E) $300,000

Question 19

Assigning direct costs poses more problems than assigning indirect costs.

Accepted Answer

A) True 
 B)False

Question 20

The total of the costs assigned to a particular product for a specific purpose is called

Accepted Answer

A) direct cost. 
B) inventoriable cost. 
C) marketing cost. 
D) product cost. 
E) prime cost.

Exam 2: An Introduction to Cost Terms and Purposes

Use the information below to answer the following question(s) .Frazer Inc.had the following activities in the year: -Which of the following formulas determine cost of goods sold in a manufacturing entity?

Conversion costs are all manufacturing costs other than direct materials.

Use the information below to answer the following question(s) .Ontario Industries Inc.had the following activities during the year: -What is the amount of Ontario Industries Inc.'s ending finished goods inventory?

Operating income does not include interest expense and income taxes.

Prime costs can include

Cost tracing is

Costs are accounted for in two basic stages: assignment followed by accumulation.

Changes in particular cost drivers automatically result in decreases in overall costs.

If a worker is paid for 8 hours, but is idle for 1 of those 8 hours, the 1 hour of idle time would be considered a component of direct labour.

Use the information below to answer the following question(s) .Toronto Industries Inc.had the following activities during the year: -Manufacturing-sector companies

Use the information below to answer the following question(s) .Toronto Industries Inc.had the following activities during the year: -What is Toronto's cost of direct materials used during the year?

When should the overtime premium of direct manufacturing labour be considered an indirect manufacturing cost? A direct manufacturing cost?

Product costs are the sum of the costs assigned to a product for a specific purpose.

A relevant range is the range of the cost driver in which a specific relationship between cost and driver is valid.

Assigning direct costs poses more problems than assigning indirect costs.

The total of the costs assigned to a particular product for a specific purpose is called