Question 1

Which of the following is characteristic of a service company?

Accepted Answer

A)  Service companies generally have no tangible products to sell.
B)  Service companies have a single category of inventory.
C)  Service companies make a product.
D)  Service companies transform raw materials into finished goods. A

Question 2

Enter the letter of the type of company on the line in front of each statement.Letters may be used more than once or not at all.
A)Service company
B)Merchandising company
C)Manufacturing company
____ Generally has no inventory
____ Has three types of inventory
____ Inventory consists of freight-in and the cost of the product
____ Has the highest percentage of labor costs
____ Wal-Mart is this type of company

Accepted Answer

__A_ Generally has no inventory __C_ Has three types of inventory __B_ Inventory consists of freight-in and the cost of the product __A_ Has the highest percentage of labor costs __B_ Wal-Mart is this type of company

Question 3

When do inventoriable costs become expenses?

Accepted Answer

A)  When direct materials are purchased
B)  When the manufacturing process begins
C)  When the manufacturing process is completed
D)  None of the above D

Question 4

Intel Corporation makes computer chips.Intel Corporation would be classified as a:

Accepted Answer

A)  manufacturing company.
B)  merchandising company.
C)  service company.
D)  simple company.

Question 5

Comfy Furniture Company manufactures furniture at its Akron,Ohio,factory.Some of its costs from the past year include:  $\begin{array}{|l|cc|}
\hline \text { Depreciation on sales office } & \$  11,000 \
\hline \text { Depreciation on factory equipment } & \$  16,000 \
\hline \text { Factory supervisor salary } & \$  52,500 \
\hline \text { Sales commissions } & \$  23,000 \
\hline \text { Lubricants used in factory equipment } & \$  3,000 \
\hline \text { Insurance costs for factory } & \$ 21,000 \
\hline \text { Wages paid to maintenance workers } & \$  115,000 \
\hline \text { Fabric used to upholster furniture } & \$  7,000 \
\hline \text { Freight-in (on raw materials) } & \$ 2,500 \
\hline \text { Costs of delivery to customers } & \$  9,000 \
\hline \text { Wages paid to assembly-line workers } & \$  132,500 \
\hline \text { Lumber used to build product } & \$  72,000 \
\hline \text { Utilities in factory } & \$ 44,500 \
\hline \text { Utilities in sales office } &\$ 26,500 \
\hline
\end{array}$
-  Prime costs for Comfy Furniture Company totaled:

Accepted Answer

A)  $ 79,000.
B)  $ 214,000.
C)  $ 211,500.
D)  $ 332,000.

Question 6

Selected information regarding a company's most recent quarter follows (all data in thousands). $$\begin{array} { | l | c c | } 
\hline \text { Direct labor } & \$ & 450 \
\hline \text { Bepinning wark in process inventary } & \$ & 320 \
\hline \text { Ending work in process inventory } & \$ & 310 \
\hline \text { Cost of goods manufactured } & \$ & 1,560 \
\hline \text { Manufacturing overhead } & \$ & 620 \
\hline
\end{array}$$ What was direct materials used for the quarter?

Accepted Answer

A)  $ 770
B)  $1,570
C)  $ 460
D)  $ 480

Question 7

Differentiate between:
A.Direct materials versus indirect materials
B.Direct labor versus indirect labor

Accepted Answer

The answer of  Differentiate between:
A.Direct materials versus indirect materials
B.Direct...

Question 8

Which of the following would NOT be a cost object?

Accepted Answer

A)  Built-to-order web sales
B)  Costs in the legal department
C)  Sales of a particular model in the southeast
D)  All of these could serve as cost objects

Question 9

Match between columns
                        Premises:  Depreciation expense on equipment in factory
Delivery expense
Toll free line for customer orders
Customer support hot line
Assembly line workers’ wages

Accepted Answer

The Answer of Research and development and Design and Production is...

Question 10

Paris Plastics has monthly fixed costs of $90,000,while its variable costs are $4.00 per unit.If the sales price of a unit is $16.00 and Paris Plastics sell 12,000 units,the company's total variable costs will be:

Accepted Answer

A)  $ 90,000.
B)  $192,000.
C)  $144,000.
D)  $ 48,000.

Question 11

Which of the following describes full product costs for a product?

Accepted Answer

A)  Full product costs are narrower in scope than inventoriable product costs.
B)  Full product costs consist of direct materials,direct labor and manufacturing overhead.
C)  Full product costs include all costs of the value chain.
D)  Both A and B are correct.

Question 12

A company's distribution system is an important part of the value chain.

Accepted Answer

A) True 
 B)False

Question 13

First Sporting Equipment manufactures sporting goods.Selected costs from the past year include: $\begin{array}{|l|rr|}
\hline \text { Plastics used to make products } & \$ & 151,000 \
\hline \text { Heating and lighting costs for factory } & \$ & 73,000 \
\hline \text { Factory janitor wages } & \$ & 67,000 \
\hline \text { Costs of shipping to customers } & \$ & 11,000 \
\hline \text { Lubricants used in factory equipment } & \$ & 2,000 \
\hline \text { Lighting costs for sales office } & \$ & 17,000 \
\hline \text { Depreciation on factory equipment } & \$ & 23,000 \
\hline \text { Office supplies for sales office } & \$ & 4,000 \
\hline \text { Insurance costs for factory } & \$ & 15,000 \
\hline \text { Maintenance worker wages } & \$ & 99,000 \
\hline \text { Freight-in (on plastics) } & \$ & 8,000 \
\hline \text { Aluminum used to make products } & \$ & 175,000 \
\hline \text { Assembly-line worker wages } & \$ & 142,000 \
\hline \text { Salaries of salespeople } & \$ &84,000 \
\hline
\end{array}$ 
-Product costs for First Sporting Equipment totaled:

Accepted Answer

A)  $ 620,000.
B)  $ 732,000.
C)  $ 755,000.
D)  $ 827,000.

Question 14

Variable costs:

Accepted Answer

A)  are fixed in total as production levels change.
B)  are fixed per unit and vary in total as productions levels change.
C)  decrease per unit as production volume increases.
D)  vary per unit of output as production levels change.

Question 15

Manufacturing overhead costs for a product include:

Accepted Answer

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

Question 16

Olde Tyme Beverage Company's operating activities for the year are listed below. $$\begin{array} { | l | r | } 
\hline \text { Purcheses } & \$ 126,000 \
\hline \text { Operating expenses } & 90,000 \
\hline \text { Bepinging inventory } & 14,000 \
\hline \text { Ending inventory } & 10,000 \
\hline \text { Sales revenue } & 250,000 \
\hline
\end{array}$$ 
-What is the gross profit for the year?

Accepted Answer

A)  $147,000
B)  $143,000
C)  $ 63,000
D)  $275,000

Question 17

Direct labor for a company was $132,000; manufacturing overhead was $275,000; and direct materials were $253,000.Prime costs would total:

Accepted Answer

A)  $407,000.
B)  $385,000.
C)  $660,000.
D)  $528,000.

Question 18

Readers Unlimited sells books.The following information summarizes the company's operating expenses for the year: $$\begin{array} { | l | c c | } 
\hline \text { Purchases } & \$ & 90,000 \
\hline \text { Operating expenses } & \mathbf { \$ } & 53,000 \
\hline \text { Bepinning merchandise inventary } & \mathbf { 1 } & 12,000 \
\hline \text { Ending merchandise inventory } & \mathbf { \$ } & 15,000 \
\hline \text { Sales revenue } & \mathbf { \$ } & 172,000 \
\hline
\end{array}$$
- What is gross profit?

Accepted Answer

A)  $ 32,000
B)  $ 82,000
C)  $ 85,000
D)  $119,000

Question 19

Sunnybrook Orange Groves processes a variety of fresh juices.The company has the following expenses for July: $\begin{array}{|l|l|}
\hline \text { Wages of factory workers } & \$ 75,000 \
\hline \text { Freshness seals/caps for juice bottles } & \$ 3,000 \
\hline \text { Reconfiguring the factory layout } & \$ 102,000 \
\hline \text { Customer help line } & \$ 2,000 \
\hline \text { Costs of refrigerated trucks used to deliver juice } & \$ 17,000 \
\hline \text { Depreciation expense on bottling machines } & \$ 63,000 \
\hline \text { Glass juice bottles } & \$ 54,000 \
\hline \text { Commissions for salespeople } & \$ 27,000 \
\hline \text { Salaries of nutrition researchers } & \$ 89,000 \
\hline \text { Costs of maintaining website used for customer orders } & \$ 4,000 \
\hline
\end{array}$
 What is the total cost for the customer service category of the value chain?

Accepted Answer

A)  $77,000
B)  $29,000
C)  $ 2,000
D)  $ 6,000

Question 20

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

Accepted Answer

The Answer of Direct costs and Marginal cost and Average is...

Exam 2: Building Blocks of Managerial Accounting