Question 1

A cost object is always either a product or a service.

Accepted Answer

A) True 
 B)False  False

Question 2

Which statement is true?

Accepted Answer

A)  All variable costs are direct costs.
B)  Because of a cost-benefit tradeoff, some direct costs may be treated as indirect costs.
C)  All fixed costs are indirect costs.
D)  All direct costs are variable costs. B

Question 3

Answer the following questions using the information below:
The following information pertains to Alleigh's Mannequins:
 
-Which of the following companies is part of the service sector of our economy?

Accepted Answer

A)  Target
B)  Citibank
C)  Ford
D)  Amazon.com B

Question 4

Inventoriable costs:

Accepted Answer

A)  include administrative and marketing costs
B)  are expensed in the accounting period in which the products are sold
C)  are particularly useful in management accounting
D)  are also referred to as nonmanufacturing costs

Question 5

Period costs:

Accepted Answer

A)  are treated as expenses in the period they are incurred
B)  are directly traceable to products
C)  include direct labor
D)  are also referred to as manufacturing overhead costs

Question 6

Direct manufacturing labor includes wages and fringe benefits paid to machine operators.

Accepted Answer

A) True 
 B)False

Question 7

Answer the following questions using the information below:
The East Company manufactures several different products. Unit costs associated with Product ORD203 are as follows:
 
-For last year, Wampum Enterprises reported revenues of $420,000, cost of goods sold of $108,000, cost of goods manufactured of $101,000, and total operating costs of $70,000. Gross margin for last year was:

Accepted Answer

A)  $319,000
B)  $312,000
C)  $249,000
D)  $242,000

Question 8

Cost accounting and cost management include calculating various costs, obtaining financial and nonfinancial information, and analyzing relevant information for decision making.

Accepted Answer

A) True 
 B)False

Question 9

Axle and Wheel Manufacturing currently produces 1,000 axles per month. The following per unit data apply for sales to regular customers:
  The plant has capacity for 2,000 axles.
Required:
a. What is the total cost of producing 1,000 axles?
b. What is the total cost of producing 1,500 axles?
c. What is the per unit cost when producing 1,500 axles?

Accepted Answer

The answer of Axle and Wheel Manufacturing currently produces 1,000...

Question 10

Answer the following questions using the information below:
 
-What is operating income for 20X5?

Accepted Answer

A)  $230,000
B)  $123,000
C)  $107,000
D)  $157,000

Question 11

Cost allocation is:

Accepted Answer

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

Question 12

Answer the following questions using the information below:
The Singer Company manufactures several different products. Unit costs associated with Product ICT101 are as follows:
 
-What are the variable costs per unit associated with Product ICT101?

Accepted Answer

A)  $18
B)  $22
C)  $88
D)  $92

Question 13

The wages of a plant supervisor would be classified as a period cost.

Accepted Answer

A) True 
 B)False

Question 14

Manufacturing overhead costs are also referred to as:

Accepted Answer

A)  indirect manufacturing costs
B)  prime costs
C)  period costs
D)  direct material

Question 15

Dave Rigby is paid $20 an hour for straight-time and $30 an hour for overtime. One week he worked 45 hours, which included 5 hours of overtime, and 3 hours of idle time caused by material shortages. Compensation would be reported as:

Accepted Answer

A)  $740 of direct labor and $210 of manufacturing overhead
B)  $840 of direct labor and $110 of manufacturing overhead
C)  $900 of direct labor and $50 of manufacturing overhead
D)  $890 of direct labor and $60 of manufacturing overhead

Question 16

In order to make decisions, managers need to know:

Accepted Answer

A)  actual costs
B)  budgeted costs
C)  both costs
D)  neither cost

Question 17

Costs that are difficult to change over the short run are always variable over the long run.

Accepted Answer

A) True 
 B)False

Question 18

Answer the following questions using the information below:
The East Company manufactures several different products. Unit costs associated with Product ORD203 are as follows:
 
-What are the period costs per unit associated with Product ORD203?

Accepted Answer

A)  $14
B)  $5
C)  $9
D)  $26

Question 19

Depreciation can be classified as either an inventoriable cost or a period cost, depending on what is being depreciated.

Accepted Answer

A) True 
 B)False

Question 20

Manufacturing costs include all of the following EXCEPT:

Accepted Answer

A)  costs incurred inside the factory
B)  both direct and indirect costs
C)  both variable and fixed costs
D)  both direct and period costs

Exam 2: An Introduction to Cost Terms and Purposes

A cost object is always either a product or a service.

Which statement is true?

Answer the following questions using the information below: The following information pertains to Alleigh's Mannequins: -Which of the following companies is part of the service sector of our economy?

Inventoriable costs:

Period costs:

Direct manufacturing labor includes wages and fringe benefits paid to machine operators.

Cost accounting and cost management include calculating various costs, obtaining financial and nonfinancial information, and analyzing relevant information for decision making.

Answer the following questions using the information below: -What is operating income for 20X5?

Cost allocation is:

Answer the following questions using the information below: The Singer Company manufactures several different products. Unit costs associated with Product ICT101 are as follows: -What are the variable costs per unit associated with Product ICT101?

The wages of a plant supervisor would be classified as a period cost.

Manufacturing overhead costs are also referred to as:

Dave Rigby is paid $20 an hour for straight-time and $30 an hour for overtime. One week he worked 45 hours, which included 5 hours of overtime, and 3 hours of idle time caused by material shortages. Compensation would be reported as:

In order to make decisions, managers need to know:

Costs that are difficult to change over the short run are always variable over the long run.

Answer the following questions using the information below: The East Company manufactures several different products. Unit costs associated with Product ORD203 are as follows: -What are the period costs per unit associated with Product ORD203?

Depreciation can be classified as either an inventoriable cost or a period cost, depending on what is being depreciated.

Manufacturing costs include all of the following EXCEPT: