Question 1

If the cost of an additive is $5,000 + $0.50 for every unit of solvent produced, the cost is classified as a step cost.

Accepted Answer

A) True 
 B)False

Question 2

Conversion of inputs to outputs is recorded in the

Accepted Answer

A)   Work in Process Inventory account.
B)   Finished Goods Inventory account.
C)   Raw Material Inventory account.
D)   both a and b.E) C) and D)
F) A) and D)

Question 3

A specific product cannot be a cost object.

Accepted Answer

A) True 
 B)False

Question 4

A variable cost remains constant on a per-unit basis as production increases.

Accepted Answer

A) True 
 B)False

Question 5

Both accountants and economists view variable costs as linear in nature.

Accepted Answer

A) True 
 B)False  False

Question 6

Using the information below, prepare a Schedule of Cost of Goods Manufactured (in good form) for the Ezell Company for June 20y0:
  Additional information: purchases of raw material were $51,900; 21,560 direct labor hours were worked at $12.50 per hour; overhead costs were $39,800.

Accepted Answer

The answer of Using the information below, prepare a Schedule...

Question 7

Product costs are deducted from revenue

Accepted Answer

A)   as expenditures are made.
B)   when production is completed.
C)   as goods are sold.
D)   to minimize taxable income.E) A) and B)
F) None of the above

Question 8

Unexpired costs are reflected on the balance sheet.

Accepted Answer

A) True 
 B)False  True

Question 9

A variable cost will be an effective cost driver.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would generally be considered a fixed factory overhead cost?

Accepted Answer

A)   no no no
B)   yes no yes
C)   yes yes no
D)   no yes noE) All of the above
F) A) and D)

Question 11

The assumed range of activity that reflects the company's normal operating range is referred to as the ______________________________.

Accepted Answer

The answer of The assumed range of activity that reflects...

Question 12

In a perpetual inventory system, the sale of items for cash consists of two entries. One entry is a debit to Cash and a credit to Sales. The other entry is a debit to

Accepted Answer

A)   Work in Process Inventory and a credit to Finished Goods Inventory.
B)   Finished Goods Inventory and a credit to Cost of Goods Sold.
C)   Cost of Goods Sold and a credit to Finished Goods Inventory.
D)   Finished Goods Inventory and a credit to Work in Process Inventory.E) All of the above
F) A) and B)

Question 13

Horner Corporation The following information has been taken from the cost records of Horner Corporation for the past year:
  Refer to Horner Company. Direct labor cost charged to production during the year was

Accepted Answer

A)   $125
B)   $188
C)   $250
D)   $375.E) None of the above
F) All of the above

Question 14

A predictor which has an absolute cause and effect relationship to a cost is referred to a cost driver.

Accepted Answer

A) True 
 B)False

Question 15

Jordan Company The following information has been taken from the cost records of Jordan Company for the past year:
  Refer to Jordan Company. Cost of Goods Sold was

Accepted Answer

A)   $691.
B)   $716.
C)   $736.
D)   $801.E) B) and C)
F) None of the above

Question 16

In a service industry, direct materials are usually insignificant in amount and can not easily be traced to a cost object.

Accepted Answer

A) True 
 B)False

Question 17

In an actual cost system, overhead is assigned to Work in Process Inventory with a debit entry to the account.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would need to be allocated to a cost object?

Accepted Answer

A)   direct material
B)   direct labor
C)   direct production costs
D)   indirect production costsE) A) and C)
F) B) and C) D

Question 19

Anderson Enterprises  Refer to Anderson Enterprises. For March, conversion cost incurred was

Accepted Answer

A)   $30,000.
B)   $40,000.
C)   $70,000.
D)   $72,000.E) A) and B)
F) C) and D)

Question 20

Goodwin Enterprises  Refer to Goodwin Enterprises. For April, Cost of Goods Manufactured was

Accepted Answer

A)   $141,000
B)   $133,000.
C)   $125,000.
D)   $121,000.E) None of the above
F) All of the above

Exam 2: Cost Terminology and Cost Behaviors

If the cost of an additive is $5,000 + $0.50 for every unit of solvent produced, the cost is classified as a step cost.

Correct AnswerverifiedShow Answer

Conversion of inputs to outputs is recorded in the

Correct AnswerverifiedShow Answer

A specific product cannot be a cost object.

Correct AnswerverifiedShow Answer

A variable cost remains constant on a per-unit basis as production increases.

Correct AnswerverifiedShow Answer

Both accountants and economists view variable costs as linear in nature.

Correct AnswerverifiedFalse

Using the information below, prepare a Schedule of Cost of Goods Manufactured (in good form) for the Ezell Company for June 20y0: Additional information: purchases of raw material were $51,900; 21,560 direct labor hours were worked at $12.50 per hour; overhead costs were $39,800.

Correct AnswerverifiedShow Answer

Product costs are deducted from revenue

Correct AnswerverifiedShow Answer

Unexpired costs are reflected on the balance sheet.

Correct AnswerverifiedTrue

A variable cost will be an effective cost driver.

Correct AnswerverifiedShow Answer

Which of the following would generally be considered a fixed factory overhead cost?

Correct AnswerverifiedShow Answer

The assumed range of activity that reflects the company's normal operating range is referred to as the ______________________________.

Correct AnswerverifiedShow Answer

In a perpetual inventory system, the sale of items for cash consists of two entries. One entry is a debit to Cash and a credit to Sales. The other entry is a debit to

Correct AnswerverifiedShow Answer

Horner Corporation The following information has been taken from the cost records of Horner Corporation for the past year: Refer to Horner Company. Direct labor cost charged to production during the year was

Correct AnswerverifiedShow Answer

A predictor which has an absolute cause and effect relationship to a cost is referred to a cost driver.

Correct AnswerverifiedShow Answer

Jordan Company The following information has been taken from the cost records of Jordan Company for the past year: Refer to Jordan Company. Cost of Goods Sold was

Correct AnswerverifiedShow Answer

In a service industry, direct materials are usually insignificant in amount and can not easily be traced to a cost object.

Correct AnswerverifiedShow Answer

In an actual cost system, overhead is assigned to Work in Process Inventory with a debit entry to the account.

Correct AnswerverifiedShow Answer

Which of the following would need to be allocated to a cost object?

Correct AnswerverifiedD

Anderson Enterprises Refer to Anderson Enterprises. For March, conversion cost incurred was

Correct AnswerverifiedShow Answer

Goodwin Enterprises Refer to Goodwin Enterprises. For April, Cost of Goods Manufactured was

Correct AnswerverifiedShow Answer

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False

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True

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D

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