Question 1

Cost of goods sold refers to the products brought to completion, whether they were started before or during the current accounting period.

Accepted Answer

A) True 
 B)False

Question 2

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of indirect cost for the soccer equipment line is the ________.

Accepted Answer

A)   material used to make the soccer balls
B)   labor to shape the leather used to make the soccer ball
C)   material used to manufacture the soccer studs
D)   property taxes paid on the land and building (plant) E) A) and B)
F) B) and C)

Question 3

Which of the following is a fixed cost for an automobile manufacturing plant?

Accepted Answer

A)   administrative salaries
B)   electricity used by assembly-line machines
C)   sales commissions
D)   tiresE) A) and B)
F) A) and C)

Question 4

All of the following are factors affecting direct versus indirect cost classification except:

Accepted Answer

A)   materiality of the cost
B)   cost accuracy
C)   information technology's ability to trace costs in an economically feasible way
D)   design of operationsE) A) and D)
F) None of the above

Question 5

Which of the following is true if the production volume decreases?

Accepted Answer

A)   fixed cost per unit increases
B)   average cost per unit decreases
C)   variable cost per unit increases
D)   variable cost per unit decreasesE) A) and C)
F) B) and D)

Question 6

Total manufacturing costs equal ________.

Accepted Answer

A)   direct materials plus prime costs
B)   direct materials plus conversion costs
C)   direct manufacturing labor costs plus sunk costs
D)   direct manufacturing labor costs plus conversion costsE) A) and D)
F) A) and C)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

What is the gross margin for 2018?

Accepted Answer

A)   $135,000
B)   $46,000
C)   $163,000
D)   $149,000E) None of the above
F) A) and C)

Question 9

All costs reported on the income statement of a service-sector company are inventoriable costs.

Accepted Answer

A) True 
 B)False

Question 10

Inventoriable costs are reported as a liability on the balance sheet when incurred and expensed on the income statement when the product is sold.

Accepted Answer

A) True 
 B)False

Question 11

Under GAAP, only ________ can be assigned to inventories in the financial statements.

Accepted Answer

A)   manufacturing costs
B)   period costs
C)   cost of goods sold
D)   historical costsE) C) and D)
F) A) and B)

Question 12

The balance sheet of a service-sector companies would show ________.

Accepted Answer

A)   work-in-process inventory, and finished goods inventory accounts
B)   only finished goods inventory
C)   direct materials inventory, work-in-process inventory, and finished goods inventory accounts
D)   no inventory accountsE) C) and D)
F) None of the above

Question 13

Which of the following cost is included in cost of goods sold?

Accepted Answer

A)   customer service cost
B)   manufacturing labor cost
C)   distribution cost
D)   marketing costE) All of the above
F) A) and B)

Question 14

In its first year of operation, the Excellent Publishing Company sells 52,000 units and has 1,700 units in stock at year end. The cost of goods sold are $3,100,000. What are the total manufacturing costs for the year if the average unit cost is $8.50?

Accepted Answer

A)   $3,114,450
B)   $3,100,000
C)   $3,085,550
D)   $14,450E) All of the above
F) B) and C)

Question 15

Which of the following is a manufacturing overhead cost?

Accepted Answer

A)   the use of direct materials in the making of a finished good
B)   labor cost of plant workers that can be traced accurately and easily to a particular product
C)   cost of materials that can be traced to individual products in an economically feasible manner
D)   overtime premiums paid to plant workersE) A) and C)
F) All of the above

Question 16

What are the three types of manufacturing cost?

Accepted Answer

Direct materials costs are the acquisiti...

Question 17

What is the operating income for 2018?

Accepted Answer

A)   $73,000
B)   $49,000
C)   $36,000
D)   $62,000E) C) and D)
F) All of the above

Question 18

Which of the following statements about the direct/indirect cost classification is true?

Accepted Answer

A)   Indirect costs are always traced.
B)   Indirect costs are always allocated.
C)   The design of sales target affects the direct/indirect classification.
D)   The direct/indirect classification depends on the cost control measures.E) A) and D)
F) A) and B)

Question 19

A plant manufactures several different products. If a particular product is the cost object, then the wages of the plant supervisor can be classified as a(n)  ________.

Accepted Answer

A)   direct cost because it occurs in the production facility
B)   indirect manufacturing cost and therefore is an inventoriable cost
C)   variable cost as it will vary on a per unit basis depending on volume
D)   period costE) None of the above
F) A) and C)

Question 20

Assigning indirect costs is easier than assigning direct costs.

Accepted Answer

A) True 
 B)False

Exam 2: An Introduction to Cost Terms and Purposes

In its first year of operation, the Excellent Publishing Company sells 52,000 units and has 1,700 units in stock at year end. The cost of goods sold are $3,100,000. What are the total manufacturing costs for the year if the average unit cost is $8.50?

Correct AnswerverifiedShow Answer

Which of the following is true if the production volume decreases?

Correct AnswerverifiedShow Answer

Under GAAP, only ________ can be assigned to inventories in the financial statements.

Correct AnswerverifiedShow Answer

What is the gross margin for 2018?

Correct AnswerverifiedShow Answer

Which of the following is a manufacturing overhead cost?

Correct AnswerverifiedShow Answer

Which of the following cost is included in cost of goods sold?

Correct AnswerverifiedShow Answer

Cost of goods sold refers to the products brought to completion, whether they were started before or during the current accounting period.

Correct AnswerverifiedShow Answer

All of the following are factors affecting direct versus indirect cost classification except:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All costs reported on the income statement of a service-sector company are inventoriable costs.

Correct AnswerverifiedShow Answer

A plant manufactures several different products. If a particular product is the cost object, then the wages of the plant supervisor can be classified as a(n) ________.

Correct AnswerverifiedShow Answer

Assigning indirect costs is easier than assigning direct costs.

Correct AnswerverifiedShow Answer

What is the operating income for 2018?

Correct AnswerverifiedShow Answer

Total manufacturing costs equal ________.

Correct AnswerverifiedShow Answer

Inventoriable costs are reported as a liability on the balance sheet when incurred and expensed on the income statement when the product is sold.

Correct AnswerverifiedShow Answer

The balance sheet of a service-sector companies would show ________.

Correct AnswerverifiedShow Answer

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of indirect cost for the soccer equipment line is the ________.

Correct AnswerverifiedShow Answer

Which of the following is a fixed cost for an automobile manufacturing plant?

Correct AnswerverifiedShow Answer

Which of the following statements about the direct/indirect cost classification is true?

Correct AnswerverifiedShow Answer

What are the three types of manufacturing cost?

Correct AnswerverifiedDirect materials costs are the acquisiti...View AnswerShow Answer

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Direct materials costs are the acquisiti...
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