Question 1

Which beginning and ending inventories appear on a cost of goods manufactured schedule?

Accepted Answer

A cost of goods manufactured schedule shows the cost of goods that were completed in a specific period. It includes the beginning and ending balances of work in process. Raw materials and finished goods do not appear on the cost of goods manufactured schedule.

Question 2

What criteria must be met in order to consider the work of factory employees to be direct labour?

Accepted Answer

Direct labour is the physical work done by employees in the production process, directly associated with converting materials into finished products. Therefore, the criteria that must be met to consider it as direct labour is that it must be physically associated with converting materials into products.

Question 3

Which one of the following is a product cost?

Accepted Answer

Indirect labour is a cost directly related to the production of goods or services, making it a product cost. Office salaries, sales person's salaries, and advertising costs are all examples of period costs, which are not directly related to the production of goods or services.

Question 4

Which one of the following would not be classified as manufacturing overhead?

Accepted Answer

Direct materials are materials that are directly used in the production process and are therefore included in the cost of goods sold. Manufacturing overhead includes indirect materials, such as cleaning supplies or lubricants, indirect labor, such as supervisors or maintenance workers, and other indirect expenses like insurance on the factory building or property taxes on the manufacturing facility.

Question 5

A company incurred manufacturing costs that were product costs, but they are not classified as either direct materials or direct labour.What are these called?

Accepted Answer

Manufacturing overhead includes all manufacturing costs other than direct materials and direct labor, such as indirect materials, indirect labor, and other manufacturing expenses.

Question 6

Which of the following represents the correct order in which inventories are reported on a manufacturer's balance sheet?

Accepted Answer

The correct order for reporting inventories on a manufacturer's balance sheet is raw materials first, then work in process, and finally finished goods. This order represents the stages of production, with raw materials being the initial stage, work in process representing the middle stage, and finished goods being the final product ready for sale.

Question 7

Zirk, Inc.incurred cost of goods manufactured totalling $700,000, manufacturing overhead of $320,000, and direct materials totalling $40,000.How much is the amount of direct labour?

Accepted Answer

To calculate the amount of direct labor, we need to use the formula:
Direct Labor = Cost of Goods Manufactured - Manufacturing Overhead - Direct Materials
Direct Labor = $700,000 - $320,000 - $40,000
Direct Labor = $340,000

Question 8

Which one of the following is classified as direct labour?

Accepted Answer

Direct labour refers to the employees or workers who are directly involved in the production of goods or services. Bottlers of cola in a bottling company are directly involved in the production process, making them an example of direct labour.

Question 9

Which product cost is most difficult to associate with a product?

Accepted Answer

Manufacturing overhead includes indirect costs that are not easily traceable to a specific product, making it difficult to associate directly with a product.

Question 10

In what category are lubricants that are used for wheel bearings on skateboards produced by a manufacturer categorized?

Accepted Answer

Lubricants used for wheel bearings on skateboards are categorized as indirect materials because they are necessary for the production process but do not become a direct part of the final product.

Question 11

Inventoriable costs are also referred to as

Accepted Answer

Inventoriable costs are costs associated with producing or purchasing goods that are held in inventory and not yet sold. These costs are also known as product costs because they are directly tied to the production or purchase of goods for sale. Administrative costs (B) refer to costs associated with running a business and are not typically included in inventoriable costs. Period costs (C) are costs that are expensed as they are incurred and do not relate to the production or purchase of goods. Recorded costs (D) is a vague term and does not accurately describe inventoriable costs.

Question 12

Which one of the following costs would be included in manufacturing overhead of a lawn mower manufacturer?

Accepted Answer

Manufacturing overhead includes indirect costs that cannot be directly traced to a specific unit of production. Depreciation on testing equipment is an indirect cost that benefits the production process as a whole, making it a typical example of manufacturing overhead. The cost of the wheels, the fuel lines, and the wages of motor assemblers are all direct costs that can be directly traced to a specific unit of production and would therefore be included in the total cost of the lawn mower.

Question 13

Which one of the following is indirect labour considered?

Accepted Answer

Indirect labour is considered a product cost because it is part of the manufacturing overhead, which is included in the cost of producing goods.

Question 14

A company uses sandpaper in its production process.How is the cost of the sandpaper classified?

Accepted Answer

The cost of sandpaper is classified as a product cost because it is used in the production process and is necessary for manufacturing the final product.

Question 15

Which one of the following is not a manufacturing cost?

Accepted Answer

Advertising costs are considered a selling and administrative expense, not a manufacturing cost.

Question 16

Which of the following would most likely be included in manufacturing overhead?

Accepted Answer

Manufacturing overhead includes all costs incurred in the production process that cannot be directly traced to a specific unit of product. Rent on the company's factory would be a cost incurred in the production process and therefore would be included in manufacturing overhead. The other options, rent on the company's store and insurance/oil change on a delivery truck, are not incurred in the production process and therefore would not be included in manufacturing overhead.

Question 17

For 2020, Sparkman Company has cost of goods manufactured of $500,000, beginning finished goods inventory of $25,000, and ending finished goods inventory of $20,000.How much is cost of goods sold?

Accepted Answer

Cost of Goods Sold (COGS) is calculated as: Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory. Therefore, $25,000 + $500,000 - $20,000 = $505,000.

Question 18

Which one of the following is not another name for the term manufacturing overhead?

Accepted Answer

Period costs refer to all costs that are not directly related to the production process and are expensed in the period they are incurred, while manufacturing overhead includes indirect costs that are necessary for the production process, such as rent, utilities, and factory equipment maintenance. Factory overhead and indirect manufacturing costs are both alternative names for manufacturing overhead, while burden generally refers to the amount of indirect costs applied to each unit of production.

Question 19

Into which one of the following accounts would the work of factory employees, that can be physically and directly associated with converting raw materials into finished goods, be categorized?

Accepted Answer

Direct labour refers to the work done by factory employees that are physically and directly involved in the conversion of raw materials into finished goods. This includes activities such as assembly, fabrication, and production. Indirect labour, on the other hand, refers to the work done by employees who are not directly involved in the production process, such as supervisors and maintenance workers. Manufacturing overhead includes indirect costs such as rent, utilities, and depreciation. Indirect materials are materials that are not directly used in the production process, such as office supplies.

Question 20

In which classification would the wages of a factory payroll clerk be classified?

Accepted Answer

The wages of a factory payroll clerk would be classified as indirect labour costs. Indirect labour represents the cost of labour that is not directly involved in the production process, such as supervisors, maintenance workers, and clerical staff.

Quiz 2: Managerial Cost Concepts and Cost Behaviour Analysis