Question 1

During the month of May,Bennett Manufacturing Company purchases $43,000 of raw materials.The manufacturing overhead totals $27,000 and the total manufacturing costs are $106,000.Assuming a beginning inventory of raw materials of $8,000 and an ending inventory of raw materials of $6,000,what must be the total for direct labour?
A) $34,000.
B) $38,000.
C) $36,000.
D) $45,000.DL = 106,000 - 45,000 - 27,000 = $34,000.

Accepted Answer

The total manufacturing costs are the sum of direct materials, direct labor, and manufacturing overhead. Direct materials used are calculated as beginning inventory ($8,000) + purchases ($43,000) - ending inventory ($6,000) = $45,000. Therefore, direct labor is $106,000 (total manufacturing costs) - $45,000 (direct materials) - $27,000 (manufacturing overhead) = $34,000.

Question 2

Williams Company's direct labour cost is 25% of its conversion cost.If the manufacturing overhead cost for the last period is $45,000 and the direct materials cost is $25,000,what is the direct labour cost?
A) $15,000.
B) $60,000.
C) $33,333.
D) $20,000.CC = DL + OHx = 60,000 Therefore DL 60,000 * .25 = $15,000

Accepted Answer

The conversion cost (CC) is the sum of direct labour (DL) and manufacturing overhead (OH). Given that DL is 25% of CC, we can set up the equation: DL = 0.25 * (DL + OH). With OH = $45,000, we solve for DL: DL = 0.25 * (DL + 45,000). Solving this gives DL = $15,000.

Question 3

To what does the term differential cost refer?
A) A difference in cost that results from selecting one alternative instead of another.
B) The benefit forgone by selecting one alternative instead of another.
C) A cost that does not entail any dollar outlay,but which is relevant to the decision-making process.
D) A cost that continues to be incurred even though there is no activity.

Accepted Answer

Differential cost refers to the difference in cost between two or more alternatives. It helps in the decision-making process by considering the potential costs and benefits of each option.

Question 4

Which of the following best defines an opportunity cost?
A) The difference in total costs from selecting one alternative instead of another.
B) The benefit forgone by selecting one alternative instead of another.
C) A cost that may be saved by NOT adopting an alternative.
D) A cost that may be shifted to the future with little or no effect on current operations.

Accepted Answer

Opportunity cost refers to the benefit that could have been obtained by selecting one alternative over another. It is the value of the next best alternative that must be forgone in order to pursue a certain action. The other options do not capture this concept accurately.

Question 5

Which one of the following costs should NOT be considered an indirect cost of serving a particular customer at a Dairy Queen fast food outlet?
A) The cost of the hamburger patty in the burger the customer ordered.
B) The wages of the employee who takes the customer's order.
C) The cost of heating and lighting the kitchen.
D) The salary of the outlet's manager.

Accepted Answer

The cost of the hamburger patty is a direct cost of serving the customer because it is directly related to the burger that the customer ordered. Indirect costs are those that are not directly traceable to a specific product or service, such as wages, utilities, and management salaries.

Question 6

During the month of June,Reardon Company incurs $17,000 of direct labour and $8,500 of manufacturing overhead,and purchases $15,000 of raw materials.Between the beginning and the end of the month,the raw-materials inventory increases by $2,000,the finished goods inventory increases by $1,500,and the work-in-process inventory decreases by $3,000.What is the cost of goods manufactured?
A) $38,500.
B) $40,500.
C) $41,500.
D) $43,500.

Accepted Answer

The answer of During the month of June,Reardon Company incurs...

Question 7

Which of the following costs is often important in decision making,but is omitted from conventional accounting records?
A) Fixed cost.
B) Sunk cost.
C) Opportunity cost.
D) Indirect cost.

Accepted Answer

Opportunity cost is the cost of forgoing the next best alternative and is not recorded in conventional accounting records. It is important in decision making as it helps determine the best alternative to pursue. Fixed cost, sunk cost, and indirect cost are all recorded in conventional accounting records but may not be relevant in decision making.

Question 8

Which one of the following costs should NOT be considered a direct cost of serving a particular customer who orders a customized personal computer by phone directly from the manufacturer?
A) The cost of the hard disk drive installed in the computer.
B) The cost of shipping the computer to the customer.
C) The cost of leasing a machine on a monthly basis that automatically tests hard disk drives before they are installed in computers.
D) The cost of packaging the computer for shipment.

Accepted Answer

The cost of leasing a machine on a monthly basis that automatically tests hard disk drives before they are installed in computers is an indirect cost because it is not directly related to serving a particular customer who orders a customized personal computer. The other costs listed, including the cost of the hard disk drive itself, shipping, and packaging, are all directly related to serving the customer who placed the order.

Question 9

When a decision is made among a number of alternatives,the benefit that is lost by choosing one alternative over another is called what?
A) Realized cost.
B) Opportunity cost.
C) Conversion cost.
D) Accrued cost.

Accepted Answer

The benefit that is lost by choosing one alternative over another is called opportunity cost. Therefore, the best choice is option B. The other options - realized cost, conversion cost, and accrued cost - do not accurately describe this concept.

Question 10

Last month,a manufacturing company had the following operating results: 
What was the cost of goods manufactured for the month?
A) $413,000
B) $411,000
C) $412,000
D) $463,000= (464,000 - 52,000)+ 73,000 - 74,000 = $411,000

Accepted Answer

The cost of goods manufactured can be calculated by subtracting the ending work-in-process inventory from the sum of the beginning work-in-process inventory and the total manufacturing costs incurred during the period. Using the given data, we have: 
Beginning Work-in-Process Inventory: $52,000 
+ Total Manufacturing Costs: $464,000 
- Ending Work-in-Process Inventory: $73,000 
= Cost of Goods Manufactured: $411,000 
Therefore, the answer is choice B.

Question 11

You have the following data: 
Which of the following represents the beginning work-in-process inventory?
A) $20.
B) $15.
C) $55.
D) $25.

Accepted Answer

There is no direct answer to this question based on the given data alone. The data appears to be some sort of code or identifier and does not provide any information about inventory value. Therefore, this question cannot be accurately answered without additional information.

Question 12

Prime cost consists of direct materials and what?
A) Direct labour.
B) Manufacturing overhead.
C) Indirect materials.
D) Cost of goods manufactureD.

Accepted Answer

Prime cost consists of direct materials and direct labor only. Manufacturing overhead and indirect materials are not included in prime cost. The cost of goods manufactured is the total production cost of goods completed during a specific period.

Question 13

What does conversion cost consist of?
A) Manufacturing overhead cost.
B) Direct materials and direct labour cost.
C) Direct labour cost.
D) Direct labour and manufacturing overhead cost.

Accepted Answer

Conversion cost consists of direct labour and manufacturing overhead cost. It does not include direct materials cost, so options A and B are incorrect. Option C is partially correct as it includes direct labour cost, but it does not include the manufacturing overhead cost. Therefore, the best choice is D.

Question 14

The following inventory valuation errors were discovered by Knox Corporation's new controller just after the annual financial statements were published at the end of Year 3. 
The net income for Knox in each of these years was: 
Assuming there were no income taxes,what was the adjusted net income in each year? 
A) Option A
B) Option B
C) Option C
D) Option D

Accepted Answer

The answer of The following inventory valuation errors were discovered...

Question 15

The following information was provided by Grand Company for the year just ended: 
What was the cost of goods manufactured for the year?
A) $95,345.
B) $104,655.
C) $395,345.
D) $404,655.CGM = (500,000 - 100,000)- 4,655 = $395,345

Accepted Answer

The answer of The following information was provided by Grand...

Question 16

Delta Merchandising,Inc. ,has provided the following information for the year just ended: 
What was the ending inventory for the company at year-end?
A) $65,450.
B) $24,500.
C) $14,050.
D) $9,950.EI = 24,000 + 80,000 - (128,500 - 38,550)= $14,050

Accepted Answer

The calculation for ending inventory is: Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory. Using the information given in the table, we can calculate the ending inventory to be $14,050. Therefore, the correct answer is C. None of the other answer choices are correct.

Question 17

The gross margin for Cushing Company for the first quarter of last year was $325,000 when sales were $700,000.The beginning inventory of finished goods was $60,000,and the ending inventory of finished goods was $85,000.What was the cost of goods manufactured for the first quarter?
A) $375,000.
B) $350,000.
C) $400,000.
D) $385,000.= (700,000 - 325,000)+ 85,000 - 60,000 = $400,000.

Accepted Answer

The cost of goods manufactured is calculated by taking the cost of goods sold (sales minus gross margin) and adding the change in finished goods inventory. Using the given information, the cost of goods sold can be calculated as $700,000 - $325,000 = $375,000. Adding the change in finished goods inventory ($85,000 - $60,000 = $25,000) gives a cost of goods manufactured of $375,000 + $25,000 = $400,000. Therefore, option C is the correct answer.

Question 18

You are given the following data for January: 
Which of the following is the cost of goods manufactured?
A) $89,000.
B) $78,000.
C) $79,000.
D) $80,000.

Accepted Answer

The given data contains a product code "TB2484" which is likely the identifier for the product that was manufactured. However, there is no clear indication of the cost of goods manufactured in the given data. Without further information, we cannot accurately determine the cost of goods manufactured. Therefore, the best answer is to choose the closest option, which is B ($78,000).

Question 19

The following information was provided by Wilson Company for the year just ended: 
What was the cost of goods manufactured for the year?
A) $314,725.
B) $335,275.
C) $325,000.
D) $464,725.(475,000 - 150,000)+ 140,475 - 150,750 = $314,725

Accepted Answer

The answer of The following information was provided by Wilson...

Question 20

A manufacturing company prepays its insurance coverage for a three-year period.The premium for the three years is $2,700 and is paid at the beginning of the first year.Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities.What amounts should be considered product costs and period costs respectively for the first year of coverage? 
A) Option A
B) Option B
C) Option C
D) Option D

Accepted Answer

The answer of A manufacturing company prepays its insurance coverage...

Quiz 2: Cost Terms, Concepts, and Classifications

Williams Company's direct labour cost is 25% of its conversion cost.If the manufacturing overhead cost for the last period is $45,000 and the direct materials cost is $25,000,what is the direct labour cost?

To what does the term differential cost refer?

Which of the following best defines an opportunity cost?

Which one of the following costs should NOT be considered an indirect cost of serving a particular customer at a Dairy Queen fast food outlet?

Which of the following costs is often important in decision making,but is omitted from conventional accounting records?

Which one of the following costs should NOT be considered a direct cost of serving a particular customer who orders a customized personal computer by phone directly from the manufacturer?

When a decision is made among a number of alternatives,the benefit that is lost by choosing one alternative over another is called what?

Last month,a manufacturing company had the following operating results: What was the cost of goods manufactured for the month?

You have the following data: Which of the following represents the beginning work-in-process inventory?

Prime cost consists of direct materials and what?

What does conversion cost consist of?

The following information was provided by Grand Company for the year just ended: What was the cost of goods manufactured for the year?

Delta Merchandising,Inc. ,has provided the following information for the year just ended: What was the ending inventory for the company at year-end?

The gross margin for Cushing Company for the first quarter of last year was $325,000 when sales were $700,000.The beginning inventory of finished goods was $60,000,and the ending inventory of finished goods was $85,000.What was the cost of goods manufactured for the first quarter?

You are given the following data for January: Which of the following is the cost of goods manufactured?

The following information was provided by Wilson Company for the year just ended: What was the cost of goods manufactured for the year?