Question 1

Which one of the following is an example of a period cost?

Accepted Answer

A period cost is a cost that is not directly related to the production of goods or services, but rather to the general functioning of the business. A manager's salary for work done in the corporate head office is an example of a period cost, because it is not directly tied to the production of goods or services, but rather the overall management and administration of the company.

Question 2

On the costs of goods manufactured schedule the item raw materials inventory (ending) appears as a(n)

Accepted Answer

Raw materials inventory (ending) represents the amount of raw materials that were not used in production during the period and therefore should be subtracted from raw materials available for use to determine the amount of raw materials actually used in production.

Question 3

Direct materials and direct labor of a company total $8000000.If manufacturing overhead is $4000000 what is direct labor cost?

Accepted Answer

The information provided does not give a specific breakdown of the direct materials and direct labor costs. Therefore, we cannot determine the direct labor cost based on the given information.

Question 4

A manufacturing company reports cost of goods manufactured as a(n)

Accepted Answer

Cost of goods manufactured represents the total cost that a manufacturing company incurs in the production of finished goods during a specific period of time. This cost is then used to calculate the cost of goods sold on the income statement. Therefore, choice C is the correct answer. Option A is incorrect because cost of goods manufactured is not a current asset but rather an expense related to the production of goods. Option B is incorrect because cost of goods manufactured is not an administrative expense but rather a cost directly related to the production process. Option D is incorrect because cost of goods manufactured is not a component of the raw materials inventory but rather a cost related to the manufacturing process as a whole.

Question 5

If the amount of "Cost of goods manufactured" during a period exceeds the amount of "Total manufacturing costs" for the period then

Accepted Answer

If the amount of "Cost of goods manufactured" during a period exceeds the amount of "Total manufacturing costs" for the period, it means that the company's cost of goods sold is less than the cost of goods manufactured. This implies that the ending work in process inventory is less than the beginning work in process inventory, and therefore, option D is the correct answer.

Question 6

As inventoriable costs expire they become

Accepted Answer

Inventoriable costs are the costs associated with producing a product and are initially recorded as inventory on the balance sheet. As the products are sold, the cost of those goods sold is transferred from inventory to cost of goods sold (COGS) on the income statement. Therefore, as inventoriable costs expire they become COGS, not selling expenses, gross profit, or sales revenue.

Question 7

The subtotal "Cost of goods manufactured" appears on

Accepted Answer

The subtotal "Cost of goods manufactured" appears only on a manufacturing company's income statement. This is because manufacturing companies produce their own goods and therefore have costs specific to producing those goods, which are reflected in the cost of goods manufactured subtotal. Merchandising companies, on the other hand, simply purchase and sell already-produced goods, so they do not have a cost of goods manufactured subtotal.

Question 8

Cost of goods sold

Accepted Answer

Cost of goods sold appears on both manufacturing and merchandising companies' income statements.

Question 9

Product costs are also called

Accepted Answer

Product costs are inventoriable costs because they are added to inventory and only become expenses when the inventory is sold. Direct costs refer to costs that can be directly associated with a product or service (such as labor or material costs), while overhead costs refer to indirect costs (such as rent or utilities). Capitalizable costs refer to costs that can be added to the cost of a fixed asset, rather than being expensed immediately.

Question 10

Kushman Combines Inc.has $20000 of ending finished goods inventory as of December 31 2022.If beginning finished goods inventory was $10000 and cost of goods sold was $50000 how much would Kushman report for cost of goods manufactured?

Accepted Answer

Cost of goods manufactured = beginning finished goods inventory + cost of goods sold - ending finished goods inventory 
= $10,000 + $50,000 - $20,000 
= $60,000

Question 11

A manufacturing company calculates cost of goods sold as follows:

Accepted Answer

The formula for calculating cost of goods sold is beginning FG inventory + cost of goods manufactured - ending FG inventory. Choice D is the closest option to this formula, with the only difference being the use of "cost of goods purchased" instead of "cost of goods manufactured." However, cost of goods purchased would only be used if the company is a reseller, not a manufacturer. Therefore, D is the best choice.

Question 12

Cost of goods manufactured is calculated as follows:

Accepted Answer

The cost of goods manufactured is the total cost incurred during the production process, including direct materials used, direct labor, and manufacturing overhead. Beginning work in process (WIP) is included because it represents the cost of unfinished goods from the previous period that are continued in the current period. Ending WIP is subtracted from the total because it represents the cost of unfinished goods that are continued into the next period, and therefore should not be included in the cost of goods manufactured for the current period.

Question 13

Cost of goods manufactured in a manufacturing company is analogous to

Accepted Answer

The answer of Cost of goods manufactured in a manufacturing...

Question 14

For inventoriable costs to become expenses under the matching principle

Accepted Answer

Inventoriable costs (also known as product costs) are costs associated with creating a product, such as direct materials, direct labor, and manufacturing overhead. These costs are initially recorded as inventory on the balance sheet and become expenses when the finished product to which they attach is sold. This is in accordance with the matching principle, which states that expenses should be recognized in the same period as the corresponding revenue is earned. Therefore, option C is correct - the product to which they attach must be sold for inventoriable costs to become expenses. Options A, B, and D are incorrect because they do not accurately describe when inventoriable costs become expenses.

Question 15

Sales commissions are classified as

Accepted Answer

Sales commissions are classified as period costs because they are expensed in the period in which they are incurred, rather than being capitalized into the cost of goods sold.

Question 16

Which one of the following costs would not be inventoriable?

Accepted Answer

Period costs are not part of the cost of producing a product and are expensed immediately in the period incurred. Factory insurance, indirect materials, and indirect labor costs are all costs that can be directly and reasonably traced to the manufacturing process and are therefore part of the inventory cost.

Question 17

Dolan Company's accounting records reflect the following inventories: $\begin{array}{lcc} 
& \text { Dec. 31,2022 } & \text { Dec. 31,2021 } \
\hline \text { Raw materials inventory } & \$ 310,000 & \$ 260,000 \
\text { Work in process inventory } & 300,000 & 160,000 \
\text { Finished qoods inventory } & 190,000 & 150,000
\end{array}$ During 2022 $800000 of raw materials were purchased direct labor costs amounted to $670000 and manufacturing overhead incurred was $640000. The total raw materials available for use during 2022 for Dolan Company is

Accepted Answer

The answer of Dolan Company's accounting records reflect the following...

Question 18

Which of the following are period costs?

Accepted Answer

Period costs are expenses that are not related to the production or manufacturing of goods, but rather to the selling and administration of products. Selling expenses like advertising, sales commissions, shipping, and other administrative expenses are classified as period costs. Raw materials, direct materials, direct labor, and manufacturing overhead are all considered part of the cost of goods sold and are therefore classified as product costs.

Question 19

On the costs of goods manufactured schedule depreciation on factory equipment

Accepted Answer

Depreciation on factory equipment is a manufacturing overhead cost and is included in the manufacturing overhead section on the costs of goods manufactured schedule.

Question 20

Product costs consist of

Accepted Answer

Product costs include direct materials, direct labor, and manufacturing overhead. Selling and administrative expenses and period costs are not included in product costs, as they are considered indirect costs that are not directly tied to the production of a specific product.

Quiz 10: Cost-Volume-Profit