Quiz 2: Cost Terminology and Cost Behaviors
Business
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Q 13Q 13
A cost that shifts upward or downward when activity changes by a certain interval is referred to as a mixed cost.
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Q 14Q 14
A cost that shifts upward or downward when activity changes by a certain interval is referred to as a step cost.
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Q 15Q 15
If the cost of an additive is $5,000 + $0.50 for every unit of solvent produced,the cost is classified as a mixed cost.
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True False
Q 16Q 16
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.
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Q 17Q 17
A predictor which has an absolute cause and effect relationship to a cost is referred to a cost driver.
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Q 24Q 24
Retailers generally have a much higher degree of conversion than do manufacturing or professional firms.
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True False
Q 25Q 25
Retailers generally have a much lower degree of conversion than do manufacturing or professional firms.
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True False
Q 26Q 26
In a service industry,direct materials are usually insignificant in amount and can not easily be traced to a cost object.
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True False
Q 27Q 27
In a service industry,direct materials are usually significant in amount and can be easily traced to a cost object.
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True False
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Q 30Q 30
In an actual cost system,actual production overhead costs are typically accumulated in an Overhead Control account and assigned to Work in Process at the end of the period.
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True False
Q 31Q 31
In a normal cost system,actual production overhead costs are typically accumulated in an Overhead Control account and assigned to Work in Process at the end of the period.
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True False
Q 32Q 32
In a normal cost system,factory overhead is applied to Work in Process using a predetermined overhead rate.
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True False
Q 33Q 33
In an actual cost system,factory overhead is applied to Work in Process using a predetermined overhead rate.
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True False
Q 34Q 34
In an actual cost system,overhead is assigned to Work in Process Inventory with a debit entry to the account.
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True False
Q 35Q 35
In an actual cost system,overhead is assigned to Work in Process Inventory with a credit entry to the account.
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True False
Q 36Q 36
It is not necessary to prepare the Cost of Goods Manufactured statement prior to preparing the Cost of Goods Sold statement.
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True False
Q 37Q 37
Anything for which management wants to accumulate or collect costs is known as a _________________________.
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Q 38Q 38
Costs that can be conveniently traced to a cost object are referred to as ____________________ costs.
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Q 39Q 39
Costs that cannot be conveniently traced to a cost object are known as ____________________ costs.
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Q 40Q 40
A cost that remains unchanged in total within the relevant range is known as a ____________________ cost.
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Q 41Q 41
A cost that varies in total in direct proportion to changes in activity is known as a ____________________ cost
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Q 42Q 42
The assumed range of activity that reflects the company's normal operating range is referred to as the ______________________________.
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Q 43Q 43
A cost that remains constant on a per unit basis within the relevant range is a ____________________ cost.
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Q 44Q 44
A cost that varies inversely with the level of production is known as a ____________________ cost.
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Q 46Q 46
A cost that shifts upward or downward when activity changes by a certain interval is referred to as a ____________________ cost.
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Q 48Q 48
The three stages of production for a manufacturing firm are _________________________,______________________________,and _________________________.
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Q 49Q 49
Costs that are incurred to improve quality by precluding defects and improper processing are referred to as ____________________ costs.
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Q 50Q 50
Costs incurred for monitoring or inspecting products are known as ____________________ costs.
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Q 51Q 51
Costs that result from defective units,product returns,and complaints are referred to as ____________________ costs.
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Q 52Q 52
The term "relevant range" as used in cost accounting means the range over which
A)costs may fluctuate.
B)cost relationships are valid.
C)production may vary.
D)relevant costs are incurreD.
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Multiple Choice
Q 53Q 53
Which of the following defines variable cost behavior?
A)remains constant remains constant
B)remains constant increases
C)increases increases
D)increases remains constant
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Q 54Q 54
When cost relationships are linear,total variable prime costs will vary in proportion to changes in
A)direct labor hours.
B)total material cost.
C)total overhead cost.
D)production volume.
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Q 55Q 55
Which of the following would generally be considered a fixed factory overhead cost?
A)no no no
B)yes no yes
C)yes yes no
D)no yes no
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Q 56Q 56
An example of a fixed cost is
A)total indirect material cost.
B)total hourly wages.
C)cost of electricity.
D)straight-line depreciation.
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Q 57Q 57
A cost that remains constant in total but varies on a per-unit basis with changes in activity is called a(n)
A)expired cost.
B)fixed cost.
C)variable cost.
D)mixed cost.
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Q 58Q 58
A(n)____ cost increases or decreases in intervals as activity changes.
A)historical cost
B)fixed cost
C)step cost
D)budgeted cost
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Q 59Q 59
When the number of units manufactured increases,the most significant change in unit cost will be reflected as a(n)
A)increase in the fixed element.
B)decrease in the variable element.
C)increase in the mixed element.
D)decrease in the fixed element.
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Q 60Q 60
Which of the following always has a direct cause-effect relationship to a cost?
A)yes yes
B)yes no
C)no yes
D)no no
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Q 61Q 61
A cost driver
A)causes fixed costs to rise because of production changes.
B)has a direct cause-effect relationship to a cost.
C)can predict the cost behavior of a variable,but not a fixed,cost.
D)is an overhead cost that causes distribution costs to change in distinct increments with changes in production volume.
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Multiple Choice
Q 62Q 62
Product costs are deducted from revenue
A)as expenditures are made.
B)when production is completed.
C)as goods are sold.
D)to minimize taxable income.
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Q 64Q 64
Which of the following is not a product cost component?
A)rent on a factory building
B)indirect production labor wages
C)janitorial supplies used in a factory
D)commission on the sale of a product
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Q 65Q 65
Period costs
A)are expensed in the same period in which they are incurred.
B)are always variable costs.
C)remain unchanged over a given period of time.
D)are associated with the periodic inventory methoD.
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Q 67Q 67
The three primary inventory accounts in a manufacturing company are
A)Merchandise Inventory,Supplies Inventory,and Finished Goods Inventory.
B)Merchandise Inventory,Work in Process Inventory,and Finished Goods Inventory.
C)Supplies Inventory,Work in Process Inventory,and Finished Goods Inventory.
D)Raw Material Inventory,Work in Process Inventory,and Finished Goods Inventory.
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Q 68Q 68
Cost of Goods Sold is an
A)unexpired product cost.
B)expired product cost.
C)unexpired period cost.
D)expired period cost.
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Q 69Q 69
The indirect costs of converting raw material into finished goods are called
A)period costs.
B)prime costs.
C)overhead costs.
D)conversion costs.
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Multiple Choice
Q 70Q 70
Which of the following would need to be allocated to a cost object?
A)direct material
B)direct labor
C)direct production costs
D)indirect production costs
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Q 71Q 71
Conversion cost does not include
A)direct labor.
B)direct material.
C)factory depreciation.
D)supervisors' salaries.
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Q 72Q 72
The distinction between direct and indirect costs depends on whether a cost
A)is controllable or non-controllable.
B)is variable or fixed.
C)can be conveniently and physically traced to a cost object under consideration.
D)will increase with changes in levels of activity.
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Multiple Choice
Q 73Q 73
Hunnicutt Company is a construction company that builds greenhouses on special request.What is the proper classification of the carpenters' wages?
A)yes yes no
B)yes no yes
C)no no no
D)no yes yes
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Q 74Q 74
Hunnicutt Company is a construction company that builds greenhouses on special request.What is the proper classification of the cost of the cement building slab used?
A)no no
B)no yes
C)yes yes
D)yes no
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Q 75Q 75
Hunnicutt Company is a construction company that builds greenhouses on special request.What is the proper classification of indirect material used?
A)no no no
B)no yes yes
C)yes yes yes
D)yes no no
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Multiple Choice
Q 76Q 76
Which of the following costs would be considered overhead in the production of chocolate chip cookies?
A)flour
B)chocolate chips
C)sugar
D)oven electricity
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Multiple Choice
Q 77Q 77
All costs related to the manufacturing function in a company are
A)prime costs.
B)direct costs.
C)product costs.
D)conversion costs.
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Q 79Q 79
Plastic used to manufacture dolls is a
A)no yes yes yes
B)yes no yes no
C)yes yes no yes
D)yes yes yes no
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Q 80Q 80
The term "prime cost" refers to
A)all manufacturing costs incurred to produce units of output.
B)all manufacturing costs other than direct labor and raw material costs.
C)raw material purchased and direct labor costs.
D)the raw material used and direct labor costs.
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Q 81Q 81
Conversion of inputs to outputs is recorded in the
A)Work in Process Inventory account.
B)Finished Goods Inventory account.
C)Raw Material Inventory account.
D)both a and b.
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Q 82Q 82
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
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.
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Multiple Choice
Q 83Q 83
The formula to compute cost of goods manufactured is
A)beginning Work in Process Inventory plus purchases of raw material minus ending Work in Process Inventory.
B)beginning Work in Process Inventory plus direct labor plus direct material used plus overhead incurred minus ending Work in Process Inventory.
C)direct material used plus direct labor plus overhead incurred.
D)direct material used plus direct labor plus overhead incurred plus beginning Work in Process Inventory.
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Multiple Choice
Q 84Q 84
The final figure in the Schedule of Cost of Goods Manufactured represents the
A)cost of goods sold for the period.
B)total cost of manufacturing for the period.
C)total cost of goods started and completed this period.
D)total cost of goods completed for the perioD.
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Q 85Q 85
The formula for cost of goods sold for a manufacturer is
A)beginning Finished Goods Inventory plus Cost of Goods Manufactured minus ending Finished Goods Inventory.
B)beginning Work in Process Inventory plus Cost of Goods Manufactured minus ending Work in Process Inventory.
C)direct material plus direct labor plus applied overhead.
D)direct material plus direct labor plus overhead incurred plus beginning Work in Process Inventory.
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Multiple Choice
Q 86Q 86
Which of the following replaces the retailing component "Purchases" in computing Cost of Goods Sold for a manufacturing company?
A)direct material used
B)cost of goods manufactured
C)total prime cost
D)cost of goods available for sale
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Multiple Choice
Q 87Q 87
Costs that are incurred to preclude defects and improper processing are:
A)prevention costs
B)detection costs
C)appraisal costs
D)failure costs
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Q 88Q 88
Costs that are incurred for monitoring and inspecting are:
A)prevention costs
B)detection costs
C)appraisal costs
D)failure costs
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Multiple Choice
Q 89Q 89
Costs that are incurred when customers complain are:
A)prevention costs
B)detection costs
C)appraisal costs
D)failure costs
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Multiple Choice
Q 90Q 90
Richards Company
The following information has been taken from the cost records of Richards Company for the past year:
Refer to Richards Company.The cost of raw material purchased during the year was
A)$316.
B)$336.
C)$360.
D)$411.
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Multiple Choice
Q 91Q 91
Richards Company
The following information has been taken from the cost records of Richards Company for the past year:
Refer to Richards Company.Direct labor cost charged to production during the year was
A)$135.
B)$216.
C)$225.
D)$360.
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Multiple Choice
Q 92Q 92
Richards Company
The following information has been taken from the cost records of Richards Company for the past year:
Refer to Richards Company.Cost of Goods Manufactured was
A)$636.
B)$716.
C)$736.
D)$766.
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Multiple Choice
Q 93Q 93
Richards Company
The following information has been taken from the cost records of Richards Company for the past year:
Refer to Richards Company.Cost of Goods Sold was
A)$691.
B)$716.
C)$736.
D)$801.
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Multiple Choice
Q 94Q 94
Bridges Corporation
The following information has been taken from the cost records of Bridges Corporation for the past year:
Refer to Bridges Corporation.The cost of raw material purchased during the year was
A)$326.
B)$346
C)$375
D)$426
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Multiple Choice
Q 95Q 95
Bridges Corporation
The following information has been taken from the cost records of Bridges Corporation for the past year:
Refer to Bridges Company.Direct labor cost charged to production during the year was
A)$125
B)$188
C)$250
D)$375.
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Multiple Choice
Q 96Q 96
Bridges Corporation
The following information has been taken from the cost records of Bridges Corporation for the past year:
Refer to Bridges Company.Cost of Goods Manufactured was
A)$651
B)$736
C)$771
D)$796
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Multiple Choice
Q 97Q 97
Bridges Corporation
The following information has been taken from the cost records of Bridges Corporation for the past year:
Refer to Bridges Company.Cost of Goods Sold was
A)$711
B)$746
C)$796
D)$816
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Multiple Choice
Q 98Q 98
Jackson Company.
Jackson Company manufactures wood file cabinets.The following information is available for June of the current year.
The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Jackson Company.Compute total manufacturing costs for June,if there were 1,500 direct labor hours and $21,000 of raw material was purchased.
A)$58,500
B)$46,500
C)$43,500
D)$43,100
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Multiple Choice
Q 99Q 99
Jackson Company.
Jackson Company manufactures wood file cabinets.The following information is available for June of the current year.
The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Jackson Company.What are prime costs and conversion costs,respectively if there were 1,500 direct labor hours and $21,000 of raw material was purchased?
A)$29,100 and $33,900
B)$33,900 and $24,000
C)$33,900 and $29,100
D)$24,000 and $33,900
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Multiple Choice
Q 100Q 100
Jackson Company.
Jackson Company manufactures wood file cabinets.The following information is available for June of the current year.
The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Jackson Company.If there were 1,500 direct labor hours and $21,000 of raw material purchased,Cost of Goods Manufactured is:
A)$49,100.
B)$45,000.
C)$51,000.
D)$49,500.
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Multiple Choice
Q 101Q 101
Jackson Company.
Jackson Company manufactures wood file cabinets.The following information is available for June of the current year.
The direct labor rate is $9.60 per hour and overhead for the month was $9,600.
Refer to Jackson Company.If there were 1,500 direct labor hours and $21,000 of raw material purchased,how much is Cost of Goods Sold?
A)$64,500.
B)$59,800.
C)$38,800.
D)$53,800.
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Multiple Choice
Q 102Q 102
Davis Company manufactures desks.The beginning balance of Raw Material Inventory was $4,500;raw material purchases of $29,600 were made during the month.At month end,$7,700 of raw material was on hand.Raw material used during the month was
A)$26,400.
B)$34,100.
C)$37,300.
D)$29,600.
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Q 103Q 103
McCoy Company manufactures tables.The beginning balance of Raw Material Inventory was $5,500;raw material purchases of $31,500 were made during the month.At month end,$8,200 of raw material was on hand.Raw material used during the month was
A)$28,800
B)$31,500
C)$37,000.
D)$39,200
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Multiple Choice
Q 104Q 104
Parker Company manufactures tables.If raw material used was $80,000 and Raw Material Inventory at the beginning and end of the period,respectively,was $17,000 and $21,000,what was amount of raw material was purchased?
A)$76,000
B)$118,000
C)$84,000
D)$101,000
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Q 105Q 105
Petrie Company manufactures chairs.If raw material used was $100,000 and Raw Material Inventory at the beginning and end of the period,respectively,was $27,000 and $31,000,what was amount of raw material was purchased?
A)$ 96,000
B)$104,000
C)$158,000
D)$131,000
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Q 106Q 106
Denson Company manufactures computer stands.What is the beginning balance of Finished Goods Inventory if Cost of Goods Sold is $107,000;the ending balance of Finished Goods Inventory is $20,000;and Cost of Goods Manufactured is $50,000 less than Cost of Goods Sold?
A)$70,000
B)$77,000
C)$157,000
D)$127,000
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Multiple Choice
Q 107Q 107
Wyman Enterprises
Refer to Wyman Enterprises.For March,prime cost incurred was
A)$75,000.
B)$69,000.
C)$45,000.
D)$39,000.
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Q 108Q 108
Wyman Enterprises
Refer to Wyman Enterprises.For March,conversion cost incurred was
A)$30,000.
B)$40,000.
C)$70,000.
D)$72,000.
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Q 109Q 109
Wyman Enterprises
Refer to Wyman Enterprises.For March,Cost of Goods Manufactured was
A)$118,000.
B)$115,000.
C)$112,000.
D)$109,000.
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Multiple Choice
Q 110Q 110
Stayton Enterprises
Refer to Stayton Enterprises.For April,prime cost incurred was
A)$78,000.
B)$84,000
C)$51,000.
D)$45,000.
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Q 111Q 111
Stayton Enterprises
Refer to Stayton Enterprises.For April,conversion cost incurred was
A)$36,000
B)$45,000.
C)$81,000.
D)$84,000.
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Multiple Choice
Q 112Q 112
Stayton Enterprises
Refer to Stayton Enterprises.For April,Cost of Goods Manufactured was
A)$141,000
B)$133,000.
C)$125,000.
D)$121,000.
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Multiple Choice
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Q 114Q 114
Define a variable cost and a fixed cost.What causes changes in these costs? Give two examples of each.
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Q 115Q 115
What is the difference between a product cost and a period cost? Give three examples of each.What is the difference between a direct cost and indirect cost? Give two examples of each.
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Q 119Q 119
Given the following information for Simpson Corporation,prepare the necessary journal entries,assuming that the Raw Material Inventory account contains both direct and indirect material.
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Q 120Q 120
Given the following information for Gregg Corporation,prepare the necessary journal entries,assuming that the Raw Material Inventory account contains both direct and indirect material.
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Q 121Q 121
Using the information below,prepare a Schedule of Cost of Goods Manufactured (in good form)for the Gleason Company for June 20y0:
Additional information: purchases of raw material were $46,700;19,700 direct labor hours were worked at $11.30 per hour;overhead costs were $33,300.
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Q 122Q 122
Using the information below,prepare a Schedule of Cost of Goods Manufactured (in good form)for the Cayton 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.
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Q 123Q 123
In June 20y0,the Johnson Company has Cost of Goods Manufactured of $296,000;beginning Finished Goods Inventory of $29,730;and ending Finished Goods Inventory of $19,990.Prepare an income statement in good form.(Ignore taxes. )The following additional information is available:
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Q 124Q 124
The following information is for the Bayway Manufacturing Company for November.
Prepare in good form a Statement of Cost of Goods Manufactured and Statement of Cost of Goods Sold.
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Q 125Q 125
The following information is for the Pawnee Manufacturing Company for November.
Prepare a statement of Cost of Goods Manufactured and a statement of Cost of Goods Sold in good form.
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Q 126Q 126
From the following information for the Bentwater Company,compute prime costs and conversion costs for the current period.
Raw material purchased during the period cost $40,800;overhead incurred and paid or accrued for the period was $21,750;and 23,600 direct labor hours were incurred at a rate of $13.75 per hour.
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Q 127Q 127
The following miscellaneous data has been collected for Sawyers Manufacturing Company for the most recent year-end:
Required: Prepare statements of cost of goods manufactured and cost of goods sold showing how all unknown amounts were determined.
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Q 128Q 128
The following information was taken from the records of the Slidell Corporation for the month of July.(There were no inventories of work in process or finished goods on July 1. )
Indirect manufacturing costs are applied on a direct labor cost basis.The under-applied balance is due to seasonal variations and will be carried forward.The following cost estimates have been submitted for the work in process inventory of July 31: material,$3,000;direct labor,$2,000.
Required:
a.Determine the number of units that were completed and transferred to finished goods during the month.
b.Complete the estimate of the cost of work in process on July 31.
c.Compute cost of goods manufactured for the month.
d.Determine the cost of each unit completed during the month.
e.Determine the total amount debited to the Overhead Control accounts during the month.
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Q 129Q 129
The Lakeview Corporation had the following account balances:
Required:
a.What was the cost of raw material put into production during the year?
b.How much of the material from question 1 consisted of indirect material?
c.How much of the factory labor cost for the year consisted of indirect labor?
d.What was the cost of goods manufactured for the year?
e.What was the cost of goods sold for the year (before considering under- or overapplied overhead)?
f.If overhead is applied to production on the basis of direct material, what rate was in effect during the year?
g.Was manufacturing overhead under- or overapplied? By how much?
h.Compute the ending balance in the Work in Process Inventory account. Assume that this balance consists entirely of goods started during the year. If $32,000 of this balance is direct material cost, how much of it is direct labor cost? Manufacturing overhead cost?
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