Question 1

The variable portion of the cost of electricity for a manufacturing plant is a: I. Conversion Cost or II. Period Cost
A)Only I
B)Both I and II
C)Only II
D)Neither I nor II

Accepted Answer

The variable portion of the cost of electricity is part of the conversion cost, which includes direct labor and manufacturing overhead costs. Period costs, on the other hand, are not directly related to the production process and include expenses such as selling and administrative costs.

Question 2

Salaries and wages incurred in the factory would be product costs

Accepted Answer

Salaries and wages incurred in the factory would be considered a product cost, which refers to the costs associated with producing and manufacturing a product. Period costs, on the other hand, are expenses that are not directly tied to production and are usually treated as operating expenses on the income statement. Examples of period costs include salaries and wages of administrative staff, advertising expenses, and rent for office space.

Question 3

Explain why in practice it is important to distinguish between period and product costs?

Accepted Answer

The answer of Explain why in practice it is important...

Question 4

Differential costs do not include fixed costs.

Accepted Answer

Differential costs can include both variable and fixed costs, as long as they change between alternatives being considered.

Question 5

Access the report by Fitzgerald, Johnston, Brignall, Silvestro and Voss (1991) mentioned on page 32 of Chapter 2. Discuss the differences that you see between costing for service industries and manufacturing. Give examples

Accepted Answer

The answer of Access the report by Fitzgerald, Johnston, Brignall,...

Question 6

The following costs were incurred in April:
Conversion costs during the month totalled:
$\begin{array}{lrr}
  \text { Direct materials. } &£ 18,000\
 \text { Direct labour. } &£ 21,000\
 \text { Manufacturing overhead. } &£ 33,000\
 \text { Selling expenses. } &£ 14,000\
 \text { Administrative expenses. } & £ 19,000\

\end{array}$

A)£39,000.
B)£54,000.
C)£105,000.
D)£51,000.

Accepted Answer

Conversion costs are the costs required to convert raw materials into finished goods and typically include Direct Labour and Manufacturing Overhead. Therefore, the total conversion costs for April are £21,000 (Direct Labour) + £33,000 (Manufacturing Overhead) = £54,000.

Question 7

Define the following.
Prime cost, conversion cost & manufacturing overhead

Accepted Answer

The answer of Define the following.
Prime cost, conversion cost &...

Question 8

Gabriel Inc. is a merchandising company. Last month the company's merchandise purchases totaled £70,000. The company's beginning merchandise inventory was £15,000 and its ending merchandise inventory was £22,000. What was the company's cost of goods sold for the month
A)£63,000
B)£77,000
C)£107,000
D)£70,000

Accepted Answer

The cost of goods sold (COGS) is calculated as beginning inventory + purchases - ending inventory. Therefore, COGS = £15,000 + £70,000 - £22,000 = £63,000.

Question 9

Define the following.
Product cost & period cost

Accepted Answer

The answer of Define the following.
Product cost & period cost...

Question 10

Define the following
Direct cost, indirect cost, variable cost, fixed cost,

Accepted Answer

The answer of Define the following
Direct cost, indirect cost, variable...

Question 11

During June, the cost of goods manufactured was £71,000. The beginning finished goods inventory was £18,000 and the ending finished goods inventory was £11,000. What was the cost of goods sold for the month
A)£64,000
B)£100,000
C)£71,000
D)£78,000

Accepted Answer

Cost of goods sold = Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory
Cost of goods sold = £18,000 + £71,000 - £11,000
Cost of goods sold = £78,000

Quiz 2: Cost Concepts, Behaviour and Estimation

The variable portion of the cost of electricity for a manufacturing plant is a: I. Conversion Cost or II. Period Cost

Salaries and wages incurred in the factory would be product costs

Explain why in practice it is important to distinguish between period and product costs?

Differential costs do not include fixed costs.

Access the report by Fitzgerald, Johnston, Brignall, Silvestro and Voss (1991) mentioned on page 32 of Chapter 2. Discuss the differences that you see between costing for service industries and manufacturing. Give examples

Define the following. Prime cost, conversion cost & manufacturing overhead

Gabriel Inc. is a merchandising company. Last month the company's merchandise purchases totaled £70,000. The company's beginning merchandise inventory was £15,000 and its ending merchandise inventory was £22,000. What was the company's cost of goods sold for the month

Define the following. Product cost & period cost

Define the following Direct cost, indirect cost, variable cost, fixed cost,

During June, the cost of goods manufactured was £71,000. The beginning finished goods inventory was £18,000 and the ending finished goods inventory was £11,000. What was the cost of goods sold for the month