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| 1 | |
Cost of goods sold is: |
| | A) | an asset |
| | B) | a liability |
| | C) | an expense |
| | D) | a revenue |
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| 2 | |
Indirect costs: |
| | A) | cannot be traced to a particular cost object in an economic manner |
| | B) | are written off as being unimportant |
| | C) | are always fixed costs |
| | D) | are always variable costs |
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| 3 | |
Steffi Blau, a recent accounting graduate, was preparing the month-end financial statements for Decorative Drapes, a manufacturer of curtains and blinds. Steffi is using the accounting information from the general ledger system and she is trying to decide under what classification the following costs should be reported: Curtain fabric | 85 000 | Machinists’ wages | 25 000 | Cutters’ wages | 4000 |
Steffi has asked you, the Management Accountant, for your advice. To which of the following cost classifications should Steffi correctly assign the above costs? |
| | A) | Manufacturing overhead. |
| | B) | Conversion costs. |
| | C) | Direct materials. |
| | D) | Prime costs. |
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| 4 | |
The Merrimax Manufacturing Company reported a cost of goods manufactured of $290 000 and cost of goods sold of $320 000, with the company’s year-end balance sheet revealing work in process and finished goods of $30 000 and $89 000 respectively. If supplemental information disclosed $60 000 of direct materials used in production, $145 000 of direct labour and $55 000 of manufacturing overhead, the company’s beginning finished goods inventory balance must have been: |
| | A) | $119 000 |
| | B) | $69 000 |
| | C) | $89 000 |
| | D) | $30 000 |
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| 5 | |
Contemporary costing systems focus on: |
| | A) | cost of activities |
| | B) | cost of products and services |
| | C) | cost of suppliers |
| | D) | all of the given answers |
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| 6 | |
Which of the following costs would be considered manufacturing overhead at a bakery that produces many types of baked goods, including date scones? |
| | A) | Electricity. |
| | B) | Flour. |
| | C) | Milk. |
| | D) | Dates. |
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| 7 | |
Which of the following costs would not be considered a manufacturing overhead cost? |
| | A) | Grease used to maintain the production equipment in working order. |
| | B) | The cost of the paper to produce an accounting textbook. |
| | C) | The annual insurance premium for the factory. |
| | D) | The annual depreciation cost incurred for the production equipment. |
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| 8 | |
Conversion costs are made up of direct labour, direct material and manufacturing overhead: |
| | A) | True |
| | B) | False |
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| 9 | |
As direct material is consumed, its cost is removed from the work in process inventory and added to the raw material cost: |
| | A) | True |
| | B) | False |
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| 10 | |
An inventoriable cost is another name for cost of goods sold: |
| | A) | True |
| | B) | False |
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| 11 | |
Fixed costs are costs that remain unchanged in total as the level of activity changes. Fixed costs decrease on a per unit basis as the level of activity increases. |
| | A) | True |
| | B) | False |
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| 12 | |
Cost of goods sold is calculated using the following formula:<BR><BR>
Cost of goods sold = beginning finished goods – cost of goods manufactured + ending finished goods |
| | A) | True |
| | B) | False |
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| 13 | |
A cost object is an item for which management wants a separate measure of cost: |
| | A) | True |
| | B) | False |
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| 14 | |
An indirect cost can be traced to a cost object in an economic manner: |
| | A) | True |
| | B) | False |
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