Question 1

We define cost allocation as:

Accepted Answer

A)  the process of tracking both direct and indirect costs associated with a cost object.
B)  the process of determining the actual cost of the cost object.
C)  the assignment of indirect costs to the chosen cost object.
D)  a function of cost tracing.
E)  not a function of cost assignment.F) A) and C)
G) C) and D)

Question 2

Wagner Company reported the following information about revenues and the cost of goods sold:

Required:
Compute the gross margin.

Accepted Answer

A)  $100,000
B)  $125,000
C)  $150,000
D)  $175,000
E)  $200,000F) A) and E)
G) All of the above

Question 3

Write a short essay and explain how managers differentiate between fixed costs and variable costs.

Accepted Answer

Managers understand that total fixed cos...

Question 4

Costs that have both fixed and variable elements are called mixed costs or semivariable costs.

Accepted Answer

A) True 
 B)False

Question 5

The two terms that managers use to describe cost classifications in manufacturing costing systems are prime costs and conversion costs.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following methods is not used to reduce the undesirable affects of absorption costing?

Accepted Answer

A)  Focus on careful planning and budgeting of inventory amounts.
B)  Incorporate carrying charges for inventory in the internal accounting system.
C)  Place greater weight on reporting performance over longer periods.
D)  Include only financial variables in the measures used to evaluate performance.
E)  Use alternative methods of inventory costing for internal purposes that does not create incentives for managers to produce for inventory.F) B) and D)
G) B) and E)

Question 7

Which of the following is normally included in direct materials inventory?

Accepted Answer

A)  Direct materials in stock and awaiting use in the manufacturing process.
B)  Goods partially worked on but not yet fully completed.
C)  Goods fully completed but not yet sold.
D)  Products in their original form intended to be sold without changing their basic form.
E)  Goods and products that have been completed and sold.F) A) and B)
G) A) and C)

Question 8

Under the variable costing method:

Accepted Answer

A)  fixed manufacturing costs are not inventoried.
B)  fixed manufacturing costs are inventoried.
C)  costs are absorbed into the finished goods inventory.
D)  does not distinguish fixed manufacturing costs from variable manufacturing costs.
E)  is only useful in long-term decision making processes in manufacturing firms.F) B) and D)
G) C) and E)

Question 9

A manager at a company that uses both variable costing and absorption costing methods can benefit from the different advantages of both.

Accepted Answer

A) True 
 B)False

Question 10

Write a short essay and explain how managers classify manufacturing costs.

Accepted Answer

There are three ways that managers class...

Question 11

Service-sector companies only provide services or intangible products and so do not hold inventories of tangible products.

Accepted Answer

A) True 
 B)False

Question 12

The cost object is:

Accepted Answer

A)  the cost incurred.
B)  a collection of cost data in some organized way by means of a cost object.
C)  a predicted,or forecasted,cost.
D)  anything for which a measurement of costs is desired.
E)  used to describe the assignment of indirect costs to a particular cost object.F) B) and D)
G) A) and B)

Question 13

Direct manufacturing labor costs are only a part of prime costs.

Accepted Answer

A) True 
 B)False

Question 14

The wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight time wage rate is:

Accepted Answer

A)  idle time.
B)  straight-time.
C)  accelerated time.
D)  overtime premium.
E)  direct costing method.F) A) and E)
G) B) and E)

Question 15

Write a short essay and explain why a manager at a manufacturing company considers the direct costs to be more accurate than indirect costs.

Accepted Answer

Managers at manufacturing companies cons...

Question 16

Acme Candle Company reported the following information:

Required:
Compute the average manufacturing cost per unit.

Accepted Answer

A)  $1.00
B)  $1.75
C)  $2.95
D)  $4.50
E)  $5.00F) C) and D)
G) B) and E)

Question 17

The general term used to identify the tracing and allocation of accumulated costs to a cost object is:

Accepted Answer

A)  cost accumulation.
B)  cost assignment.
C)  cost tracing.
D)  conversion costing.
E)  convertible costing.F) All of the above
G) B) and E)

Question 18

In general,a manager is more confident about the accuracy of direct costs of cost objects.

Accepted Answer

A) True 
 B)False

Question 19

If each motorcycle requires a fan belt that costs $20 and 2,000 motorcycles are produced in the month,the total cost for the fan belts is:

Accepted Answer

A)  considered to be a fixed cost.
B)  considered to be a direct variable cost.
C)  considered to be an indirect fixed cost.
D)  considered to be an indirect variable cost.
E)  none of these are true.F) C) and E)
G) None of the above

Question 20

Under Generally Accepted Accounting Principles (GAAP) ,only ________ costs can be assigned to inventories in the financial statements.

Accepted Answer

A)  period
B)  direct
C)  indirect
D)  variable
E)  manufacturingF) A) and B)
G) A) and C)

Exam 2: An Introduction to Cost Terms and Purposes

Write a short essay and explain why a manager at a manufacturing company considers the direct costs to be more accurate than indirect costs.

Correct AnswerverifiedManagers at manufacturing companies cons...View AnswerShow Answer

Under Generally Accepted Accounting Principles (GAAP) ,only ________ costs can be assigned to inventories in the financial statements.

Correct AnswerverifiedShow Answer

The wage rate paid to workers (for both direct labor and indirect labor) in excess of their straight time wage rate is:

Correct AnswerverifiedShow Answer

The two terms that managers use to describe cost classifications in manufacturing costing systems are prime costs and conversion costs.

Correct AnswerverifiedShow Answer

Costs that have both fixed and variable elements are called mixed costs or semivariable costs.

Correct AnswerverifiedShow Answer

Which of the following methods is not used to reduce the undesirable affects of absorption costing?

Correct AnswerverifiedShow Answer

We define cost allocation as:

Correct AnswerverifiedShow Answer

A manager at a company that uses both variable costing and absorption costing methods can benefit from the different advantages of both.

Correct AnswerverifiedShow Answer

In general,a manager is more confident about the accuracy of direct costs of cost objects.

Correct AnswerverifiedShow Answer

The general term used to identify the tracing and allocation of accumulated costs to a cost object is:

Correct AnswerverifiedShow Answer

Write a short essay and explain how managers differentiate between fixed costs and variable costs.

Correct AnswerverifiedManagers understand that total fixed cos...View AnswerShow Answer

Write a short essay and explain how managers classify manufacturing costs.

Correct AnswerverifiedThere are three ways that managers class...View AnswerShow Answer

If each motorcycle requires a fan belt that costs $20 and 2,000 motorcycles are produced in the month,the total cost for the fan belts is:

Correct AnswerverifiedShow Answer

Wagner Company reported the following information about revenues and the cost of goods sold: Required: Compute the gross margin.

Correct AnswerverifiedShow Answer

Under the variable costing method:

Correct AnswerverifiedShow Answer

Which of the following is normally included in direct materials inventory?

Correct AnswerverifiedShow Answer

Service-sector companies only provide services or intangible products and so do not hold inventories of tangible products.

Correct AnswerverifiedShow Answer

The cost object is:

Correct AnswerverifiedShow Answer

Direct manufacturing labor costs are only a part of prime costs.

Correct AnswerverifiedShow Answer

Acme Candle Company reported the following information: Required: Compute the average manufacturing cost per unit.

Correct AnswerverifiedShow Answer

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Managers at manufacturing companies cons...
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Managers understand that total fixed cos...
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There are three ways that managers class...
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Correct Answer
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Correct Answer
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