Deck 2: Cost Concepts

Question 1

Reference:
Frosting Corp. has provided the following relating to the most recent month (August 31, 2016) of operations, for their main product, cupcakes $$\begin{array} { l r } \text { Baker's salaries } & 20,000 \\\text { Finished goods inventory, beginning } & 18,000 \\\text { Finished goods inventory, ending } & 20,000 \\\text { General \& administrative expenses } & 20,000 \\\text { Indirect materials } & 17,500 \\\text { Production Supervisor, Salary } & 21,000 \\\text { Purchases of raw materials } & 28,000 \\\text { Raw materials inventory, ending } & 19,000 \\\text { Raw materials inventory, beginning } & 18,000 \\\text { Rent on production factory } & 19,000 \\\text { Rent, retail store } & 18,000 \\\text { Sales } & 243,000 \\\text { Utilities on production factory } & 17,500 \\\text { Utilities, retail store } & 17,000 \\\text { Wages, retail staff } & 20,000 \\\text { WIP inventory, beginning } & 19,500 \\\text { WIP inventory, ending } & 21,500\end{array}$$

-What was the operating income for the period?

A)$125,000
B)$68,000
C)$50,000
D)$88,000

Answer 1

$50,000

Question 2

The sequence of major activities that every organization carries out to fulfill its missio is known as:

A)the manufacturing process.
B)the value chain.
C)product planning and development.
D)marketing.

Answer 2

the value chain.

Question 3

Reference:
Frosting Corp. has provided the following relating to the most recent month (August 31, 2016) of operations, for their main product, cupcakes $$\begin{array} { l r } \text { Baker's salaries } & 20,000 \\\text { Finished goods inventory, beginning } & 18,000 \\\text { Finished goods inventory, ending } & 20,000 \\\text { General \& administrative expenses } & 20,000 \\\text { Indirect materials } & 17,500 \\\text { Production Supervisor, Salary } & 21,000 \\\text { Purchases of raw materials } & 28,000 \\\text { Raw materials inventory, ending } & 19,000 \\\text { Raw materials inventory, beginning } & 18,000 \\\text { Rent on production factory } & 19,000 \\\text { Rent, retail store } & 18,000 \\\text { Sales } & 243,000 \\\text { Utilities on production factory } & 17,500 \\\text { Utilities, retail store } & 17,000 \\\text { Wages, retail staff } & 20,000 \\\text { WIP inventory, beginning } & 19,500 \\\text { WIP inventory, ending } & 21,500\end{array}$$

-What was the cost of goods sold for the period?

A)$120,000
B)$118,000
C)$123,000
D)$121,000

Answer 3

$118,000

Question 4

Reference:
Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses:

-The delivery charges incurred when shipping the computer hard drives to be installed in the computer.

A)Fixed period cost.
B)Fixed product cost.
C)Variable product cost.
D)Variable period cost.

Question 5

Reference:
Boardman Company reported the following data for the month of January: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Inventories: } & 1 / 1 & 1 / 31 \\\hline \text { Raw materials } & \$ 32,000 & \$ 31,000 \\\hline \text { Work in process } & \$ 18,000 & \$ 12,000 \\\hline \text { Finished goods } & \$ 30,000 & \$ 35,000 \\\hline\end{array}\\\begin{array} { | l | r | } \hline \text { Additional information: } & \\\hline \text { Sales revenue } & \$ 210,000 \\\hline \text { Direct labour costs } & 40,000 \\\hline \text { Manufacturing overhead costs } & 70,000 \\\hline \text { Selling expenses } & 25,000 \\\hline \text { Administrative expenses } & 35,000 \\\hline\end{array}\end{array}$$

-If raw materials costing $35,000 were purchased during January, the total manufacturing costs for the month was?

A)$145,000.
B)$146,000.
C)$151,000.
D)$144,000.

Question 6

The following account balances has been extracted from Jimbob Co.'s general ledger: $$\begin{array} { | l | r | } \hline \text { Direct materials used in production } & \$ 200,000 \\\hline \text { Depreciation factory building } & \$ 10,000 \\\hline \text { Depreciation factory equipment } & \$ 50,000 \\\hline \text { Depreciation sales department automobiles } & \$ 10,000 \\\hline \text { Direct wages factory employees } & \$ 200,000 \\\hline \text { Sales department salaries and commissions } & \$ 150,000 \\\hline \text { Factory manager's salary } & \$ 50,000 \\\hline \text { Utility costs factory } & \$ 50,000 \\\hline \text { Utility costs sales office } & \$ 20,000 . \\\hline\end{array}$$ What was the total of nonmanufacturing costs?

A)$230,000.
B)$160,000.
C)$180,000.
D)$150,000.

Question 7

Which of the following major activities of a business will result in product costs

A)General administrative.
B)Manufacturing.
C)Marketing.
D)Customer support.

Question 8

Reference:
Frosting Corp. has provided the following relating to the most recent month (August 31, 2016) of operations, for their main product, cupcakes $$\begin{array} { l r } \text { Baker's salaries } & 20,000 \\\text { Finished goods inventory, beginning } & 18,000 \\\text { Finished goods inventory, ending } & 20,000 \\\text { General \& administrative expenses } & 20,000 \\\text { Indirect materials } & 17,500 \\\text { Production Supervisor, Salary } & 21,000 \\\text { Purchases of raw materials } & 28,000 \\\text { Raw materials inventory, ending } & 19,000 \\\text { Raw materials inventory, beginning } & 18,000 \\\text { Rent on production factory } & 19,000 \\\text { Rent, retail store } & 18,000 \\\text { Sales } & 243,000 \\\text { Utilities on production factory } & 17,500 \\\text { Utilities, retail store } & 17,000 \\\text { Wages, retail staff } & 20,000 \\\text { WIP inventory, beginning } & 19,500 \\\text { WIP inventory, ending } & 21,500\end{array}$$

-What was the amount of raw materials used in production?

A)$27,000
B)$28,000
C)$46,000
D)$18,000

Question 9

Which one of the following costs should NOT be considered a direct cost of serving particular customer who orders a customized personal computer by phone directly from the manufacturer?

A)The cost of shipping the computer to the customer.
B)The cost of packaging the computer for shipment.
C)The cost of leasing a machine on a monthly basis that automatically tests hard disk drives before they are installed in computers.
D)The cost of the hard disk drive installed in the computer.

Question 10

Which of the following would NOT be treated as a product cost for external financial reporting purposes?

A)Salaries of factory workers.
B)Advertising expenses.
C)Depreciation on a factory building.
D)Indirect labour in the factory.

Question 11

Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?

A)Manufacturing equipment depreciation.
B)Sheet steel in a file cabinet made by the company.
C)Idle time for direct labour.
D)Taxes on a factory building.

Question 12

Green Company's costs for the month of August were as follows: direct materials, $27,000; direct labour, $34,000; sales salaries, $14,000; indirect labour, $10,000; indirect materials, $15,000; general corporate administrative cost, $12,000; taxes on manufacturing facility, $2,000; and rent on factory, $17,000. The beginning work in process inventory was $16,000 and the ending work in process inventory was $9,000. What was the cost of goods manufactured for the month?

A)$112,000.
B)$105,000.
C)$132,000.
D)$138,000.

Question 13

An opportunity cost is:

A)a cost which may be saved by not adopting an alternative.
B)the difference in total costs which results from selecting one alternative instead of another.
C)a cost which may be shifted to the future with little or no effect on current operations.
D)the potential benefit forgone by selecting one alternative instead of another.

Question 14

The prime cost was?

A)$500.
B)$800.
C)$700.
D)$900.

Question 15

Last month a manufacturing company had the following operating results: $$\begin{array} { | l | r | } \hline \text { Beginning finished goods inventory } & \$ 74,000 \\\hline \text { Ending finished goods inventory } & \$ 73,000 \\\hline \text { Sales } & \$ 464,000 \\\hline \text { Gross margin } & \$ 52,000 \\\hline\end{array}$$ What was the cost of goods manufactured for the month?

A)$463,000.
B)$411,000.
C)$413,000.
D)$412,000.

Question 16

The following information was provided by Grand Company for the year just ended: $$\begin{array} { | l | r | } \hline \text { Beginning finished goods inventory } & \$ 130,425 \\\hline \text { Ending finished goods inventory } & \$ 125,770 \\\hline \text { Sales } & \$ 500,000 \\\hline \text { Gross margin } & \$ 100,000 \\\hline\end{array}$$ The cost of goods manufactured for the year was:

A)$395,345.
B)$404,655.
C)$104,655.
D)$95,345.

Question 17

Reference:
Charlie's Chocolate Factory manufactures chocolate bars and ships them directly to wholesalers and retailers across the country. The company has two product lines: milk chocolate bars and chocolate covered almonds. Classify the following company's expenses if the cost object is a single product line (either milk chocolate bars or chocolate covered almonds).

-Rent on the production factory.

A)Indirect product cost.
B)Direct product cost.
C)Direct period cost.
D)Indirect period cost.

Question 18

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 910 \\\hline \text { Raw materials inventory, beginning } & \$ 80 \\\hline \text { Raw materials inventory, ending } & \$ 20 \\\hline \text { Purchases of raw materials } & \$ 100 \\\hline \text { Direct labour } & \$ 130 \\\hline \text { Manufacturing overhead } & \$ 200 \\\hline \text { Administrative expenses } & \$ 160 \\\hline \text { Selling expenses } & \$ 140 \\\hline \text { Work in process inventory, beginning } & \$ 40 \\\hline \text { Work in process inventory, ending } & \$ 10 \\\hline \text { Finished goods inventory, beginning } & \$ 130 \\\hline \text { Finished goods inventory, ending } & \$ 150 \\\hline\end{array}$$

-The cost of goods manufactured for the year (in thousands of dollars)was:

A)$530.
B)$520.
C)$460.
D)$500.

Question 19

Reference:
Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses:

-The delivery charges incurred when shipping the computers to distributors and retailers.

A)Fixed product cost.
B)Variable period cost.
C)Fixed period cost.
D)Variable product cost.

Question 20

The beginning balance of the Raw Materials inventory account for May was $27,500. The ending balance for May was $28,750 and $128,900 of raw materials were used during the month. The materials purchased during the month cost:

A)$130,150.
B)$157,650.
C)$127,650.
D)$131,300.

Question 21

Which of the following statements regarding fixed costs is incorrect

A)Fixed costs expressed on a per unit basis will react inversely with changes in activity.
B)Expressing fixed costs on a per unit basis usually is the best approach for decision-making.
C)Assumptions by accountants regarding the behaviour of fixed costs rest heavily on the concept of the relevant range.
D)Fixed costs frequently represent long-term investments in property, plant, and equipment.

Question 22

Reference:
Charlie's Chocolate Factory manufactures chocolate bars and ships them directly to wholesalers and retailers across the country. The company has two product lines: milk chocolate bars and chocolate covered almonds. Classify the following company's expenses if the cost object is a single product line (either milk chocolate bars or chocolate covered almonds).

-The cost of cocoa used in the factory.

A)Indirect product cost.
B)Direct period cost.
C)Direct product cost.
D)Indirect period cost.

Question 23

Delta Merchandising, Inc. has provided the following information for the year just ended: $$\begin{array} { | l | r | } \hline \text { Net sales } & \$ 128,500 \\\hline \text { Beginning inventory } & 24,000 \\\hline \text { Purchases } & 80,000 \\\hline \text { Gross margin } & 38,550 \\\hline\end{array}$$ The ending inventory for the company at year end was:

A)$9,950.
B)$24,500.
C)$65,450.
D)$14,050.

Question 24

Which of the following costs is often important in decision making, but is omitted from conventional accounting records?

A)Sunk cost.
B)Indirect cost.
C)Fixed cost.
D)Opportunity cost.

Question 25

During January, the cost of goods manufactured was $93,000. The beginning finished goods inventory was $16,000 and the ending finished goods inventory was $20,000. What was the cost of goods sold for the month?

A)$97,000.
B)$129,000.
C)$93,000.
D)$89,000.

Question 26

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karlist Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 800 \\\hline \text { Raw materials inventory, beginning } & \$ 60 \\\hline \text { Raw materials inventory, ending } & \$ 70 \\\hline \text { Purchases of raw materials } & \$ 180 \\\hline \text { Direct labour } & \$ 100 \\\hline \text { Manufacturing overhead } & \$ 190 \\\hline \text { Administrative expenses } & \$ 110 \\\hline \text { Selling expenses } & \$ 150 \\\hline \text { Work in process inventory, beginning } & \$ 70 \\\hline \text { Work in process inventory, ending } & \$ 80 \\\hline \text { Finished goods inventory, beginning } & \$ 120 \\\hline \text { Finished goods inventory, ending } & \$ 160 \\\hline\end{array}$$

-The net income for the year (in thousands of dollars)was:

A)$190.
B)$390.
C)$130.
D)$70.

Question 27

Reference:
Charlie's Chocolate Factory manufactures chocolate bars and ships them directly to wholesalers and retailers across the country. The company has two product lines: milk chocolate bars and chocolate covered almonds. Classify the following company's expenses if the cost object is a single product line (either milk chocolate bars or chocolate covered almonds).

-Advertising campaign for Charlie's Chocolate Factory, no specific products were mentioned in the campaign.

A)Indirect product cost.
B)Indirect period cost.
C)Direct period cost.
D)Direct product cost.

Question 28

The following account balances has been extracted from Jimbob Co.'s general ledger:

$\begin{array}{|l|r|}\hline \text { Direct materials used in production } & \$ 200,000 \\\hline \text { Depreciation factory building } & \$ 10,000 \\\hline \text { Depreciation factory equipment } & \$ 50,000 \\\hline \text { Depreciation sales department automobiles } & \$ 10,000 \\\hline \text { Direct wages factory employees } & \$ 200,000 \\\hline \text { Sales department salaries and commissions } & \$ 150,000 \\\hline \text { Factory manager's salary } & \$ 50,000 \\\hline \text { Utility costs factory } & \$ 50,000 \\\hline \text { Utility costs sales office } & \$ 20,000 \\\hline\end{array}$

What was the total of manufacturing overhead?

A)$400,000.
B)$160,000.
C)$740,000.
D)$110,000.

Question 29

Reference:
Geneva Steel Corporation produces large sheets of heavy gauge steel. The company showed the following amounts relating to its production for the year just completed: $$\begin{array} { | l | r | } \hline \text { Direct materials used in production } & \$ 110,000 \\\hline \text { Direct labour costs for the year } & 55,000 \\\hline \text { Work in process, beginning } & 22,000 \\\hline \text { Finished goods, beginning } & 45,000 \\\hline \text { Cost of goods available for sale } & 288,000 \\\hline \text { Cost of goods sold } & 238,000 \\\hline \text { Work in process, ending } & 16,000 \\\hline\end{array}$$

-Manufacturing overhead cost for the year was?

A)$84,000.
B)$78,000.
C)$72,000.
D)$56,000.

Question 30

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karlist Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 800 \\\hline \text { Raw materials inventory, beginning } & \$ 60 \\\hline \text { Raw materials inventory, ending } & \$ 70 \\\hline \text { Purchases of raw materials } & \$ 180 \\\hline \text { Direct labour } & \$ 100 \\\hline \text { Manufacturing overhead } & \$ 190 \\\hline \text { Administrative expenses } & \$ 110 \\\hline \text { Selling expenses } & \$ 150 \\\hline \text { Work in process inventory, beginning } & \$ 70 \\\hline \text { Work in process inventory, ending } & \$ 80 \\\hline \text { Finished goods inventory, beginning } & \$ 120 \\\hline \text { Finished goods inventory, ending } & \$ 160 \\\hline\end{array}$$

-The cost of goods manufactured or the year (in thousands of dollars)was:

A)$450.
B)$530.
C)$470.
D)$540.

Question 31

Reference:
Frosting Corp. has provided the following relating to the most recent month (August 31, 2016) of operations, for their main product, cupcakes $$\begin{array} { l r } \text { Baker's salaries } & 20,000 \\\text { Finished goods inventory, beginning } & 18,000 \\\text { Finished goods inventory, ending } & 20,000 \\\text { General \& administrative expenses } & 20,000 \\\text { Indirect materials } & 17,500 \\\text { Production Supervisor, Salary } & 21,000 \\\text { Purchases of raw materials } & 28,000 \\\text { Raw materials inventory, ending } & 19,000 \\\text { Raw materials inventory, beginning } & 18,000 \\\text { Rent on production factory } & 19,000 \\\text { Rent, retail store } & 18,000 \\\text { Sales } & 243,000 \\\text { Utilities on production factory } & 17,500 \\\text { Utilities, retail store } & 17,000 \\\text { Wages, retail staff } & 20,000 \\\text { WIP inventory, beginning } & 19,500 \\\text { WIP inventory, ending } & 21,500\end{array}$$

-What was the total manufacturing overhead incurred during the period?

A)$57,500
B)$40,000
C)$92,000
D)$75,000

Question 32

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 990 \\\hline \text { Raw materials inventory, beginning } & \$ 40 \\\hline \text { Raw materials inventory, ending } & \$ 70 \\\hline \text { Purchases of raw materials } & \$ 120 \\\hline \text { Direct labour } & \$ 200 \\\hline \text { Manufacturing overhead } & \$ 230 \\\hline \text { Administrative expenses } & \$ 150 \\\hline \text { Selling expenses } & \$ 140 \\\hline \text { Work in process inventory, beginning } & \$ 70 \\\hline \text { Work in process inventory, ending } & \$ 50 \\\hline \text { Finished goods inventory, beginning } & \$ 120 \\\hline \text { Finished goods inventory, ending } & \$ 160 \\\hline\end{array}$$

-The cost of goods manufactured for the year (in thousands of dollars)was:

A)$590.
B)$500.
C)$540.
D)$570.

Question 33

The following information was provided by Jimbob Co. for the year just ended: $$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 500,000 \\\hline \text { Ending finished goods inventory } & \$ 100,000 \\\hline \text { Sales } & \$ 800,000 \\\hline \text { Gross margin } & \$ 200,000 \\\hline\end{array}$$ What was beginning finished goods inventory?

A)$200,000.
B)$300,000.
C)$400,000.
D)$100,000.

Question 34

If the cost of goods sold is greater than the cost of goods manufactured, then:

A)total manufacturing costs must be greater than cost of goods manufactured.
B)work in process inventory has decreased during the period.
C)finished goods inventory has decreased during the period.
D)finished goods inventory has increased during the period.

Question 35

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 990 \\\hline \text { Raw materials inventory, beginning } & \$ 40 \\\hline \text { Raw materials inventory, ending } & \$ 70 \\\hline \text { Purchases of raw materials } & \$ 120 \\\hline \text { Direct labour } & \$ 200 \\\hline \text { Manufacturing overhead } & \$ 230 \\\hline \text { Administrative expenses } & \$ 150 \\\hline \text { Selling expenses } & \$ 140 \\\hline \text { Work in process inventory, beginning } & \$ 70 \\\hline \text { Work in process inventory, ending } & \$ 50 \\\hline \text { Finished goods inventory, beginning } & \$ 120 \\\hline \text { Finished goods inventory, ending } & \$ 160 \\\hline\end{array}$$

-The cost of the raw materials used in production during the year (in thousands of dollars) was:

A)$160.
B)$190.
C)$90.
D)$150.

Question 36

The following information was provided by Wilson Company for the year just ended: $$\begin{array} { | l | r | } \hline \text { Beginning finished goods inventory } & \$ 150,750 \\\hline \text { Ending finished goods inventory } & \$ 140,475 \\\hline \text { Sales } & \$ 475,000 \\\hline \text { Gross margin } & \$ 150,000 \\\hline\end{array}$$ The cost of goods manufactured for the year was:

A)$325,000.
B)$333,275.
C)$314,725.
D)$334,275.

Question 37

The gross margin for Cushing Company for the first quarter of last year was $325,000 when sales were $700,000. The beginning inventory of finished goods was $60,000 and the ending inventory of finished goods was $85,000. The cost of goods manufactured for the first quarter would have been:

A)$350,000.
B)$485,000.
C)$375,000.
D)$400,000.

Question 38

Variable cost:

A)decreases on a per unit basis as the number of units produced increases.
B)increases on a per unit basis as the number of units produced increases.
C)remains the same in total as production increases.
D)remains constant on a per unit basis as the number of units produced increases.

Question 39

Reference:
The following data pertain to Harriman Company's operations during July: $$\begin{array} { | l | r | r | } \hline & { \text { July 1 } } & { \text { July 31 } } \\\hline \text { Raw materials inventory } & 0 & \$ 5,000 \\\hline \text { Work in process inventory } & ? & 4,000 \\\hline \text { Finished goods inventory } & \$ 12,000 & ? \\\hline & & \\\hline \text { Other data: } & & \\\hline \text { Cost of goods manufactured } & & \$ 105,000 \\\hline \text { Raw materials used } & & 40,000 \\\hline \text { Manufacturing overhead costs } & & 20,000 \\\hline \text { Direct labour costs } & & 39,000 \\\hline \text { Gross profit } & & 100,000 \\\hline \text { Sales } & & 210,000 \\\hline\end{array}$$

-The beginning work in process inventory was?

A)$4,000.
B)$10,000.
C)$1,000.
D)$14,000.

Question 40

Reference:
Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses:

-The hard drive installed in each computer.

A)Fixed period cost.
B)Fixed product cost.
C)Variable period cost.
D)Variable product cost.

Question 41

Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behaviour patterns remain unchanged, the total cost of goods manufactured will be?

A)$630,000.
B)$600,000.
C)$585,000.
D)$615,000.

Question 42

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 990 \\\hline \text { Raw materials inventory, beginning } & \$ 40 \\\hline \text { Raw materials inventory, ending } & \$ 70 \\\hline \text { Purchases of raw materials } & \$ 120 \\\hline \text { Direct labour } & \$ 200 \\\hline \text { Manufacturing overhead } & \$ 230 \\\hline \text { Administrative expenses } & \$ 150 \\\hline \text { Selling expenses } & \$ 140 \\\hline \text { Work in process inventory, beginning } & \$ 70 \\\hline \text { Work in process inventory, ending } & \$ 50 \\\hline \text { Finished goods inventory, beginning } & \$ 120 \\\hline \text { Finished goods inventory, ending } & \$ 160 \\\hline\end{array}$$

-The net income for the year (in thousands of dollars)was:

A)$490.
B)$200.
C)$150.
D)$250.

Question 43

Reference:
Boardman Company reported the following data for the month of January: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Inventories: } & 1 / 1 & 1 / 31 \\\hline \text { Raw materials } & \$ 32,000 & \$ 31,000 \\\hline \text { Work in process } & \$ 18,000 & \$ 12,000 \\\hline \text { Finished goods } & \$ 30,000 & \$ 35,000 \\\hline\end{array}\\\begin{array} { | l | r | } \hline \text { Additional information: } & \\\hline \text { Sales revenue } & \$ 210,000 \\\hline \text { Direct labour costs } & 40,000 \\\hline \text { Manufacturing overhead costs } & 70,000 \\\hline \text { Selling expenses } & 25,000 \\\hline \text { Administrative expenses } & 35,000 \\\hline\end{array}\end{array}$$

-Assume that cost of goods sold for Boardman Company for January was $140,000. What was the cost of goods manufactured for the month?

A)$135,000
B)$140,000
C)$145,000
D)$139,000

Question 44

If CD Company were to sell 43,000 units, the total expected cost would be

A)$144,625.
B)$166,625.
C)$124,000.
D)$146,000.

Question 45

Reference:
Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses:

-Units of production depreciation on the factory equipment.

A)Fixed period cost.
B)Fixed product cost.
C)Variable product cost.
D)Variable period cost.

Question 46

Reference:
Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses:

-Straight line depreciation on the factory building.

A)Variable period cost.
B)Fixed period cost.
C)Variable product cost.
D)Fixed product cost.

Question 47

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 910 \\\hline \text { Raw materials inventory, beginning } & \$ 80 \\\hline \text { Raw materials inventory, ending } & \$ 20 \\\hline \text { Purchases of raw materials } & \$ 100 \\\hline \text { Direct labour } & \$ 130 \\\hline \text { Manufacturing overhead } & \$ 200 \\\hline \text { Administrative expenses } & \$ 160 \\\hline \text { Selling expenses } & \$ 140 \\\hline \text { Work in process inventory, beginning } & \$ 40 \\\hline \text { Work in process inventory, ending } & \$ 10 \\\hline \text { Finished goods inventory, beginning } & \$ 130 \\\hline \text { Finished goods inventory, ending } & \$ 150 \\\hline\end{array}$$

-The net income for the year (in thousands of dollars)was:

A)$18.
B)$40.
C)$410.
D)$110.

Question 48

Rossiter Company failed to record a credit sale at the end of the year, although the reduction in finished goods inventories was correctly recorded when the goods were shipped to the customer. Which one of the following statements is correct?

A)Accounts receivable was not affected, inventory was understated, sales were understated, and cost of goods sold was understated.
B)Accounts receivable was not affected, inventory was not affected, sales were understated, and cost of goods sold was understated.
C)Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was overstated.
D)Accounts receivable was understated, inventory was not affected, sales were understated, and cost of goods sold was not affected.

Question 49

An accounting course is taught in two classes per week for one hour and fifty minutes each. The classes are held in a building with 36 classrooms that are used for a variety of courses. The building has an advanced monitoring system which allows electricity costs to be determined for each classroom and for each course. If the cost object is the accounting course, which of the following is an indirect cost?

A)The electricity cost for the course.
B)The salary of the building's custodian.
C)The course Instructor's salary for teaching the course (he only teaches this one course).
D)The cost of the preparation of the exam papers for this course.

Question 50

Reference:
Bergeron Inc. reported the following data for last year: $$\begin{array} { | l | r | } \hline \text { Work in process inventory, beginning } & \$ 100 \\\hline \text { Work in process inventory, ending } & \$ 150 \\\hline \text { Finished goods inventory, beginning } & \$ 180 \\\hline \text { Finished goods inventory, ending } & \$ 200 \\\hline \text { Direct labour cost } & \$ 300 \\\hline \text { Direct materials cost } & \$ 500 \\\hline \text { Manufacturing overhead cost } & \$ 400 \\\hline\end{array}$$

-The cost of goods manufactured was?

A)$1,250.
B)$1,180.
C)$1,220.
D)$1,150.

Question 51

Manufacturing overhead consists of:

A)all manufacturing costs, except direct materials and direct labour.
B)indirect labour but not indirect materials.
C)indirect materials but not indirect labour.
D)all manufacturing costs.

Question 52

The cost of rent for a manufacturing plant is generally considered to be a:
$$\begin{array} { | l | l | l | } \hline & \text { Prime cost } & \text { Product cost } \\\hline \text { a. } & \text { No } & \text { Yes } \\\hline \text { b. } & \text { No } & \text { No } \\\hline \text { c. } & \text { Yes } & \text { No } \\\hline \text { d. } & \text { Yes } & \text { Yes } \\\hline\end{array}$$

A)choice a.
B)choice b.
C)choice c.
D)choice d.

Question 53

Reference:
The following data pertain to Harriman Company's operations during July: $$\begin{array} { | l | r | r | } \hline & { \text { July 1 } } & { \text { July } 31 } \\\hline \text { Raw materials inventory } & 0 & \$ 5,000 \\\hline \text { Work in process inventory } & ? & 4,000 \\\hline \text { Finished goods inventory } & \$ 12,000 & ? \\\hline & & \\\hline \text { Other data: } & & \\\hline \text { Cost of goods manufactured } & & \$ 105,000 \\\hline \text { Raw materials used } & & 40,000 \\\hline \text { Manufacturing overhead costs } & & 20,000 \\\hline \text { Direct labour costs } & & 39,000 \\\hline \text { Gross profit } & & 100,000 \\\hline \text { Sales } & & 210,000 \\\hline\end{array}$$

-The ending finished goods inventory was?

A)$7,000.
B)$12,000.
C)$17,000.
D)$2,000.

Question 54

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karlist Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 800 \\\hline \text { Raw materials inventory, beginning } & \$ 60 \\\hline \text { Raw materials inventory, ending } & \$ 70 \\\hline \text { Purchases of raw materials } & \$ 180 \\\hline \text { Direct labour } & \$ 100 \\\hline \text { Manufacturing overhead } & \$ 190 \\\hline \text { Administrative expenses } & \$ 110 \\\hline \text { Selling expenses } & \$ 150 \\\hline \text { Work in process inventory, beginning } & \$ 70 \\\hline \text { Work in process inventory, ending } & \$ 80 \\\hline \text { Finished goods inventory, beginning } & \$ 120 \\\hline \text { Finished goods inventory, ending } & \$ 160 \\\hline\end{array}$$

-The cost of the raw materials used in production during the year (in thousands of dollars) was:

A)$250.
B)$170.
C)$240.
D)$190.

Question 55

Using the following data for January, calculate the cost of goods manufactured: $$\begin{array} { | l | r | } \hline \text { Direct materials } & \$ 38,000 \\\hline \text { Direct labour } & \$ 24,000 \\\hline \text { Manufacturing overhead } & \$ 17,000 \\\hline \text { Beginning work in process inventory } & \$ 10,000 \\\hline \text { Ending work in process inventory } & \$ 11,000 \\\hline\end{array}$$ The cost of goods manufactured was:

A)$80,000.
B)$78,000.
C)$89,000.
D)$79,000.

Question 56

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karlana Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 910 \\\hline \text { Raw materials inventory, beginning } & \$ 80 \\\hline \text { Raw materials inventory, ending } & \$ 20 \\\hline \text { Purchases of raw materials } & \$ 100 \\\hline \text { Direct labour } & \$ 130 \\\hline \text { Manufacturing overhead } & \$ 200 \\\hline \text { Administrative expenses } & \$ 160 \\\hline \text { Selling expenses } & \$ 140 \\\hline \text { Work in process inventory, beginning } & \$ 40 \\\hline \text { Work in process inventory, ending } & \$ 10 \\\hline \text { Finished goods inventory, beginning } & \$ 130 \\\hline \text { Finished goods inventory, ending } & \$ 150 \\\hline\end{array}$$

-The cost of the raw materials used in production during the year (in thousands of dollars) was:

A)$160.
B)$40.
C)$180.
D)$120.

Question 57

Reference:
At a sales volume of 32,000 units, CD Company's total fixed costs are $64,000 and total variable costs are
$60,000. (Do not round intermediate calculations)

-If CD Company were to sell 50,000 units, the total expected cost per unit would be (Do not round intermediate calculations.:

A)$3.16.
B)$3.88.
C)$3.20.
D)$2.48.

Question 58

Which one of the following costs should NOT be considered an indirect cost of serving a particular customer at a Dairy Queen fast food outlet?

A)The cost of the hamburger patty in the burger they ordered.
B)The cost of heating and lighting the kitchen.
C)The salary of the outlet's manager.
D)The wages of the employee who takes the customer's order.

Question 59

Reference:
Boardman Company reported the following data for the month of January: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Inventories: } & 1 / 1 & 1 / 31 \\\hline \text { Raw materials } & \$ 32,000 & \$ 31,000 \\\hline \text { Work in process } & \$ 18,000 & \$ 12,000 \\\hline \text { Finished goods } & \$ 30,000 & \$ 35,000 \\\hline\end{array}\\\begin{array} { | l | r | } \hline \text { Additional information: } & \\\hline \text { Sales revenue } & \$ 210,000 \\\hline \text { Direct labour costs } & 40,000 \\\hline \text { Manufacturing overhead costs } & 70,000 \\\hline \text { Selling expenses } & 25,000 \\\hline \text { Administrative expenses } & 35,000 \\\hline\end{array}\end{array}$$

-Assume that cost of goods sold for January was $124,000. The net income for January was:

A)$51,000.
B)$25,000.
C)$61,000.
D)$26,000.

Question 60

Reference:
Frosting Corp. has provided the following relating to the most recent month (August 31, 2016) of operations, for their main product, cupcakes $$\begin{array} { l r } \text { Baker's salaries } & 20,000 \\\text { Finished goods inventory, beginning } & 18,000 \\\text { Finished goods inventory, ending } & 20,000 \\\text { General \& administrative expenses } & 20,000 \\\text { Indirect materials } & 17,500 \\\text { Production Supervisor, Salary } & 21,000 \\\text { Purchases of raw materials } & 28,000 \\\text { Raw materials inventory, ending } & 19,000 \\\text { Raw materials inventory, beginning } & 18,000 \\\text { Rent on production factory } & 19,000 \\\text { Rent, retail store } & 18,000 \\\text { Sales } & 243,000 \\\text { Utilities on production factory } & 17,500 \\\text { Utilities, retail store } & 17,000 \\\text { Wages, retail staff } & 20,000 \\\text { WIP inventory, beginning } & 19,500 \\\text { WIP inventory, ending } & 21,500\end{array}$$

-What was the total prime costs for the period?

A)$20,000
B)$47,000
C)$27,000
D)$95,000

Question 61

Reference:
Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses:

-Annual subscription fee paid to computer magazine.

A)Variable period cost.
B)Fixed period cost.
C)Fixed product cost.
D)Variable product cost.

Question 62

The salary of the president of a manufacturing company would be classified as which of the following?

A)Manufacturing overhead.
B)Direct labour.
C)Product cost.
D)Period cost.

Question 63

For a manufacturing company, which of the following is an example of a period rather than a product cost?

A)Wages of salespersons.
B)Depreciation of factory equipment.
C)Wages of machine operators.
D)Insurance on factory equipment.

Question 64

The term differential cost refers to:

A)a cost which continues to be incurred even though there is no activity.
B)a cost which does not entail any dollar outlay but which is relevant to the decision-making process.
C)a difference in cost between any two alternatives.
D)the potential benefit forgone by selecting one alternative instead of another.

Question 65

Which of the following would be considered a product cost for external financial reporting purposes?

A)Cost of sand spread on the factory floor to absorb oil from manufacturing machines.
B)Cost of a warehouse used to store finished goods.
C)Cost of travel necessary to sell the manufactured product.
D)Cost of guided public tours through the company's facilities.

Question 66

Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behaviour patterns remain unchanged the?

A)total variable cost will remain unchanged.
B)total cost per unit will decrease.
C)fixed costs will increase in total.
D)variable cost per unit will increase.

Question 67

Reference:
Charlie's Chocolate Factory manufactures chocolate bars and ships them directly to wholesalers and retailers across the country. The company has two product lines: milk chocolate bars and chocolate covered almonds. Classify the following company's expenses if the cost object is a single product line (either milk chocolate bars or chocolate covered almonds).

-Advertising campaign for chocolate covered almonds.

A)Indirect product cost.
B)Direct product cost.
C)Direct period cost.
D)Indirect period cost.

Question 68

The following account balances has been extracted from Jimbob Co.'s general ledger: $$\begin{array} { | l | r | } \hline \text { Direct materials used in production } & \$ 200,000 \\\hline \text { Depreciation factory building } & \$ 10,000 \\\hline \text { Depreciation factory equipment } & \$ 50,000 \\\hline \text { Depreciation sales department automobiles } & \$ 10,000 \\\hline \text { Direct wages factory employees } & \$ 200,000 \\\hline \text { Sales department salaries and commissions } & \$ 150,000 \\\hline \text { Factory manager's salary } & \$ 50,000 \\\hline \text { Utility costs factory } & \$ 50,000 \\\hline \text { Utility costs sales office } & \$ 20,000 \\\hline\end{array}$$ What was the total of manufacturing costs?

A)$510,000.
B)$740,000.
C)$560,000.
D)$400,000.

Question 69

Using the following data, calculate the beginning work in process inventory. $$\begin{array} { | l | r | } \hline \text { Cost of goods sold } & \$ 70 \\\hline \text { Direct labour } & \$ 20 \\\hline \text { Direct materials } & \$ 15 \\\hline \text { Cost of goods manufactured } & \$ 80 \\\hline \text { Work in process ending } & \$ 10 \\\hline \text { Finished goods ending } & \$ 15 \\\hline \text { Manufacturing overhead } & \$ 30 \\\hline\end{array}$$ The beginning work in process inventory is:

A)$20.
B)$55.
C)$25.
D)$15.

Question 70

Reference:
The following data (in thousands of dollars) have been taken from the accounting records of Karlist Corporation for the just completed year. $$\begin{array} { | l | r | } \hline \text { Sales } & \$ 800 \\\hline \text { Raw materials inventory, beginning } & \$ 60 \\\hline \text { Raw materials inventory, ending } & \$ 70 \\\hline \text { Purchases of raw materials } & \$ 180 \\\hline \text { Direct labour } & \$ 100 \\\hline \text { Manufacturing overhead } & \$ 190 \\\hline \text { Administrative expenses } & \$ 110 \\\hline \text { Selling expenses } & \$ 150 \\\hline \text { Work in process inventory, beginning } & \$ 70 \\\hline \text { Work in process inventory, ending } & \$ 80 \\\hline \text { Finished goods inventory, beginning } & \$ 120 \\\hline \text { Finished goods inventory, ending } & \$ 160 \\\hline\end{array}$$

-The cost of goods sold for the year (in thousands of dollars)was:

A)$490.
B)$610.
C)$410.
D)$570.

Question 71

Which of the following statements is true

A)The determination of a cost object is nor relevant to the traceability of costs.
B)An indirect cost can be easily traced to an individual cost object.
C)A direct cost cannot be easily and economically traced to a cost object.
D)An indirect cost is one incurred to support a number of cost objects.

Question 72

Haack Inc. is a merchandising company. Last month the company's cost of goods sold was $84,000. The company's beginning merchandise inventory was $20,000 and its ending merchandise inventory was $18,000. What was the total amount of the company's merchandise purchases for the month?

A)$84,000.
B)$82,000.
C)$86,000.
D)$122,000.

Question 73

Reference:
Frosting Corp. has provided the following relating to the most recent month (August 31, 2016) of operations, for their main product, cupcakes $$\begin{array} { l r } \text { Baker's salaries } & 20,000 \\\text { Finished goods inventory, beginning } & 18,000 \\\text { Finished goods inventory, ending } & 20,000 \\\text { General \& administrative expenses } & 20,000 \\\text { Indirect materials } & 17,500 \\\text { Production Supervisor, Salary } & 21,000 \\\text { Purchases of raw materials } & 28,000 \\\text { Raw materials inventory, ending } & 19,000 \\\text { Raw materials inventory, beginning } & 18,000 \\\text { Rent on production factory } & 19,000 \\\text { Rent, retail store } & 18,000 \\\text { Sales } & 243,000 \\\text { Utilities on production factory } & 17,500 \\\text { Utilities, retail store } & 17,000 \\\text { Wages, retail staff } & 20,000 \\\text { WIP inventory, beginning } & 19,500 \\\text { WIP inventory, ending } & 21,500\end{array}$$

-What was the cost of goods manufactured for the period?

A)$122,000
B)$124,000
C)$120,000
D)$138,000

Question 74

Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?

A)Period cost.
B)Manufacturing overhead.
C)Product cost.
D)Administrative cost.

Question 75

Reference:
Frosting Corp. has provided the following relating to the most recent month (August 31, 2016) of operations, for their main product, cupcakes $$\begin{array} { l r } \text { Baker's salaries } & 20,000 \\\text { Finished goods inventory, beginning } & 18,000 \\\text { Finished goods inventory, ending } & 20,000 \\\text { General \& administrative expenses } & 20,000 \\\text { Indirect materials } & 17,500 \\\text { Production Supervisor, Salary } & 21,000 \\\text { Purchases of raw materials } & 28,000 \\\text { Raw materials inventory, ending } & 19,000 \\\text { Raw materials inventory, beginning } & 18,000 \\\text { Rent on production factory } & 19,000 \\\text { Rent, retail store } & 18,000 \\\text { Sales } & 243,000 \\\text { Utilities on production factory } & 17,500 \\\text { Utilities, retail store } & 17,000 \\\text { Wages, retail staff } & 20,000 \\\text { WIP inventory, beginning } & 19,500 \\\text { WIP inventory, ending } & 21,500\end{array}$$

-What was the total manufacturing costs for the period?

A)$102,000
B)$122,000
C)$95,000
D)$47,000

Question 76

Reference: 02-06
Geneva Steel Corporation produces large sheets of heavy gauge steel. The company showed the following amounts relating to its production for the year just completed: $$\begin{array} { | l | r | } \hline \text { Direct materials used in production } & \$ 110,000 \\\hline \text { Direct labour costs for the year } & 55,000 \\\hline \text { Work in process, beginning } & 22,000 \\\hline \text { Finished goods, beginning } & 45,000 \\\hline \text { Cost of goods available for sale } & 288,000 \\\hline \text { Cost of goods sold } & 238,000 \\\hline \text { Work in process, ending } & 16,000 \\\hline\end{array}$$

-The balance of the finished goods inventory at the end of the year was:

A)$50,000.
B)$45,000.
C)$95,000.
D)$193,000.

Question 77

Jimbob Company has two business alternatives - A & B with different total annual costs as 72) set out below: $$\begin{array} { | l | l | l | } \hline \text { Total annual costs: } & A & B \\\hline \text { Advertising } & \$ 32,000 & \$ 31,000 \\\hline \text { Other marketing costs } & \$ 18,000 & \$ 12,000 \\\hline \text { Other expenses } & \$ 30,000 & \$ 35,000 \\\hline\end{array}$$ Additionally, if alternative B is chosen the business will have to use some space for its own purposes that are currently being rented to an outside business for $5,000 per year. What are the total differential costs between the two alternatives?

A)$7,000.
B)$5,000.
C)$2,000.
D)$3,000.

Question 78

Gabel Inc. is a merchandising company. Last month the company's merchandise purchases totalled $63,000. The company's beginning merchandise inventory was $13,000 and its ending merchandise inventory was $15,000. What was the company's cost of goods sold for the month?

A)$65,000.
B)$91,000.
C)$61,000.
D)$63,000.

Question 79

Reference:
Tech Computer manufactures computers in its plant located in Toronto and then ships the computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses:

-Wages of factory supervisor.

A)Fixed period cost.
B)Variable period cost.
C)Variable product cost.
D)Fixed product cost.

Question 80

The Lyons Company's cost of goods manufactured was $120,000 when its sales were $360,000 and its gross margin was $220,000. If the ending inventory of finished goods was $30,000, the beginning inventory of finished goods must have been:

A)$20,000.
B)$150,000.
C)$50,000.
D)$110,000.