Deck 2: Cost Terms,concepts,and Classifications

Question 1

What would be the classification of the transportation costs incurred by a manufacturing company to ship its product to its customers?

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

Answer 1

C

Question 2

What would be the classification of corporate controller's salary?

A) Manufacturing cost.
B) Product cost.
C) Administrative cost.
D) Selling cost.

Answer 2

C

Question 3

What does manufacturing overhead cost consist of?

A) All manufacturing costs.
B) All manufacturing costs, EXCEPT direct materials and direct labour.
C) Indirect materials but NOT indirect labour.
D) Indirect labour but NOT indirect materials.

Answer 3

B

Question 4

What is the outcome if the cost of goods sold is greater than the cost of goods manufactured?

A) Work-in-process inventory has decreased during the period.
B) Finished goods inventory has increased during the period.
C) Total manufacturing costs must be greater than cost of goods manufactured.
D) Finished goods inventory has decreased during the period.

Question 5

How would the cost of rent for a manufacturing plant generally be classified?

A) A product cost but not a prime cost.
B) Neither a product nor prime cost.
C) A prime cost but not a product cost.
D) Both a prime cost and product cost.

Question 6

Which of the following statements regarding variable cost is true?

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

Question 7

Prime costs consist of:

A) Direct Labour and Manufacturing Overhead.
B) Direct Material and Direct Labour.
C) Direct Material and Manufacturing overhead.
D) Direct Material, Direct Labour and Manufacturing Overhead.

Question 8

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

Question 9

Within the relevant range,what is the difference between variable costs and fixed costs?

A) Variable costs per unit fluctuate and fixed costs per unit remain constant.
B) Variable costs per unit are constant and fixed costs per unit fluctuate.
C) Total variable costs and total fixed costs are constant.
D) Total variable costs and total fixed costs fluctuate.

Question 10

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

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

Question 11

The Target store in your home town is one of many Target department stores across the province.Some of the costs associated with the store in your home town last month appear below:
$\begin{array}{|l|r|}\hline \text { Shoe Department Cost of Sales } & \$ 80,000 \\\hline \text { Other Department Salaries } & 62,000 \\\hline \text { Store Managers Salary } & 14,000 \\\hline \text { Shoe Department Sales Commissions } & 8,000 \\\hline \text { Store Utilities } & 13,000 \\\hline \text { Shoe Department Manager's Salary } & 9,000 \\\hline \text { Store Lease Cost } & 11,000 \\\hline \text { Store Janitorial Costs } & 11,000 \\\hline \text { Other Store Costs } & 98,000 \\\hline\end{array}$
The Shoe Department is one of many departments in the home town store.The direct costs of the Shoe Department total:

A) $80,000
B) $88,000
C) $97,000
D) $108,000

Question 12

The advertising costs incurred by Pepsi to air its commercials during the hockey season can best be described as a:

A) Variable cost.
B) Fixed cost.
C) Prime cost.
D) Conversion cost.

Question 13

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

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

Question 14

How should the cost of the fire insurance for a manufacturing plant be classified?

A) Prime cost.
B) Product cost.
C) Period cost.
D) Variable cost.

Question 15

How would the wages of factory maintenance personnel usually be classified?

A) Direct labour and manufacturing overhead.
B) Indirect labour and manufacturing overhead.
C) Direct labour and period cost.
D) Indirect labour and period cost

Question 16

For a lamp manufacturing company,the cost of the insurance on its vehicles that deliver lamps to customers is best described as a:

A) Prime cost.
B) Manufacturing overhead cost.
C) Period cost.
D) Differential cost of a lamp.

Question 17

Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company.How would the cost of this toll-free line be classified?

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

Question 18

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

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

Question 19

A brewery produces many variety of beer.If the cost object is a particular brand of beer the factory supervisor salary is classified a/an _____________ cost of the brand of beer and a _____________ cost of the entire division.

A) Direct; Common
B) Indirect; Common
C) Direct; Prime
D) Fixed; Period

Question 20

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

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

Question 21

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

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

Question 22

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

A) $314,725.
B) $335,275.
C) $325,000.
D) $464,725.

Question 23

During the month of June,Reardon Company incurs $17,000 of direct labour and $8,500 of manufacturing overhead,and purchases $15,000 of raw materials.Between the beginning and the end of the month,the raw-materials inventory increases by $2,000,the finished goods inventory increases by $1,500,and the work-in-process inventory decreases by $3,000.What is the cost of goods manufactured?

A) $38,500.
B) $40,500.
C) $41,500.
D) $43,500.

Question 24

Williams Company's direct labour cost is 25% of its conversion cost.If the manufacturing overhead cost for the last period is $45,000 and the direct materials cost is $25,000,what is the direct labour cost?

A) $15,000.
B) $60,000.
C) $33,333.
D) $20,000.

Question 25

You are given the following data for January:
$\begin{array}{|l|l|}\hline \text { Direct materials } & \$ 38,000 \\\hline \text { Direct labour } & \$ 24,000 \\\hline \text { Manufacturing overhead } & \$ 17,000 \\\hline \text { Beginning work in process inventory } & \$ 10,000 \\\hline \text { Ending work in process inventory } & \$ 11,000 \\\hline\end{array}$
Which of the following is the cost of goods manufactured?

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

Question 26

The following inventory valuation errors were discovered by Knox Corporation's new controller just after the annual financial statements were published at the end of Year 3.
The year 3 ending inventory was understated by $17,000.
The year 2 ending inventory was understated by $61,000.
The year 1 ending inventory was overstated by $23,000.
The net income for Knox in each of these years was:
$\begin{array}{|l|rr|r|}\hline & \text { Year 3 } & \text { Year 2 } & \text { Year 1 } \\\hline \text { Net income } & \$ 168,000 & \$ 254,000 & \$ 138,000 \\\hline\end{array}$
Assuming there were no income taxes,what was the adjusted net income in each year?
$\begin{array}{|l|r|r|r|}\hline & \text { Year 3 } & \text { Year 2 } & \text { Year 1 } \\\hline \text { A) } & \$ 212,000 & \$ 170,000 & \$ 161,000 \\\hline \text { B) } & \$ 124,000 & \$ 338,000 & \$ 115,000 \\\hline \text { C) } & \$ 90,000 & \$ 338,000 & \$ 161,000 \\\hline \text { D) } & \$ 124,000 & \$ 170,000 & \$ 115,000 \\\hline\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Question 27

You have the following data:
$\begin{array}{|l|r|}\hline \text { Cost of goods sold } & \$ 70 \\\hline \text { Direct labour } & \$ 20 \\\hline \text { Direct materials } & \$ 15 \\\hline \text { Cost of goods manufactured } & \$ 80 \\\hline \text { Work-in-process ending } & \$ 10 \\\hline \text { Finished goods ending } & \$ 15 \\\hline \text { Manufacturing overhead } & \$ 30 \\\hline\end{array}$
Which of the following represents the beginning work-in-process inventory?

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

Question 28

What does conversion cost consist of?

A) Manufacturing overhead cost.
B) Direct materials and direct labour cost.
C) Direct labour cost.
D) Direct labour and manufacturing overhead cost.

Question 29

The following information was provided by Grand Company for the year just ended:
$\begin{array}{|l|r|}\hline \text { Decrease in finished goods inventory } & \$ 4,655 \\\hline \text { Sales } & \$ 500,000 \\\hline \text { Gross margin } & \$ 100,000 \\\hline\end{array}$
What was the cost of goods manufactured for the year?

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

Question 30

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

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

Question 31

Which of the following best defines an opportunity cost?

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

Question 32

During the month of May,Bennett Manufacturing Company purchases $43,000 of raw materials.The manufacturing overhead totals $27,000 and the total manufacturing costs are $106,000.Assuming a beginning inventory of raw materials of $8,000 and an ending inventory of raw materials of $6,000,what must be the total for direct labour?

A) $34,000.
B) $38,000.
C) $36,000.
D) $45,000.

Question 33

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

Question 34

When a decision is made among a number of alternatives,the benefit that is lost by choosing one alternative over another is called what?

A) Realized cost.
B) Opportunity cost.
C) Conversion cost.
D) Accrued cost.

Question 35

To what does the term differential cost refer?

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

Question 36

A manufacturing company prepays its insurance coverage for a three-year period.The premium for the three years is $2,700 and is paid at the beginning of the first year.Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities.What amounts should be considered product costs and period costs respectively for the first year of coverage?
$\begin{array}{|l|r|r|}\hline & \text { Product Costs } & \text { Period Costs } \\\hline \text { A) } & \$ 2,700 & \$ 0 \\\hline \text { B) } & \$ 2,160 & \$ 540 \\\hline \text { C) } & \$ 1,440 & \$ 360 \\\hline \text { D) } & \$ 720 & \$ 180 \\\hline\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Question 37

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

Question 38

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

A) The cost of the hard disk drive installed in the computer.
B) The cost of shipping the computer to the customer.
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 packaging the computer for shipment.

Question 39

Prime cost consists of direct materials and what?

A) Direct labour.
B) Manufacturing overhead.
C) Indirect materials.
D) Cost of goods manufactured.

Question 40

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.What was the cost of goods manufactured for the first quarter?

A) $375,000.
B) $350,000.
C) $400,000.
D) $385,000.

Question 41

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


-What was the net income (in thousands of dollars)for the year?

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

Question 42

The following data pertain to Harriman Company's operations during July:

$\begin{array}{l}\begin{array} { | l | r | r | } \hline & \text { July 1 } & \text { July 31 } \\\hline \text { Raw materials } & 0 & \$ 5,000 \\\hline \text { Work-in-process inventory } & ? & \$ 4,000 \\\hline \text { Finished goods inventory } & \$ 12,000 & ? \\\hline\end{array}\\\\\begin{array} { | l | r | } \hline \text { Other data: } & \\\hline \text { Cost of goods manufactured } & \$ 105,000 \\\hline \text { Raw materials used } & \$ 40,000 \\\hline \text { Manufacturing overhead costs } & \$ 20,000 \\\hline \text { Direct labour costs } & \$ 39,000 \\\hline \text { Gross Margin } & \$ 100,000 \\\hline \text { Sales } & \$ 210,000 \\\hline\end{array}\end{array}$



-What was the beginning work-in-process inventory?

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

Question 43

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




-What was the cost of goods manufactured (finished)for the year (in thousands of dollars)?

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

Question 44

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



-What was the Gross Margin (in thousands of dollars)for the year?

A) $350.
B) $130.
C) $390.
D) $190.

Question 45

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



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

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

Question 46

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

Question 47

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


-What was the cost of goods manufactured (finished)for the year (in thousands of dollars)?

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

Question 48

During the first week of April,Gillian worked a total of 50 hours assembling products and had no idle time.Gillian is paid $15 per hour for regular time,and is paid time-and-a-half for all hours in excess of a 40-hour week.How much of Gillian's wages for the week should be charged to direct labour?

A) $600.
B) $225.
C) $750.
D) $975.

Question 49

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

Question 50

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




-What was the net income (in thousands of dollars)for the year?

A) $410.
B) $110.
C) $40.
D) $180.

Question 51

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



-What was the cost of goods sold (in thousands of dollars)for the year?

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

Question 52

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


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

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

Question 53

Robert Smith earns $16 per hour assembling products.For each hour over 40 he works in a week he is paid time-and-a-half.During a given week,he worked 40 hours for which 3 hours were idle time.How much of his weekly wages would be charged to direct labour?

A) $640.
B) $592.
C) $688.
D) $48.

Question 54

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


-What was the cost of goods sold (in thousands of dollars)for the year?

A) $700.
B) $500.
C) $660.
D) $580.

Question 55

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




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

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

Question 56

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.What was the cost of the materials purchased during the month?

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

Question 57

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




-What was the cost of goods sold for the year (in thousands of dollars)?

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

Question 58

Sally Smith is employed in the production of various electronic products,and she earns $8 per hour.She is paid time-and-a-half for work in excess of 40 hours per week.During a given week,she worked 45 hours and had no idle time.How much of her week's wages would be charged to manufacturing overhead?

A) $60.
B) $20.
C) $40.
D) $0.

Question 59

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



-What was the cost of goods manufactured (finished)for the year (in thousands of dollars)?

A) $450.
B) $460.
C) $530.
D) $540.

Question 60

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

Question 61

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:
$\begin{array} { | l | r | } \hline \text { Direct materials used in production } & \$ 110,000 \\\hline \text { Direct labour cost for the year } & \$ 55,000 \\\hline \text { Work in process, beginning } & \$ 22,000 \\\hline \text { Finished goods, beginning } & \$ 45,000 \\\hline \text { Cost of goods available for sale } & \$ 288,000 \\\hline \text { Cost of goods sold } & \$ 238,000 \\\hline \text { Work in process, ending } & \$ 16,000 \\\hline\end{array}$


-What was the balance of the finished goods inventory at the end of the year?

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

Question 62

$\begin{array}{l}\text { Boardman Company reported the following data for the month of January: }\\\begin{array} { | l | r | r | } \hline \text { Inventories: } & \mathbf { 1 } / \mathbf { 1 } & \mathbf { 1 / 3 1 } \\\hline \text { Raw materials } & \$ 32,000 & \$ 31,000 \\\hline \text { Work in process } & \$ 18,000 & \$ 12,000 \\\hline \text { Finished goods } & \$ 30,000 & \$ 35,000 \\\hline\end{array}\end{array}$
$\begin{array} { | l | r | } \hline \text { Additional information: } & \\\hline \text { Sales revenue } & \$ 210,000 \\\hline \text { Direct labour costs } & \$ 40,000 \\\hline \text { Manufacturing overhead costs } & \$ 70,000 \\\hline \text { Selling expenses } & \$ 25,000 \\\hline \text { Administrative expenses } & \$ 35,000 \\\hline\end{array}$

-Assuming that cost of goods sold for January was $124,000,what was the net income for January?

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

Question 63

Manufacturing overhead combined with direct materials is known as conversion cost.

Question 64

In a manufacturing company,goods available for sale equals the sum of the cost of goods manufactured and the beginning finished goods inventory.

Question 65

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




-Which of the following is the cost of goods manufactured?

A) $1,250.
B) $1,200.
C) $1,220.
D) $1,150.

Question 66

$\begin{array}{l}\text { Boardman Company reported the following data for the month of January: }\\\begin{array} { | l | r | r | } \hline \text { Inventories: } & \mathbf { 1 } / \mathbf { 1 } & \mathbf { 1 / 3 1 } \\\hline \text { Raw materials } & \$ 32,000 & \$ 31,000 \\\hline \text { Work in process } & \$ 18,000 & \$ 12,000 \\\hline \text { Finished goods } & \$ 30,000 & \$ 35,000 \\\hline\end{array}\end{array}$
$\begin{array} { | l | r | } \hline \text { Additional information: } & \\\hline \text { Sales revenue } & \$ 210,000 \\\hline \text { Direct labour costs } & \$ 40,000 \\\hline \text { Manufacturing overhead costs } & \$ 70,000 \\\hline \text { Selling expenses } & \$ 25,000 \\\hline \text { Administrative expenses } & \$ 35,000 \\\hline\end{array}$

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

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

Question 67

$\begin{array}{l}\text { Boardman Company reported the following data for the month of January: }\\\begin{array} { | l | r | r | } \hline \text { Inventories: } & \mathbf { 1 } / \mathbf { 1 } & \mathbf { 1 / 3 1 } \\\hline \text { Raw materials } & \$ 32,000 & \$ 31,000 \\\hline \text { Work in process } & \$ 18,000 & \$ 12,000 \\\hline \text { Finished goods } & \$ 30,000 & \$ 35,000 \\\hline\end{array}\end{array}$
$\begin{array} { | l | r | } \hline \text { Additional information: } & \\\hline \text { Sales revenue } & \$ 210,000 \\\hline \text { Direct labour costs } & \$ 40,000 \\\hline \text { Manufacturing overhead costs } & \$ 70,000 \\\hline \text { Selling expenses } & \$ 25,000 \\\hline \text { Administrative expenses } & \$ 35,000 \\\hline\end{array}$

-Assuming that cost of goods sold for Boardman Company for January was $140,000,what was the cost of goods manufactured for the month?

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

Question 68

In a manufacturing firm,depreciation is always considered a product cost for external financial reporting purposes.

Question 69

$\begin{array}{l}\text { Boardman Company reported the following data for the month of January: }\\\begin{array} { | l | r | r | } \hline \text { Inventories: } & \mathbf { 1 } / \mathbf { 1 } & \mathbf { 1 / 3 1 } \\\hline \text { Raw materials } & \$ 32,000 & \$ 31,000 \\\hline \text { Work in process } & \$ 18,000 & \$ 12,000 \\\hline \text { Finished goods } & \$ 30,000 & \$ 35,000 \\\hline\end{array}\end{array}$
$\begin{array} { | l | r | } \hline \text { Additional information: } & \\\hline \text { Sales revenue } & \$ 210,000 \\\hline \text { Direct labour costs } & \$ 40,000 \\\hline \text { Manufacturing overhead costs } & \$ 70,000 \\\hline \text { Selling expenses } & \$ 25,000 \\\hline \text { Administrative expenses } & \$ 35,000 \\\hline\end{array}$

-Which of the following is Boardman Company's total conversion cost for January?

A) $110,000.
B) $170,000.
C) $135,000.
D) $130,000.

Question 70

At a sales volume of 32,000 units, CD Company's total fixed costs are $64,000 and total variable costs are $60,000. The relevant range is 30,000 to 55,000 units.




-If CD Company sells 50,000 units,what is the total expected cost per unit? (Do not round intermediate computations).Round final answer to the nearest cent.

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

Question 71

In external financial reports,factory utilities costs may be included in an asset account on the balance sheet at the end of the period.

Question 72

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




-Which of the following is the prime cost?

A) $900.
B) $800.
C) $1,200.
D) $700.

Question 73

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:
$\begin{array} { | l | r | } \hline \text { Direct materials used in production } & \$ 110,000 \\\hline \text { Direct labour cost for the year } & \$ 55,000 \\\hline \text { Work in process, beginning } & \$ 22,000 \\\hline \text { Finished goods, beginning } & \$ 45,000 \\\hline \text { Cost of goods available for sale } & \$ 288,000 \\\hline \text { Cost of goods sold } & \$ 238,000 \\\hline \text { Work in process, ending } & \$ 16,000 \\\hline\end{array}$


-What was the manufacturing overhead cost for the year?

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

Question 74

All costs incurred in a merchandising firm are considered to be period costs.

Question 75

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




-Which of the following is the conversion cost?

A) $700.
B) $800.
C) $900.
D) $1,200.

Question 76

The following data pertain to Harriman Company's operations during July:

$\begin{array}{l}\begin{array} { | l | r | r | } \hline & \text { July 1 } & \text { July 31 } \\\hline \text { Raw materials } & 0 & \$ 5,000 \\\hline \text { Work-in-process inventory } & ? & \$ 4,000 \\\hline \text { Finished goods inventory } & \$ 12,000 & ? \\\hline\end{array}\\\\\begin{array} { | l | r | } \hline \text { Other data: } & \\\hline \text { Cost of goods manufactured } & \$ 105,000 \\\hline \text { Raw materials used } & \$ 40,000 \\\hline \text { Manufacturing overhead costs } & \$ 20,000 \\\hline \text { Direct labour costs } & \$ 39,000 \\\hline \text { Gross Margin } & \$ 100,000 \\\hline \text { Sales } & \$ 210,000 \\\hline\end{array}\end{array}$



-What was the ending finished goods inventory?

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

Question 77

Property taxes and insurance premiums paid on a factory building are examples of manufacturing overhead.

Question 78

Advertising costs are considered product costs for external financial reports since they are incurred in order to promote specific products.

Question 79

If the ending inventory of finished goods is understated,net income will be overstated.

Question 80

At a sales volume of 32,000 units, CD Company's total fixed costs are $64,000 and total variable costs are $60,000. The relevant range is 30,000 to 55,000 units.




-If CD Company sells 43,000 units,what is the total expected cost (Do not round your intermediate calculations)?

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