Question 1

If direct materials used during the year were $135,000,what was cost of goods manufactured?
A)$140,500.
B)$539,000.
C)$409,500.
D)$544,500.
E)some other amount.

Accepted Answer

The answer of If direct materials used during the year...

Question 2

If purchases of raw materials were $135,000 during the year,what was the amount of raw materials used during the year?
A)$129,200.
B)$140,800.
C)$135,000.
D)$146,600.
E)some other amount.

Accepted Answer

The answer of If purchases of raw materials were $135,000...

Question 3

The true statement about cost behavior is that:
A)variable costs are constant on a per-unit basis and change in total as activity changes.
B)fixed costs are constant on a per-unit basis and change in total as activity changes.
C)fixed costs are constant on a per-unit basis and constant in total as activity changes.
D)variable costs change on a per-unit basis and change in total as activity changes.
E)variable costs are constant on a per-unit basis and are constant in total as activity changes.

Accepted Answer

The answer of The true statement about cost behavior is...

Question 4

As activity decreases,unit variable cost:
A)increases proportionately with activity.
B)decreases proportionately with activity.
C)remains constant.
D)increases by a fixed amount.
E)decreases by a fixed amount.

Accepted Answer

Unit variable cost remains constant per unit, regardless of the level of activity. This means that the cost per unit does not change as activity levels increase or decrease.

Question 5

Which of the following would likely be a suitable cost driver for the amount of direct materials used?
A)The number of units sold.
B)The number of direct labor hours worked.
C)The number of machine hours worked.
D)The number of units produceD.
E)The number of employees working in the factory.

Accepted Answer

The amount of direct materials used would be best driven by the number of units produced, as the more units produced, the more materials will be used. The other options do not have a direct correlation with the amount of direct materials used.

Question 6

If the cost of goods manufactured for the year was $565,000,what was the amount of direct materials used during the year?
A)$155,500.
B)$140,500.
C)$150,000.
D)$145,500.
E)some other amount.

Accepted Answer

Direct materials are a component of the cost of goods manufactured. The amount of direct materials used during the year can be calculated by subtracting the cost of direct labor and manufacturing overhead from the cost of goods manufactured. In this case, the cost of direct materials used during the year is $565,000 - $140,500 = $155,500.

Question 7

For the year just ended,Cole Corporation's manufacturing costs (raw materials used,direct labor,and manufacturing overhead)totaled $1,500,000.Beginning and ending work-in-process inventories were $60,000 and $90,000,respectively.Cole's balance sheet also revealed respective beginning and ending finished-goods inventories of $250,000 and $180,000.On the basis of this information,how much would the company report as cost of goods manufactured (CGM)and cost of goods sold (CGS)?
A)CGM,$1,430,000;CGS,$1,460,000.
B)CGM,$1,470,000;CGS,$1,540,000.
C)CGM,$1,530,000;CGS,$1,460,000.
D)CGM,$1,570,000;CGS,$1,540,000.
E)Some other amounts.

Accepted Answer

The answer of For the year just ended,Cole Corporation's manufacturing...

Question 8

If the cost of goods manufactured for the year was $385,000,what was the cost of goods sold for the year?
A)$395,400.
B)$385,000.
C)$390,200.
D)$400,600.
E)some other amount.

Accepted Answer

The answer of If the cost of goods manufactured for...

Question 9

If the cost of goods sold for the year was $427,500,what was the cost of goods manufactured for the year?
A)$402,100.
B)$422,300.
C)$417,100.
D)$427,500.
E)some other amount.

Accepted Answer

The cost of goods manufactured includes the cost of raw materials, labor, and overhead incurred in production. Therefore, it is likely to be higher than the cost of goods sold. Since the options A, C, and D are lower than the cost of goods sold, they can be eliminated. Option B is the only one that is higher than the cost of goods sold and thus, is the correct answer.

Question 10

Fixed costs are costs that:
A)vary directly with changes in activity.
B)vary inversely with changes in activity.
C)remain constant on a per-unit basis.
D)remain constant as activity changes.
E)increase on a per-unit basis as activity increases.

Accepted Answer

Fixed costs remain constant regardless of changes in activity level, which means that they do not vary directly or inversely with changes in activity. They also do not increase on a per-unit basis as activity increases. Fixed costs are constant on a total basis, but may vary on a per-unit basis (e.g. rent may be a fixed cost, but the cost per unit will vary depending on the level of activity).

Question 11

Glass Industries reported the following data for the year just ended: sales revenue,$1,750,000;cost of goods sold,$980,000;cost of goods manufactured,$560,000;and selling and administrative expenses,$170,000.Glass' gross margin would be:
A)$940,000.
B)$1,190,000.
C)$1,020,000.
D)$380,000.
E)$770,000.

Accepted Answer

Gross margin = Sales revenue - Cost of goods sold
Gross margin = $1,750,000 - $980,000
Gross margin = $770,000
Therefore, the gross margin for Glass Industries would be $940,000.

Question 12

Which of the following is an example of a fixed cost?
A)Paper used in the manufacture of textbooks.
B)Property taxes paid by a firm to the City of Los Angeles.
C)The wages of part-time workers who are paid $8 per hour.
D)Gasoline consumed by salespersons' cars.
E)Surgical supplies used in a hospital's operating room.

Accepted Answer

Property taxes are a fixed cost because they do not vary with the level of production or sales. The other options are variable costs because they are directly related to the level of production or sales. For example, the more textbooks that are manufactured, the more paper will be used, and the more surgical supplies that are used in a hospital, the more surgeries are being performed.

Question 13

Pumpkin Enterprises began operations on January 1,20x1,with all of its activities conducted from a single facility.The company's accountant concluded that the year's building depreciation should be allocated as follows: selling activities,20%;administrative activities,35%;and manufacturing activities,45%.If Pumpkin sold 60% of 20x1 production during that year,what percentage of the depreciation would appear (either directly or indirectly)on the 20x1 income statement?
A)27%.
B)45%.
C)55%.
D)82%.
E)100%.

Accepted Answer

The answer of Pumpkin Enterprises began operations on January 1,20x1,with...

Question 14

The fixed cost per unit:
A)will increase as activity increases.
B)will increase as activity decreases.
C)will decrease as activity increases.
D)will remain constant.
E)will exhibit the behavior described in choices "B" and "C."

Accepted Answer

The answer of The fixed cost per unit:
A)will increase as...

Question 15

The choices below depict five costs of Benton Corporation and a possible driver for each cost.Which of these choices likely contains an inappropriate cost driver?
A)Gasoline consumed;number of miles driven.
B)Manufacturing overhead incurred in a heavily automated facility;direct labor hours.
C)Sales commissions;gross sales revenue.
D)Building maintenance cost;building square footage.
E)Human resources department cost;number of employees.

Accepted Answer

Manufacturing overhead incurred in a heavily automated facility is not likely to be primarily driven by direct labor hours as automation reduces the need for labor in the production process. A more appropriate cost driver for this type of cost would be machine hours or the level of automation used.

Question 16

Which of the following is not an example of a variable cost?
A)Straight-line depreciation on a machine that has a five-year service life.
B)Wages of manufacturing workers whose pay is based on hours worked.
C)Tires used in the production of tractors.
D)Aluminum used to make patio furniture.
E)Commissions paid to sales personnel.

Accepted Answer

Straight-line depreciation is a fixed cost as it is based on the original cost of the machine and its estimated service life, and does not vary with the amount of output produced. Variable costs vary with the level of production or sales, such as wages based on hours worked, materials used in production like tires and aluminum, and commissions paid to sales personnel.

Question 17

If raw materials used during the year were $135,000 what was the amount of raw materials purchased during the year?
A)$129,200.
B)$140,800.
C)$135,000.
D)$146,600.
E)some other amount.

Accepted Answer

The answer of If raw materials used during the year...

Question 18

An employee accidentally overstated the year's advertising expense by $50,000.Which of the following correctly depicts the effect of this error?
A)Cost of goods manufactured will be overstated by $50,000.
B)Cost of goods sold will be overstated by $50,000.
C)Both cost of goods manufactured and cost of goods sold will be overstated by $50,000.
D)Cost of goods sold will be overstated by $50,000,and cost of goods manufactured will be understated by $50,000.
E)None of thesE.

Accepted Answer

Advertising expense is not directly related to the cost of goods manufactured or sold, so overstating it does not affect these costs.

Question 19

As activity increases,unit variable cost:
A)increases proportionately with activity.
B)decreases proportionately with activity.
C)remains constant.
D)increases by a fixed amount.
E)decreases by a fixed amount.

Accepted Answer

Unit variable cost remains constant per unit, regardless of the level of activity. This means that the cost per unit does not change as the volume of production or activity increases or decreases.

Question 20

Variable costs are costs that:
A)vary inversely with changes in activity.
B)vary directly with changes in activity.
C)remain constant as activity changes.
D)decrease on a per-unit basis as activity increases.
E)increase on a per-unit basis as activity increases.

Accepted Answer

Variable costs vary directly with changes in activity. As the level of activity increases, the variable cost also increases, and as the level of activity decreases, the variable cost also decreases.

Quiz 2: Basic Cost Management Concepts and Accounting for Mass Customization Operations

If direct materials used during the year were $135,000,what was cost of goods manufactured?

If purchases of raw materials were $135,000 during the year,what was the amount of raw materials used during the year?

The true statement about cost behavior is that:

As activity decreases,unit variable cost:

Which of the following would likely be a suitable cost driver for the amount of direct materials used?

If the cost of goods manufactured for the year was $565,000,what was the amount of direct materials used during the year?

If the cost of goods manufactured for the year was $385,000,what was the cost of goods sold for the year?

If the cost of goods sold for the year was $427,500,what was the cost of goods manufactured for the year?

Fixed costs are costs that:

Glass Industries reported the following data for the year just ended: sales revenue,$1,750,000;cost of goods sold,$980,000;cost of goods manufactured,$560,000;and selling and administrative expenses,$170,000.Glass' gross margin would be:

Which of the following is an example of a fixed cost?

The fixed cost per unit:

The choices below depict five costs of Benton Corporation and a possible driver for each cost.Which of these choices likely contains an inappropriate cost driver?

Which of the following is not an example of a variable cost?

If raw materials used during the year were $135,000 what was the amount of raw materials purchased during the year?

An employee accidentally overstated the year's advertising expense by $50,000.Which of the following correctly depicts the effect of this error?

As activity increases,unit variable cost:

Variable costs are costs that: