Multiple Choice Which of the following statements about costs and expenses is co

Question

Multiple Choice Which of the following statements about costs and expenses is correct? a. b. c. d. 1. A cost is a sacrifice of resources. Cost and expense are the same. All assets will become expenses. There is no guidance as to when costs are to be treated as expenses. 2. A cost of goods sold statement for a retail business: a. b. c. d. Both a and c. Includes transportation-in costs. Has a cost of goods manufactured section. Covers a period of time. 3. A period cost: Is also known as manufacturing cost. b. a. Includes both marketing and administrative costs. Will be expensed when products are sold. c. d. Is part of cost of goods sold. Use the following information to answer questions 4 through 7: A product is sold for $75 each with unit cost of direct materials $20, direct labor $15, variable manufacturing overhead $12, and fixed manufacturing overhead $10. The volume produced and sold is 6,000 units. Variabe and fixed marketing and administrative costs are $4 and S3, respectively 4. Which of the following statements is correct? Prime cost is $35. Conversion cost is $37. Inventoriable cost is $57. All of the above. a. b. c. d. 5. What is the amount of cost of goods sold? a. S342,000 b. $201,500 c. $364,000 d. None of the above. . Which of the following statements is correct? a. Operating profit is $66,000. b. Gross margin is $108,000. c. Contribution margin is $144,000. d. All of the above.

Explanation / Answer

1 The following statements about costs and expenses is correct: a. A cost is a sacrifice of resources. c. All assets will become expenses 2 A cost of goods sold sold statement for a retail business: a. Both a and c. 3 A Period cost : b. Includes both marketing and administrative costs. 4 The following statement is correct: d. All of the above is correct. Prime cost (20+15) Conversion cost (15+12+10) Inventoriable cost (20+15+12+10) 5 Cost of goods sold 342000 (6000*57) a. $342,000 6 The following statement is correct: d. All of the above is correct.

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