(TCO A) Wages paid to an assembly line worker in a factory are a (Points : 6) Pr

Question

(TCO A) Wages paid to an assembly line worker in a factory are a (Points : 6) Prime Cost YES.....Conversion Cost YES. Prime Cost YES.....Conversion Cost NO. Prime Cost NO....Conversion Cost NO. Prime Cost NO.....Conversion Cost YES. Question 2. 2. (TCO A) The costs of staffing and operating the accounting department at Central Hospital would be considered by the department of surgery to be (Points : 6) indirect costs. sunk costs. incremental costs. direct costs. Question 3. 3. (TCO A) The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n) (Points : 6) period cost. direct material cost. indirect manufacturing cost. direct product cost. None of the above Question 4. 4. (TCO C) When the activity level is expected to increase within the relevant range, what effects would be anticipated with respect to each of the following? (Points : 6) Fixed costs per unit decrease and variable costs per unit do not change. Fixed costs per unit increase and variable costs per unit do not change. Fixed costs per unit do not change and variable costs per unit do not change. Fixed costs per unit do not change and variable costs per unit increase. Question 5. 5. (TCO B) Emco Company uses direct labor cost as a basis for computing its predetermined overhead rate. In computing the predetermined overhead rate for last year, the company included in direct labor cost a portion of indirect labor. The effect of this misclassification will be to (Points : 6) overstate the predetermined overhead rate. understate the predetermined overhead rate. have no effect on the predetermined overhead rate. This cannot be determined from the information given. Question 6. 6. (TCO B) Under a job-order costing system, the product being manufactured (Points : 6) is homogeneous. passes from one manufacturing department to the next before being completed. can be custom manufactured. has a unit cost that is easy to calculate by dividing total production costs by the units produced. Question 7. 7. (TCO B) The weighted-average method of process costing differs from the FIFO method of process costing in that the weighted-average method (Points : 6) can be used under any cost-flow assumption. does not require the use of predetermined overhead rates. keeps costs in the beginning inventory separate from current period costs. does not consider the degree of completion of units in the beginning work-in-process inventory when computing equivalent units of production. Question 8. 8. (TCO C) The contribution margin ratio always decreases when the (Points : 6) fixed expenses increase. fixed expenses decrease. variable expenses as a percentage of net sales increase. variable expenses as a percentage of net sales decrease. Question 9. 9. (TCO C) Which of the following would not affect the break-even point? (Points : 6) Variable expense per unit Number of units sold Total fixed expenses Selling price per unit Question 10. 10. (TCO D) In an income statement prepared using the variable costing method, fixed manufacturing overhead would (Points : 6) not be used. be used in the computation of the contribution margin. be used in the computation of net operating income but not in the computation of the contribution margin. be treated the same as variable manufacturing overhead.

Explanation / Answer

1 The prime cost = Direct Material+ Direct Labour+ Direct Material Conversion cost is cost that converts the material into final products. Hence the correct answer is A. Prime Cost   Yes, Conversion Cost Yes 2. A. Indirect Costs Indirect costs is the cost which is not directly related to a product.

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