1 Costs that are expensed when incurred are called: A. product costs. B. direct
ID: 2561314 • Letter: 1
Question
1 Costs that are expensed when incurred are called:
A. product costs.
B. direct costs.
C. inventoriable costs.
D. period costs.
E. indirect costs.
2 Which of the following entities would most likely have raw materials, work in process, and finished goods?
A. Macy's Department Store.
B. Wendy's.
C. Southwest Airlines.
D. Columbia University.
E. Exxon Corporation.
3 Mideast Motors manufactures automobiles. Which of the following would not be classified as direct materials by the company?
A. Tires.
B. Interior leather.
C. CD player.
D. Wheel lubricant.
E. Sheet metal used in the automobile's body.
4 Which of the following employees of a commercial printer/publisher would be classified as direct labor?
A. Book binder.
B. Plant security guard.
C. Sales representative.
D. Plant supervisor.
E. Payroll supervisor.
5 Depreciation of factory equipment would be classified as:
A. operating cost.
B. "other" cost.
C. manufacturing overhead.
D. period cost.
E. administrative cost.
6 Conversion costs are:
A. direct material, direct labor, and manufacturing overhead.
B. direct material and direct labor.
C. direct labor and manufacturing overhead.
D. prime costs.
E. period costs.
7 Prime costs are comprised of:
A. direct materials and manufacturing overhead.
B. direct materials and direct labor.
C. direct labor and manufacturing overhead.
D. direct materials, direct labor, and manufacturing overhead.
E. direct materials and indirect materials.
8 Which of the following equations is used to calculate cost of goods sold during the period?
A. Beginning finished goods + cost of goods manufactured + ending finished goods.
B. Beginning finished goods - ending finished goods.
C. Beginning finished goods + cost of goods manufactured.
D. Beginning finished goods + cost of goods manufactured - ending finished goods.
E. Beginning finished goods + ending finished goods - cost of goods manufactured.
9 Work-in-process inventory is composed of:
A. direct material, direct labor, and manufacturing overhead.
B. direct material and direct labor.
C. direct labor and manufacturing overhead.
D. direct material and manufacturing overhead.
E. direct material only.
10 Holden Industries began July with a finished-goods inventory of $48,000. The finished-goods inventory at the end of July was $56,000 and the cost of goods sold during the month was $125,000. The cost of goods manufactured during July was:
A. $104,000.
B. $125,000.
C. $117,000.
D. $133,000.
E. some other amount.
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.
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.
Explanation / Answer
Ans 1: D. period costs.
Ans Period Cost are fixed in nature and independent of any volume of output and service and are expensed based on incurred at definite interbal.
Ans 2: B. Wendy's.
Reason: it is fast food chain so it will have rawmaterials-inbcrident to make , work in progress and finished goods(i.e. consumables)
Ans 3: D. Wheel lubricant.
Reason: it is used post manufacturing mostly in servicing so it wont be a rawmaterial for them.
Ans 4:A. Book binder.
Reason: it is directly associated with manufacturing of books and making them in presentable form.
Ans 5:C. manufacturing overhead.
Reason: As it will be directly associated with manufacturing of goods
Ans 6:C.direct labor and manufacturing overhead.
Reason: it is basic inclusion in the defination of the conversion cost.
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