Question 1

Which of the following costs is an example of a period rather than a product cost?

Accepted Answer

A)  Depreciation on production equipment.
B)  Wages of salespersons.
C)  Wages of production machine operators.
D)  Insurance on production equipment.E) C) and D)
F) A) and D)

Question 2

The salary of the president of a manufacturing company would be classified as which of the following?

Accepted Answer

A)  Product cost
B)  Period cost
C)  Manufacturing overhead
D)  Direct laborE) A) and B)
F) B) and D)

Question 3

To the nearest whole cent, what should be the average cost of operating the helpline per call at a volume of 36,100 calls in a month? (Assume that this call volume is within the relevant range.)

Accepted Answer

A)  $21.54
B)  $20.57
C)  $21.34
D)  $22.50E) B) and D)
F) All of the above

Question 4

In a contribution format income statement for a merchandising company, cost of goods sold is a variable cost that gets included in the "Variable expenses" portion of the income statement.

Accepted Answer

A) True 
 B)False

Question 5

When the level of activity increases, total variable cost will increase.

Accepted Answer

A) True 
 B)False

Question 6

The total of the product costs listed above for November is:

Accepted Answer

A)  $77,000
B)  $348,000
C)  $592,000
D)  $244,000E) None of the above
F) C) and D)

Question 7

Which of the following statements regarding fixed costs is incorrect?

Accepted Answer

A)  Expressing fixed costs on a per unit basis usually is the best approach for decision making.
B)  Fixed costs expressed on a per unit basis will decrease with increases in activity.
C)  Total fixed costs are constant within the relevant range.
D)  Fixed costs expressed on a per unit basis will increase with decreases in activity.E) B) and C)
F) A) and B)

Question 8

Anaconda Mining Company shipped 9,000 tons of copper concentrate for $450,000 in March and 11,000 tons for $549,000 in April. Shipping costs for 12,000 tons to be shipped in May would be expected to be:

Accepted Answer

A)  $548,780
B)  $549,020
C)  $594,000
D)  $598,500E) C) and D)
F) A) and B)

Question 9

Committed fixed costs are fixed costs that are not controllable.

Accepted Answer

A) True 
 B)False

Question 10

Gambarini Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $197.80 per unit.  The best estimate of the total monthly fixed cost is:

Accepted Answer

A)  $541,800
B)  $1,192,100
C)  $1,099,200
D)  $1,145,650E) A) and B)
F) A) and C)

Question 11

Aberge Company's manufacturing overhead is 60% of its total conversion costs. If direct labor is $38,000 and if direct materials are $21,000, the manufacturing overhead is:

Accepted Answer

A)  $57,000
B)  $88,500
C)  $25,333
D)  $31,500E) A) and B)
F) A) and C)

Question 12

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

Accepted Answer

A)  Depreciation on a factory building.
B)  Salaries of factory workers.
C)  Indirect labor in the factory.
D)  Advertising expenses.E) A) and B)
F) A) and D)

Question 13

The following data pertains to activity and the cost of cleaning and maintenance for two recent months:  The best estimate of the total month 1 variable cost for cleaning and maintenance is:

Accepted Answer

A)  $300
B)  $500
C)  $800
D)  $100E) A) and B)
F) A) and C)

Question 14

In any decision making situation, sunk costs are irrelevant and should be ignored.

Accepted Answer

A) True 
 B)False

Question 15

The cost of goods sold for September was:

Accepted Answer

A)  $132,000
B)  $134,000
C)  $133,000
D)  $200,000E) None of the above
F) A) and C)

Question 16

To the nearest whole cent, what should be the average property tax per unit at a sales volume of 27,600 units? (Assume that this sales volume is within the relevant range.)

Accepted Answer

A)  $6.73
B)  $7.70
C)  $7.62
D)  $7.53E) B) and C)
F) A) and B)

Question 17

What is the total amount of the costs listed above that are NOT direct costs of the Brentwood Store?

Accepted Answer

A)  $152,000
B)  $92,000
C)  $79,000
D)  $38,000E) None of the above
F) All of the above

Question 18

Although the contribution format income statement is useful for external reporting purposes, it has serious limitations when used for internal purposes because it does not distinguish between fixed and variable costs.

Accepted Answer

A) True 
 B)False

Question 19

What is the total amount of the costs listed above that are NOT direct costs of the Northridge Store?

Accepted Answer

A)  $40,000
B)  $34,000
C)  $141,000
D)  $78,000E) None of the above
F) A) and B)

Question 20

A decrease in production will ordinarily result in an increase in fixed production costs per unit.

Accepted Answer

A) True 
 B)False

Exam 1: Managerial Accounting and Cost Concepts

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

Correct AnswerverifiedShow Answer

In a contribution format income statement for a merchandising company, cost of goods sold is a variable cost that gets included in the "Variable expenses" portion of the income statement.

Correct AnswerverifiedShow Answer

Gambarini Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $197.80 per unit. The best estimate of the total monthly fixed cost is:

Correct AnswerverifiedShow Answer

A decrease in production will ordinarily result in an increase in fixed production costs per unit.

Correct AnswerverifiedShow Answer

The total of the product costs listed above for November is:

Correct AnswerverifiedShow Answer

To the nearest whole cent, what should be the average cost of operating the helpline per call at a volume of 36,100 calls in a month? (Assume that this call volume is within the relevant range.)

Correct AnswerverifiedShow Answer

When the level of activity increases, total variable cost will increase.

Correct AnswerverifiedShow Answer

To the nearest whole cent, what should be the average property tax per unit at a sales volume of 27,600 units? (Assume that this sales volume is within the relevant range.)

Correct AnswerverifiedShow Answer

The following data pertains to activity and the cost of cleaning and maintenance for two recent months: The best estimate of the total month 1 variable cost for cleaning and maintenance is:

Correct AnswerverifiedShow Answer

What is the total amount of the costs listed above that are NOT direct costs of the Northridge Store?

Correct AnswerverifiedShow Answer

Anaconda Mining Company shipped 9,000 tons of copper concentrate for $450,000 in March and 11,000 tons for $549,000 in April. Shipping costs for 12,000 tons to be shipped in May would be expected to be:

Correct AnswerverifiedShow Answer

The salary of the president of a manufacturing company would be classified as which of the following?

Correct AnswerverifiedShow Answer

What is the total amount of the costs listed above that are NOT direct costs of the Brentwood Store?

Correct AnswerverifiedShow Answer

Aberge Company's manufacturing overhead is 60% of its total conversion costs. If direct labor is $38,000 and if direct materials are $21,000, the manufacturing overhead is:

Correct AnswerverifiedShow Answer

In any decision making situation, sunk costs are irrelevant and should be ignored.

Correct AnswerverifiedShow Answer

Committed fixed costs are fixed costs that are not controllable.

Correct AnswerverifiedShow Answer

The cost of goods sold for September was:

Correct AnswerverifiedShow Answer

Which of the following costs is an example of a period rather than a product cost?

Correct AnswerverifiedShow Answer

Which of the following statements regarding fixed costs is incorrect?

Correct AnswerverifiedShow Answer

Although the contribution format income statement is useful for external reporting purposes, it has serious limitations when used for internal purposes because it does not distinguish between fixed and variable costs.

Correct AnswerverifiedShow Answer

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