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Exam 2: An Introduction to Cost Terms and Purposes

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Question 41

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The distinction between variable costs and fixed costs is central to variable costing,and it is highlighted by the gross-margin format.

A) True
B) False

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Question 42

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Compute the Total Manufacturing Costs incurred from the data provided by Wize Manufacturing.

A) $85,000
B) $88,500
C) $102,500
D) $107,300
E) $110,000

F) D) and E)
G) A) and B)

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Question 43

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Merchandising-sector companies purchase and then sell tangible products without changing their basic form.

Outside the relevant range,variable costs,such as direct materials,may not change proportionately with changes in production volume.

Service-sector companies are known as companies that provide products to its customers.

Ford Motor Company is an example of a plant that manufactures automobiles.The cost of the lease where it manufactures automobiles can be categorized as an indirect cost.

In the absorption-costing method,all of the manufacturing costs are included as inventoriable costs.

Mr.Foxhound works at a manufacturing plant that makes balloons for holiday parades.He earns $30 per hour for straight-time and $50 per hour for overtime.One week he worked 46 hours,which included 6 hours of overtime,and 4 hours of idle time caused by a shortage of materials to make the balloons. Required: Compute Mr.Foxhound's total compensation for the week;the amount of compensation reported as direct manufacturing labor;and the amount of compensation that would be reported as manufacturing overhead.

A ________ is usually measured as the amount of money that must be paid to acquire goods and services.

Managers compare actual results to planned performance:

Which of the following is not true about unit costs?

The cost of steel and tires to an automobile manufacturer is an example of a direct cost.

Answer the question below using the following information: Required: Compute the fixed supervision cost per custom carburetor for 5,000,10,000,and 15,000 carburetors produced.

Isaac Manufacturing reported the following information for the previous month: Compute the projected operating income if sales doubled in the next month.

Which of the following is not a characteristic of the type of inventory used in manufacturing-type sector companies?

Managers should think in terms of unit costs rather than terms of total costs for many decisions.

A production system under which products are manufactured only when needed is:

The sum of the costs assigned to a product for a specific purpose are:

The managerial accountant at Sahara Organizations matches business functions to cost drivers.The list below provides representative cost drivers in the right column are randomized with respect to the list of functions in the left column [Note: These are not matched to the respective cost driver]. Numbers 1-6 represent the Business Functions and the letters A-F represent the cost drivers at the company. Required: Insert the letter of the appropriate cost driver (A through F)and match each business function with its appropriate cost driver.

Financial accountants realize that a mixed cost is: