Cost Accounting Midterm Exam

PART II. Multiple Choice MIDTERM EXAMINATION SET A PART I. True or False (Shade A for True, B for False) 1. The sum of all costs that composed manufacturing costs except direct materials is called manufacturing overhead. 2. Conversion cost is the manufacturing overhead. sum of direct labor and 3. Prime cost is the sum of direct labor and manufacturing overhead. 4. Thread used in the production of bed sheet set, an indirect material, is classified as manufacturing overhead. 16. The cost of the cushions that are used to manufacture sofas is best described as a: a. manufacturing overhead cost. b. period cost. c. variable cost. d. conversion cost. 17. ABC Company manufactures and sells washing machines. In order to make assembly of the machines faster and easier, some of the metal parts in the machines are coated with grease. How should the cost of this grease be classified? Direct Material Cost Fixed Cost a. Yes Yes b. Yes No c. No Yes d. No No 5. All costs in a manufacturing company are product costs. 6. The cost of goods sold of a manufacturing company equals beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory. 7. A variable cost is constant if expressed on a per unit basis but the total dollar amount changes as the number of units’ increases or decreases. 8. As activity increases within the relevant range, fixed costs remain constant on a per unit basis. 9. All of the following are examples of opportunity costs: salary given up to start a business; rental income given up when you live in a house you own; interest income that could be earned on money spent for a car. 10. The amount that was paid by a company for a building to house its operations is an example of a sunk cost. 11. The flow of costs through the manufacturing accounts is essentially the same in both process costing and joborder costing. 12. Companies that use a process-cost accounting system would establish a separate Work-in-Process Inventory account for each manufacturing department. 13. ABC Inc. overstated the percentage of work completed with respect to conversion cost on the ending work-inprocess inventory. This overstatement caused conversion-cost equivalent units to be overstated. 14. Equivalent-unit calculations are necessary to allocate manufacturing costs between units sold and ending work in process. 15. Equivalent units are computed to assign costs to partially completed units. 18. A security guard's wages at a factory would be an example of: a. b. c. d. Indirect labor No Yes Yes No Fixed manufacturing overhead No Yes No Yes 19. M a n u f acturing overhead includes: a.all direct material, direct labor and administrative costs. b.all manufacturing costs except direct labor. c.all manufacturing costs except direct labor and direct materials. d.all selling and administrative costs. 20. Materials used in the operation of a factory, such as cleaning supplies, that are not an integral part of the final product should be classified as: a.direct materials. b.a period cost. c.administrative expense. d.manufacturing overhead. 21. The one cost that would be classified as part of both prime cost and conversion cost would be: a. indirect material. b. direct labor. c. direct material. d. indirect labor. 22. Direct costs: a. are incurred to benefit a particular accounting period. b. are incurred due to a specific decision. c. can be easily traced to a particular cost object. d. are the variable costs of producing a product. 23. Prime costs consist of: a. direct materials and the variable portion of manufacturing overhead. b. direct labor and indirect labor. c. indirect labor and the fixed portion of manufacturing overhead. d. direct labor and direct materials. 24.Which of the following is NOT a period cost? a. Monthly depreciation of the equipment in a fitness room used by factory workers. b. Salary of a billing clerk. c. Insurance on a company showroom, where current and potential customers can view new products. d. Cost of a seminar concerning tax law updates that was attended by the company's controller. 25.The annual insurance premium for the factory building would be a: a. fixed cost, period cost, and indirect cost with regard to units of product. b. fixed cost, product cost, and direct cost with regard to units of product. c. variable cost, product cost, direct cost with regard to units of product. d. fixed cost, product cost, indirect cost with regard to units of product. 26.Factory supplies in a manufacturing plant are most likely: a. sunk costs. b. period costs. c. variable costs. d. excluded from product costs. 27.All of the following are examples of product costs except: a. depreciation on the company's retail outlets. b. salary of the plant manager. c. insurance on the factory equipment. d. rental costs of the factory facility. 28.Inventoriable costs that have become expenses can be found in: a. period costs. b. selling expenses. c. cost of goods sold. d. administrative expenses. 29.The fixed portion of the cost of electricity for a manufacturing plant is a: Period Cost Product Cost a. Yes No b. Yes Yes c. No Yes d. No No 30.Which of the following statements about product costs is true? a. Product costs are deducted from revenue when the production process is completed. b. Product costs are deducted from revenue as expenditures are made. c. Product costs associated with unsold finished goods and work in process appear on the balance sheet as assets. d. Product costs appear on financial statements only when products are sold. 31.Direct materials cost is part of Conversion Cost Prime Cost a. Yes Yes b. No No c. No Yes d. Yes No 32.Direct labor cost is part of Conversion Cost Prime Cost a. Yes Yes b. No No c. No Yes d. Yes No 33.Indirect labor is a a. Prime cost b. Conversion cost c. Period cost d. Non-manufacturing cost 34.Prime cost and conversion cost share what common element of total cost? a. Variable overhead b. Fixed overhead c. Direct materials d. Direct labor 35.Costs that vary inversely with changes in v include olume a. Total variable costs b. Total variable costs divided by volume c. Total fixed costs d. Total fixed costs divided by volume 36.Costs that vary directly with changes in volume include a. Total variable costs b. Total variable costs divided by volume c. Total fixed costs d. Total fixed costs divided by volume 37.Which of the following cost is not a product cost? a. Wages paid to workers for rework on defective products b. Wages paid to truck loaders who load finished goods onto outgoing delivery trucks c. Wages and benefits paid to factory workers. d. Wages paid to workers for idle time due to machine breakdown in a production department 38.A process costing system is used by a company that a. Produces heterogeneous products b. Produces items by special requests of customers c. Produces homogeneous products d. Accumulates costs by job 39.Which of the following characteristics applies to process costing but not to job-order costing? a. Identifiable batches of production b. Equivalent units of production (EUP) c. Averaging process d. Use of standard costs 40.Equivalent units of production are equal to a. Units completed by a production department in the period b. Number of units worked on during the period by a production department c. Number of whole units that could have been completed if all work of the period had been used to produce whole units d. Identifiable units existing at the end of the period in a production department