ACC 202 EXAM 1

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Audio Corporation purchased $20,000 of DVDs during the current year. The company had DVD inventory of $15,000 at the beginning of the year. An end of the year audit revealed that the company had DVD inventory of $10,000. The amount that would be reported as cost of goods sold in the income statement for the current year is A. $25,000 B. $15,000 C. $10,000 D. $20,000

A. $25,000 20,000 + 15,000 = 35,000 - 10,000 = 25,000

In the first year of operation, Ajax manufacturing incurred depreciation cost (a fixed cost) of $60,000 and produced 10,000 units. In year 2 they expect to produce 12,000 units with no change in cost structure. Their expected total depreciation cost would be? A. $60,000 B. $72,000 C. $48,000 D. $55,000

A. $60,000

In the first year of operation, Ajax manufacturing incurred direct labor cost (a variable cost) of $80,000 and produced 10,000 units. In year 2 they expect to produce 12,000 units with no change in cost structure. Their expected direct labor cost per unit would be? A. $6.67 B. $12 C. $8 D. $5.33

A. $8 80,000 / 10,000 = 8 Variable costs per unit don't change

In the first year of operation, Ajax manufacturing incurred depreciation cost (a fixed cost) of $60,000 and produced 10,000 units. In year 2 they expect to produce 12,000 units with no change in cost structure. Their expected depreciation cost per unit would be? A. $6 B. $5 C. $3 D. $12

B. $5 60,000 / 12,000 = 5

In the first year of operation, Ajax manufacturing incurred direct labor cost (a variable cost) of $80,000 and produced 10,000 units. In year 2 they expect to produce 12,000 units with no change in cost structure. Their expected total direct labor cost in year 2 would be? A. $80,000 B. $96,000 C. $64,000 D. $12,000

B. $96,000 $8 per unit x 12,000 units = 96,000

The cost of a worker who operates a drill press in a manufacturing facility is? A. Selling cost B. Direct labor cost C. Indirect labor cost D. Manufacturing overhead cost

B. Direct labor cost

What costs will change with an increase in activity within the relevant range? A. Total fixed costs and total variable cost B. Per unit fixed costs and total variable cost C. Per unit variable cost and per unit fixed cost D. Per unit fixed cost and total fixed cost

B. Per unit fixed costs and total variable cost

Which of the following costs would be considered a period rather than a product cost in a manufacturing company? A. Manufacturing equipment depreciation B. Property taxes on corporate headquarters C. Direct materials costs D. Electrical costs to light the production facility

B. Property taxes on corporate headquarters

Prime costs plus conversion costs equal total manufacturing costs. A. True B. The sum equals more than the total manufacturing costs. C. The sum equals less than the total manufacturing costs.

B. The sum equals more than the total manufacturing costs.

The glue used in the manufacture of furniture would probably be considered by the manufacturer to be A. a direct material cost B. a manufacturing overhead cost C. crazy

B. a manufacturing overhead cost

In a small manufacturing facility, one welder is needed for every 200 hours of machine-hours or fewer in a month. The welder is paid a monthly salary of $2,500. If the total monthly requirement is 1,300 machine-hours, the total salaried employee expense is ________. A. $12,500 B. $16,250 C. $17,500 D. $15,000

C. $17,500 1,300 hours 200 hours or fewer per month 2500 x 7 = 17500

Which costs are not traced directly to a product? A. DM B. DL C. Advertising D. The cost of wood when making patio sets.

C. Advertising

Which variable was X in the class name tent activity? A. Number of people B. Number of pens C. Number of name tents D. Sheets of paper

C. Number of name tents

Which of the following costs would be variable with respect to the number of cones sold at a Baskins & Robbins shop? A. The cost of lighting the store B. The salary of the store manager C. The cost of ice cream D. The cost of napkins for customers

C. The cost of ice cream AND D. The cost of napkins for customers

Cyber Devices manufactures PCTV products that enable people to watch television content on their computers. It sells its product to retailers for $50. A tuner component that goes into each of these devices costs $5 to acquire. The total variable cost at an activity level of 1,000 units equal A. $50,000 B. $5 C. $1,000 D. $5,000

D. $5,000

The cost of a janitor in a manufacturing plant is? A. Indirect labor cost B. Manufacturing cost C. Conversion cost D. All of the above

D. All of the above

T/F A fixed cost per unit will stay constant as activity increases.

FALSE

T/F Managerial accounting is more precise than financial accounting.

FALSE

Suppose you are trying to decide whether to drive or take the train to Portland to attend a concert. You have ample cash to do either, but you don't want to waste money needlessly. Is the annual cost of licensing your car relevant in this decision? Yes/No

NO You must license your car regardless.

Suppose that your car could be sold now for $5,000. Is this cost sunk? Yes/No

NO Sunk costs are in the past, this example is focused on the future.

T/F A cost is relevant for decision making if it is differential.

TRUE

T/F A step cost stays fixed within the relevant range.

TRUE

T/F The CFO's salary is generally a period cost.

TRUE

Suppose you are trying to decide whether to drive or take the train to Portland to attend a concert. You have ample cash to do either, but you don't want to waste money needlessly. Is the cost of the train ticket relevant in this decision? In other words, should the cost of the train ticket affect the decision of whether you drive or take the train to Portland? Yes/No

YES


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