Bus 230B - Chapter 1: Practice

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 ________. - $12,500 - $16,250 - $17,500 - $15,000

$17,500

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 ________. - $25,000 - $15,000 - $10,000 - $20,000

$25,000

Davidson Company has a product with a selling price per unit of $100, the unit variable cost is $60, and the total monthly fixed costs are $30,000. If the company sells 1,000 units, how much is Davidson's contribution margin per unit? - $40,000 - $10,000 - $40

$40

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 ________. - $50000 - $5 - $1000 - $5000

$5000

Manufacturing costs include all of the following except ________. - Administrative - Direct labor - Direct materials - Manufacturing overhead

Administrative; not a manufacturing cost

The traditional income statement uses which of the following cost categories? - Variable expenses and fixed expenses. - Cost of goods sold and fixed expenses. - Operating expenses and selling and administrative expenses. - Cost of goods sold and selling and administrative expenses.

Cost of goods sold and selling and administrative expenses

________ is common to both prime cost and conversion cost. - Manufacturing overhead - Direct materials - Nonmanufacturing costs - Direct labor

Direct labor

________ is sometimes called "touch labor." - Direct labor - Indirect labor - Overhead labor

Direct labor

Materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product are called ________. - raw materials - direct materials - indirect materials

Direct materials

Which of the following is true of the contribution approach? - It is mainly used for external reporting purposes. - It separates costs into fixed and variable categories. - It is not useful for merchandising companies. - It calculates gross margin by deducting cost of goods sold from sales.

It separates costs into fixed and variable categories

________ best describe the wages of a sheet metal worker in a fabrication plant. - Product costs - Period costs - Nonmanufacturing costs - Administrative costs

Product costs

________ is always an irrelevant cost. - Differential cost - Sunk cost - Opportunity cost

Sunk cost

Which observation is true of period costs? - They are expensed in the period in which they are incurred. - They are included as part of the cost of manufactured goods. - They include costs that are incurred to convert materials into the finished product. - They are also known as inventoriable costs.

They are expensed in the period in which they are incurred.

A ___________ is a cost that is incurred to support a number of cost objects but cannot be traced to them individually.

a common cost

Adventure Holiday sells thousands of tour packages each month thought its various branches. A branch manager's salary would be a(n) _________ of the branch.

a direct cost

Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of selling a tour package.

an indirect cost

Items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in ________. - nonmanufacturing cost - manufacturing overhead costs - direct costs

manufacturing overhead costs

The ________ requires that the costs incurred to generate a particular revenue should be recognized as expenses in the same period that the revenue is recognized. - materiality concept - consistency concept - matching principle - going concern assumption

matching concept

Property taxes associated with a company's administrative facility are considered ________. - nonmanufacturing costs - manufacturing overhead costs - direct costs

nonmanufacturing costs

Differential costs are always ________. - irrelevant in making business decisions - relevant in making business decisions - a sunk cost

relevant in making business decisions

A fixed cost is a cost which ________. - varies in total with changes in the level of activity - remains constant per unit with changes in the level of activity - varies inversely in total with changes in the level of activity - remains constant in total with changes in the level of activity

remains constant in total with changes in the level of activity

If a firm increases its activity level, ________. - costs will remain the same - all costs will rise - some costs will change, other costs will remain the same

some costs will change, other costs will remain the same

In the equation, Y = a + bX, X represents ________. - the total mixed cost - the level of activity - the total fixed cost - the variable cost per unit of activity

the level of activity