S ACC II EXAM I

a contribution approach income statement: (select all that apply) a. separates costs into their fixed and variable components b. reports both gross margin and net income c. can assist with management decision making d. is prepared primarily for external reporting purposes

a, c

which of the following statements are true? a. period costs are expensed when incurred b. inventoriable costs are expensed in the period in which they are incurred c. period costs do not flow through the inventory accounts d. all costs in a merchandising company are period costs

a, c

generally costs are recognized as expenses on the income statement in the period that _____ from the cost

benefits

a job-order costing system may inaccurately assign costs to jobs due to: a. inaccurate allocation of (dm) b. inaccurate allocation of (dl) c. an inappropriate allocation base

c

administrative costs can be/be either _____ a. indirect b. direct c. both a and b

c

differential costs, opportunity costs and sunk costs are all cost classifications used in: a. predicting cost behavior b. account analysis c. decision making d. financial statements

c

in the formula Y=a+bX, X represents the estimated a. total (f mo) cost b. total (mo) cost c. total amount of the allocation base d. (v mo) cost per unit

c

prime cost= a. selling exp. + admin exp. b. dl + mo c. dm + dl d. dm + dl + v mo e. f mo + f selling exp + f admin exp f. dm + dl + mo

c

selling costs can be/be either _____ a. indirect b. direct c. both a and b

c

the (mo) account contains: a. a single kind of direct cost b. many different kinds of indirect costs c. many different kinds of direct costs

c

the salary of the assembly shop's supervisor a. dl cost b. dm cost c. mo cost d. selling cost e. admin cost

c

(mo) costs: (select all that apply) a. tend to vary significantly, in total, from one period to the next b. do not impact the average cost per unit c. consist of many different items d. are indirect costs

c, d

includes all costs necessary to secure customer orders and get the finished product into the hands of the customer. selling costs can be either direct or indirect costs

selling costs

when all of a company's job cost sheets are viewed collectively, they form what is known as a(n) _____ _____

subsidiary ledger

a cost that has already been incurred and that cannot be changed by any decision made now or in the future, they are not relevant in decision making and should always be ignored

sunk cost

companies assign costs to products and services to: (select all that apply) a. establish selling prices b. value end. inv. c. determine the best supplier of raw materials d. understand product profitability

a, b, d

job cost sheet contains: (select all that apply) a. materials costs charged to the job b. labor costs charged to the job c. the selling price of the job d. (mo) costs charged to the job e. selling costs charged to the job

a, b, d

prior to being recorded on the income statement, manufacturers' product costs flow through: (select all that apply) a. raw materials b. finished goods c. (cogs) d. work in process

a, b, d

an income statement focusing on product and period costs has been prepared using a _____ format, while a(n) _____ format income statement makes a distinction between fixed and variable costs

traditional, contribution

the costs in the activity cost pools are allocated to products using activity rates and activity measures. this is part of stage _____ in allocating overhead costs to products

two

consists of units of product that are only partially complete and will require further work before they are ready for sale to the customer

work in process

the following info is for s&p enterprises for the month of september: (dm+dl+v mo) dm: $82,000 dl: $51,000 v mo: $32,000 f mo: $30,000 v sell exp.: $16,000 f sell exp.: $15,000 v admin exp.: $9,000 f admin exp.: $18,000 total variable manufacturing cost for the month of september was $_____

$165,000

the following info is for s&p enterprises for the month of september: (dl + dm + mo) dm: $82,000 dl: $51,000 v mo: $32,000 f mo: $30,000 v sell exp.: $16,000 f sell exp.: $15,000 v admin exp.: $9,000 f admin exp.: $18,000 total product cost for the month of september was $_____

$195,000

the following info is for s&p enterprises for the month of july: (selling exp. + admin exp.) dm: $76,000 dl: $40,000 v mo: $25,000 f mo: $30,000 v sell exp.: $12,000 f sell exp.: $15,000 v admin exp.: $6,000 f admin exp.: $18,000 total period cost for the month of july was $_____

$51,000

the following info is for s&p enterprises for the month of july: (f selling exp.+ f mo + f admin exp.) dm: $76,000 dl: $40,000 v mo: $25,000 f mo: $30,000 v sell exp.: $12,000 f sell exp.: $15,000 v admin exp.: $6,000 f admin exp.: $18,000 total fixed cost for the month of july was $_____

$63,000

job xyz has a total manufacturing cost of $600. if the mark-up percentage is 40%, the job will sell for $_____ (manufacturing cost+(manufacturing cost*mark-up percentage))

$840

estimated (mo): $450,000 estimated (dl) hours: 150,000 actual (mo): $405,000 actual (dl) hours: 180,000 based on this info, the (pdhr) per (dl) hr is _____ (estimated (mo)/estimated (dl) hr)

3

total estimated (mo) is $900,000 and total estimated activity is 30,000 machine hours. the plantwide overhead rate is $_____ per machine hour (estimated (mo)/estimated activity)

30

marginal cost is: a. the cost incurred to produce one more unit of a product b. another name for the fixed cost per unit c. what is given up by selecting one alternative over another d. the cost that can be traced to a specific product

a

period cost= a. selling exp. + admin exp. b. dl + mo c. dm + dl d. dm + dl + v mo e. f mo + f selling exp + f admin exp f. dm + dl + mo

a

product cost is _____ a. included in cost of inventory b. expensed immediately

a

what equation can be used in order to calculate what the total mixed cost would be for any level of activity? a. Y=a+bX b. A=(a+b)XY c. Y=bX-a

a

what represents the total mixed cost? a. Y b. a c. b d. X

a

which one of these is true? a. total product cost = (dm) + (dl) + (mo) b. total product cost = (dm) - (dl) - (mo) c. total product cost = (dm/dl) - (mo)

a

step-variable costs: (select all that apply) a. can be adjusted quickly as conditions change b. may include total salaried employee exp. c. are generally treated as fixed costs

a, b

how can you find the variable cost? a. variable cost = change in cost/change in activity b. variable cost = total cost - fixed cost c. both a and b

c

differential cost is: (select all that apply) a. the same as opportunity cost b. never relevant to a product decision c. also known as incremental cost d. the difference in cost between two alternatives

c, d

typical cost drivers include _____ a. machine depreciation b. utilities cost c. computer time d. flight-hours e. machine-hours

c, d, e

which of these are considered manufacturing costs (select all that apply) a. period costs b. prime costs c. direct materials d. selling costs e. direct labor f. administrative costs g. product costs h. manufacturing overhead

c, e, h

investments in facilities and equipment as well as real estate taxes, insurance premiums, and salaries of top management are examples of _____ _____ ____

committed fixed costs

represent investments with a multi-year planning horizon that cannot be easily adjusted in the short term (ex: building depreciation)

committed fixed costs

represent organizational investments with a multiyear planning horizon that can't be significantly reduced even for short periods of time without making fundamental changes

committed fixed costs

(dm) is a variable cost. if (dm) is $10 per unit, the cost per unit stays _____, regardless of the number of units produced. However, the total (dm) cost will _____ if more units are produced.

constant, increase

(dl) cost plus (mo) costs that are incurred to convert raw materials into a finished product

conversion cost

how cost will react to changes un the level of activity

cost behavior

anything for which cost data are desired including products, customers, jobs, organizational subunits, etc.

cost object

the relative proportion of each type of cost in an organization is known as the company's _____ _____

cost structure

a type of indirect cost incurred to benefit more than one cost object is a(n) _____ cost a. sunk b. opportunity c. prime d. common

d

what represents the level of activity a. Y b. a c. b d. X

d

which of these are considered nonmanufacturing costs (select all that apply) a. period costs b. prime costs c. direct materials d. selling costs e. direct labor f. administrative costs g. product costs h. manufacturing overhead

d, f

what are the two broad categories manufacturing companies separate their cost into?

manufacturing and non manufacturing

(dm) costs are recorded on the job cost sheet when the a. materials are issued to the job b. job is sold to a customer

a

contribution margin is: a. sales rev minus variable costs b. sales rev minus cogs c. sales rev minus fixed costs

a

in the equation Y=a+bX, b denotes the: (select all that apply) a. variable cost per unit of activity b. fixed cost per unit of activity c. level of activity d. slope of the line

a, d

measure of what causes the incurrence of variable cost. as the level of the activity base increases the total variable cost increases proportionally.

activity base

period costs are _____ a. included in cost of inventory b. expensed immediately

b

what represents the total fixed cost (the vertical intercept of the line) a. Y b. a c. b d. X

b

what represents the variable cost per unit of activity (the slope of the line) a. Y b. a c. b d. X

b

discretionary fixed costs include: (select all that apply) a. factory depreciation b. management training programs c. insurance exp. d. advertising

b, d

a supervisor's salary is fixed. if the supervisor's salary is $ 60,000 annually, the total salary cost does not change with a change in units produced. however, the per unit cost will change based on output. If 60,000 units are produced, the cost per unit is $ 1.00 per unit ($ 60,000/60,000 units). however, if 120,000 units are produced the cost per unit declines to $ 0.50 per unit ($60,000/120,000 units). As output increases, the fixed cost per unit __(increases/declines)__. as output decreases, the fixed cost per unit __(increases/declines)__.

declines, increases

a change in revenue between two alternatives is known as _____ or incremental revenue

differential

a future cost that differs between any two alternative, always relevant costs

differential cost

direct or indirect cost? cost: lab tests by outside contractor cost object: a particular department

direct

while the campbell soup factory manager's salary is an indirect cost of the manufacturing chicken noodle soup, it is a _____ cost of the manufacturing division

direct

cats that can be easily and conveniently traced to a specified cost object

direct costs

assembly-line workers at toyota, carpenters at the home builder kb home, and electricians who install equipment on aircrafts at bombardier learjet are examples of _____

direct labor

seats that airbus purchases from subcontractors to install in its commercial aircraft, the electronic components that apple uses in its iphones, and the doors that whirlpool installs on its refrigerators are example of _____

direct materials

advertising, research, public relations, management development programs, and internships for students are all examples of _____ _____ _____

discretionary fixed costs

also known as managed fixed costs. usually arise from annual decisions by management to spend on certain fixed cost items

discretionary fixed costs

usually arise from annual decisions by management and they can be easily reduced in the short term (ex: advertising)

discretionary fixed costs

what equation is correct for finding the total cost? a. total cost = total fixed cost + total variable cost b. total cost = total variable cost - total fixed cost c. total cost = total fixed cost + (variable cost per unit * number of units) d. total cost = total variable cost per unit (number of units * total fixed cost) e. options a and c f. options b and d

e

a cost that remains constant, in total, regardless of changes in the level of the activity. however, if expressed on a per unit basis, the average fixed cost per unit varies inversely with changes in activity.

fixed cost

example: a campbell soup factory ay produce dozens of varieties of canned soups. the factory manager's salary would be an _____ cost of a particular variety such as chicken noodle soup

indirect

only those indirect costs associated with operating the factory are included in _____

manufacturing overhead (mo)

a cost that contains both variable and fixed elements

mixed cost

the potential benefit/cost that is given up when one alternative is selected over another, should be considered in decision making but it's not a part of traditional accounting records

opportunity

a credit balance in the (mo) account means overhead was _____

overapplied

includes all selling and administrative costs. these costs are expensed on the income statement during the period incurred

period costs

(dm) costs plus (dl) costs

prime cost

includes all the costs that are involved in acquiring or making a product. more specifically it includes (dm), (dl), and (mo). product costs are included in the inventory account and are expensed as a (cogs) as in the inventory (product) is sold

product costs

the level of activity within which variable and fixed cost assumptions are valid is known as the _____ _____

relevant range

the range of activity within which the assumptions made about cost behavior are valid

relevant range

(dl) is also called _____ labor

touch

(cogs) for a manufacturing company, (dm) and commissions are all examples of _____ costs

variable

within the relevant range, _____ costs remain constant on a per unit basis

variable

a cost that varies in total, in direct proportion to changes in the level of activity. however, variable cost per unit is constant

variable cost

what are the most commonly used classifications of cost behavior

variable, fixed, and mixed

the following info is for s&p enterprises for the month of september: (dl+f mo+v mo) dm: $82,000 dl: $51,000 v mo: $32,000 f mo: $30,000 v sell exp.: $16,000 f sell exp.: $15,000 v admin exp.: $9,000 f admin exp.: $18,000 total conversion cost for the month of september was $_____

$113,000

the following info is for s&p enterprises for the month of september: (v selling exp.+ f selling exp +v admin exp. + f admin exp.) dm: $82,000 dl: $51,000 v mo: $32,000 f mo: $30,000 v sell exp.: $16,000 f sell exp.: $15,000 v admin exp.: $9,000 f admin exp.: $18,000 total prime cost for the month of september was $_____

$133,000

given (dm) cost of $10, (dl) cost of $15, (dl) based overhead of $12 and activity based costing overhead of $16, the total cost of the product using activity-based costing is $_____ (dm+dl+overhead)

$41

plaster company expects to have a total cost of $400,000 in its activity cost pool. the total expected activity is 800 machine set ups. the activity rate is $_____ per set up (total cost in activity pool/total expected activity)

$500

the following info is for s&p enterprises for the month of september: (v selling exp.+ f selling exp +v admin exp. + f admin exp.) dm: $82,000 dl: $51,000 v mo: $32,000 f mo: $30,000 v sell exp.: $16,000 f sell exp.: $15,000 v admin exp.: $9,000 f admin exp.: $18,000 total period cost for the month of september was $_____

$58,000

the following info is for s&p enterprises for the month of july: (dl + mo) dm: $76,000 dl: $40,000 v mo: $25,000 f mo: $30,000 v sell exp.: $12,000 f sell exp.: $15,000 v admin exp.: $6,000 f admin exp.: $18,000 total conversion cost for the month of july was $_____

$95,000

a company's activity rate for the general factory is $2 per machine hour. product apple used 3,000 machine hours and 1,000 labor hours. general factory overhead assigned to product apple is $______ (activity rate*machine hours used)

6,000

Helio Company has two products: A and B. The annual production and sales of Product A is 1,850 units and of Product B is 1,250 units. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labor-hours per unit and Product B requires 0.6 direct labor-hours per unit. The total estimated overhead for next period is $100,485. What is the company's predetermined overhead rate? 100485/((1805*.3)+(1220*.6))

77

True Blue Corporation provided the data set forth above from its activity-based costing system. The company makes 430 units of product D28K a year, requiring a total of 690 machine-hours, 40 orders, and 10 inspection-hours per year. The product's direct materials cost is $35.82 per unit and its direct labor cost is $29.56 per unit. What is the unit product cost of product D28K? assembly $14.35 per machine hr processing orders $47.85 per order inspection $70.30 per inspection hr (35.82+29.56+29.11)

94.49

a multiple (pdhr) system is more accurate than a plantwide overhead rate system because it: a. reflects differences in how overhead costs are incurred within departments b. is easier to apply than a plantwide system c. reflects how different departments use direct labor

a

average (mo) cost per unit usually varies from one period to the next because: a. (f mo) remains constant in total even when production changes b. (v overhead) costs per unit vary when production changes c. the makeup of (mo) changes from period to period

a

based on the following info, calculate net income for dana's dress shop using the traditional format. sales: $360,000 gm: $140,000 cm: $110,000 total s&a exp.: $60,000 a. $80,000 b. $190,000 c. $160,000 d. $50,000

a

himber inc. just completed a job that cost $14,000 in (dm) $12,000 in (dl) and $8,000 in applied (mo) the journal entry to record completion of the job debits a. finished goods $34,000 and credits work in process $34,000 b. (cogs) $34,000 and credits work in process $26,000

a

selling costs are sometimes called _____ and _____ a. order-getting and order-filling b. order-gathering and order-fulfilling c. order-getting and order-gathering

a

the (pdhr) is multiplied by the actual allocation base incurred by a job to find: a. overhead applied to the job b. the total cost of the job c. the (pdhr) for the job

a

underapplied or overapplied overhead is the _____ a. difference between overhead applied to work in process and actual overhead b. overhead applied to work in process c. difference between estimated and actual overhead

a

an activity base: (select all that apply) a. is sometimes called a cost driver b. measures whatever causes cost to vary c. is a measure of whatever causes fixed costs to occur d. is part of the organization where major operations are planned and carried out

a, b

which of the following are differences between the traditional and contribution format to income statements? (select all that apply) a. traditional income statements focus on cost classification. contribution format statements focus on cost behavior b. compared to traditional statements, contribution format statements provide management with a tool to make decision making easier c. the traditional income statement is for internal use, while the contribution format income statement is for external users

a, b

bill of materials contains the: a. type of each (dm) needed to complete a unit of product b. type of materials to be drawn from the storeroom c. quantity of materials to be drawn from the storeroom d. quantity of each (dm) needed to complete a unit of product

a, d

nonmanufacturing costs include: (select all that are included) a. sales commissions b. assembly-line worker wages c. insurance on plant equipment d. company president's salary

a, d

when the allocation method is used to close out the underapplied or overapplied balance remaining in (mo) which accounts are affected a. (cogs) b. raw materials c. sales rev d. work in process e. finished goods

a, d, e

when a company creates overhead rates based on the actions it performs, it is employing an approach called _____-_____ costing

activity based

the formula to apply overhead to products is

activity rate times activity

includes all costs associated with the general management of an organization. administrative costs can be either direct or indirect costs

administrative costs

based on the following info, compute the (cogs) for spengler merchandising corp. sales: $400,000 purchases: $300,000 beg. inv.: $50,000 end. inv.: $90,000 selling exp,: $70,000 admin exp.: $30,000 acc rec.: $110,000 a. $340,000 b. $260,000 c. $140,000 d. $370,000

b

conversion cost= a. selling exp. + admin exp. b. dl + mo c. dm + dl d. dm + dl + v mo e. f mo + f selling exp + f admin exp f. dm + dl + mo

b

cost of goods manufactured is the _____ a. avg value f the work in process account b. sum of all jobs transferred from work in process to finished goods c. sum of all jobs in finished goods at the end of a period

b

manufacturing overhead (mo) includes _____ a. (dm), sales commissions, and factory assembly workers' wages b. (i/dm), factory supervisors' salaries, and factory depreciation c. (dm), administrative taxes and insurance, and sales commissions d. administrative taxes and insurance, sales commissions, and factory assembly workers' wages

b

the activity rate is computed by dividing the _____ by the ____ a. total manufacturing cots; total activity level b. total cost in the activity cost pool; activity level in the activity cost pool

b

the adjustment for overapplied overhead _____ a. increases both (cogs) and net income b. decreases (cogs) and increases net income c. decreases both (cogs) and net income

b

we ship it inc. is considering its shipping methods, which they believe will attract new customers. the following info relates to the present and proposed methods ((change in rev)-((change in var and fix cost)) present rev: $140,000 present var cost: $60,000 present fix cost: $25,000 proposed rev: $190,000 proposed var cost: $70,000 propsed fix cost: $25,000 a. $50,000 differential net income b. $35,000 differential net income c. $15,000 differential net income d. $40,000 differential net income

b

which of the following would not be considered a (dl) cost in a service firm that uses job-order costing a. the wages of technicians at an auto repair shop b. the salary of the manager at a hair salon c. the salary of an attorney at a law firm

b

other names for (mo) include: (select all that apply) a. prime manufacturing costs b. factory burden c. factory overhead d. indirect manufacturing costs

b, c, d

materials requisition forms are used for (select all that apply) a. summarizing the cost of a job b. controlling the flow of materials into production c. specifying the cost of materials to be ordered d. making journal entries in accounting records

b, d

v mo cost= a. selling exp. + admin exp. b. dl + mo c. dm + dl d. dm + dl + v mo e. f mo + f selling exp + f admin exp f. dm + dl + mo

d

labor costs that can be easily traced to individual units of product (also called touch labor)

direct labor (dl)

raw materials that become an integral part of the finished/final product and whose costs can be conveniently traced to it

direct materials (dm)

the cost of an advertising campaign dedicated to one specific product is a _____ cost of that product, whereas the salary of a marketing manager who overseas numerous products is an _____ cost with respect to individual products

direct, indirect

a company purchased a 12 month insurance policy on october 1st at a cost of $1,200. on the december 31 annual financial statements: a. $1,200 is reported as an exp. b. $300 is reported as an exp. and $900 is reported as a liability c. $1,200 is reported as a liability d. $1,200 is reported as an asset e. $300 is reported as an exp. and $900 is reported as an asset

e

total fixed cost= a. selling exp. + admin exp. b. dl + mo c. dm + dl d. dm + dl + v mo e. f mo + f selling exp + f admin exp f. dm + dl + mo

e

t or f removing exp. that do not differ between alternatives could alter a decision

f

consists of completed units of product that have not yet been sold to customers

finished goods

a serious limitation of using a traditional income statement for internal reporting purposes is that it does not distinguish between _____ costs

fixed and variable

direct or indirect cost? cost: heating the hospital cost object: the pediatric department

indirect

direct or indirect cost? cost: hospital chaplain's salary cost object: a particular patient

indirect

costs that cannot easily and conveniently traced to a specified cost object

indirect costs

employees such as janitors, supervisors, materials handlers, maintenance workers, and night security guards, that play an essential role in running a manufacturing facility are examples of _____ seeing as the cost of compensating these people cannot easily or conveniently traced to specific units of product

indirect labor

the solder used to make electrical connections in a samsung hgtv and the glue used to assemble an ethan allen chair whose costs cannot be easily or conveniently traced to finished products are examples of _____

indirect materials

the salary of a chief financial officer who oversees all of a company's regions is an _____ cost with respect to individual region, whereas the salary of an accounting manager in charge of accounts receivable collections in the east region is a _____ cost of that region.

indirect, direct

product costs are also called _____ costs

inventoriable

includes all manufacturing costs except (dm) and (dl). These costs cannot be easily traced to specific units produced (also called indirect manufacturing cost, factory overhead, and factory burden). includes (i/dm) that are part of the finished product, but that cannot be easily traced to it. includes (i/dl) costs that cannot be conveniently traced to the creation of products. other examples of (mo) include: maintenance and repairs on production equipment, heat and light, property taxes, depreciation and insurance on manufacturing facilities, etc.

manufacturing overhead (mo)

based on the accrual concept that costs incurred to generate a particular rev. should be recognized as exp. in the same period that the rev. is recognized. if cost is incurred t acquire/make something to be sold, the cost should be recognized as an exp. only when the sale takes place/when the benefit occurs

matching principle

period or product cost? materials used for boxing products for shipment overseas (units are not normally boxed)

period

period or product cost? salaries of personnel who work in the finished goods warehouse

period

period or product cost? the wages of the receptionist in the administrative offices

period

when all overhead is assigned using (dl) hours, the company has chosen to use a(n) _____ predetermined overhead rate (pdhr)

plantwide

if a company pays for liability insurance in advance for two years, the entire amount is not considered as expense of the year in which the payment is made. instead one-half of the cost would be recognized as an expense each year. the reason is that both years--not just the first year--benefit from the insurance payment. the unexpensed portion of the insurance payment is carried on the balance sheet as an asset called _____

prepaid insurance

period or product cost? rent on equipment used in the factory

product

period or product cost? workers' compensation insurance for factory employees

product