Chapter 2- MC

In September direct labor was 40% of conversion cost. If the manufacturing overhead for the month was $66,000 and the direct materials cost was $20,000 the direct labor cost was

$44,000

During the month of September, direct labor cost totaled $11,000 and direct labor cost was 40% of prime cost. If total manufacturing costs during September were $73,000, the manufacturing overhead was:

$45,500

Arsenault Company's manufacturing overhead is 60% of its total conversion costs. If direct labor is $38,000 and if direct materials are $21,000 the manufacturing overhead is:

$57,000

Which of the following statements is true of direct costs?

A direct cost of one cost object can be an indirect cost of another cost object

Which of the following statements is true?

Because of a cost-benefit tradeoff, some costs that could be traced to cost objects may be treated as indirect costs

Which of the following statements about the direct/ indirect cost classification is true?

Indirect costs are always allocated

Which of the following is true of indirect costs?

Indirect costs cannot be traced to a particular cost object in an economically feasible way

If each motorcycle requires a belt that costs $20 and 2000 motorcycles are produced for the month, the total cost for belts is

considered to be a direct variable cost

The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is

cost assignment

The determination of a cost as either direct or indirect depends upon the

cost object chosen

Conversion costs include

direct labor and overhead

Prime Costs include

direct materials and direct labor

A manufacturing plant produces two product lines: golf equipment and soccer equipment. an example of indirect cost for the soccer equipment line is the

direct salary paid to the plant manager

Which of the following is true if the production volume decreases?

fixed costs per unit increase

Finished goods inventory would normally include

goods fully completed but not yet sold

Work-in-process inventory would normally include

goods partially worked on but not yet fully completed

Cost behavior refers to

how costs react to a change in the level of activity

Within the relevant range, variable costs

increase in total when activity levels increase

Indirect manufacturing costs

may include both variable and fixed costs

For a manufacturing company, indirect manufacturing costs may be included

only in raw materials inventory, work-in-process inventory, finished goods inventory and cost of goods sold

For a manufacturing company, direct labor costs may be included in

only in work-in-process inventory, finished goods inventory and cost of goods sold

Last month, when 10000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and production activity is still within the relevant range,

per unit total cost will decrease

For a manufacturing company, direct material costs may be included in

raw materials inventory, work-in-process inventory, and finished goods inventory

Within the relevant range, a variable cost

remains constant on per unit basis as the number of unites produced increases

Cost tracing is

the assignment of direct costs to the chosen cost object

Cost allocation is

the assignment of indirect costs to the chosen cost object

Total manufacturing costs equal

the sum of direct materials and conversion costs

Which of the following is true if the volume of sales increase (within the relevant range) for a company that has both fixed and variable costs?

total variable costs increase

Inventoriable costs are expensed on the income statement

when the products are sold

Classifying a cost as either direct or indirect depends upon

whether the cost can be economically traced to the cost object