Managerial Accounting RQ 1

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Which of the following statements is true? a. Fixed costs are constant on a per unit basis b. Variable costs per unit decrease as activity volume increases c. Variable costs are constant in total dollars d. Fixed costs are constant in total dollars

d. Fixed costs are constant in total dollars

Manufacturing costs that cannot be classified as either direct materials or direct labor are known as a. period costs b. nonmanufacturing costs c. selling and administrative expenses d. manufacturing overhead

d. manufacturing overhead

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

Because of automation, which component of product cost is declining? a. Direct labor b. Direct materials c. Manufacturing overhead d. Advertising

a. Direct labor

________ is sometimes called "touch labor." a. Direct labor b. Indirect labor c. Overhead labor

a. Direct labor

How should the wages of a sheet metal worker in a fabrication plant be classified? a. Product cost b. Period cost c. Nonmanufacturing cost d. Administrative cost

a. Product cost

Manufacturing costs include all of the following categories except ________. a. administrative costs b. direct labor c. direct materials d. manufacturing overhead

a. administrative costs

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. a. indirect cost b. common cost c. direct cost

a. indirect cost

Property taxes associated with a company's administrative facility are considered a. nonmanufacturing costs b. manufacturing overhead costs c. selling costs

a. nonmanufacturing costs

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

d. remains constant in total with changes in the level of activity

Which of the following statements about opportunity costs is not correct? a. An opportunity cost is the potential benefit that is given up when one alternative is selected over another. b. An opportunity cost cannot be changed by any decision made now or in the future. c. Opportunity costs are not usually found in accounting records. d. Opportunity costs are costs that must be explicitly considered in every decision a manager makes.

b. An opportunity cost cannot be changed by any decision made now or in the future.

Which of the following is always an irrelevant cost? a. Differential cost b. Sunk cost c. Opportunity cost

b. Sunk cost

A ___________ is a cost that is incurred to support a number of cost objects but cannot be traced to them individually. a. indirect cost b. common cost c. direct cost No answer text provided.

b. common cost

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

b. direct materials

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

b. manufacturing overhead costs

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

b. the level of activity

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

b. It separates costs into fixed and variable categories.

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

b. relevant in making business decisions

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

Davidson Company has sales of $100,000, variable cost of goods sold of $40,000, variable selling expenses of$15,000, variable administrative expenses of $5,000, fixed selling expenses of $7,000, and fixed administrative expenses of $9,000. What is Davidson's contribution margin? a. $84,000 b. $45,000 c. $40,000 d. $8,000

c. $40,000

Costs that are not worth the effort to trace to a specific cost object are: a. opportunity costs b. direct costs c. indirect costs d. irrelevant costs

c. indirect costs

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

c. some costs will change, other costs will remain the same

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 equals ________. a. $50,000 b. $5 c. $1,000 d. $5,000

d. $5,000

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

d. Cost of goods sold and selling and administrative expenses

Which of the following is common to both prime cost and conversion cost? a. Manufacturing overhead b. Direct materials c. Nonmanufacturing costs d. Direct labor

d. Direct labor

Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of the branch. a. indirect cost b. common cost c. direct cost

c. direct cost

Conversion costs consist of: a. all costs of production b. raw materials and direct labor c. direct labor and manufacturing overhead d. raw materials and manufacturing overhead

c. direct labor and manufacturing overhead


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