.

All costs related to the manufacturing

function in a company are
A. prime costs.
C
B. conversion costs.
C. product costs.
D. direct costs.

Botana Company constructed the following formula for monthly

utility cost.
Total utility cost = $1,200 + $8.10 x´ labor hours
Assume that 775 labor hours are budgeted for the month of
April.
Calculate the total variable utility cost for the month of April D
A. $7,477.50
B. $5,077.50
C. $1,200
D. $6,277.50

. Carson Company's market for the Model A has changed significantly, and Carson has
had to drop the
price per unit from $265 to $125. There are some units in the work in process inventory that
have
costs of $150 per unit associated with them. Carson could sell these units in their current
state for
$100 each. It will cost Carson $10 per unit to complete these units so that they can be
sold for $125
each. A
Based on the information about Carson, which of the following is not considered a
relevant value for
this problem?
A. $265 = former price
B. $10 = cost to complete units
C. $100 = price for partially completed units
D. $125 = current price

Carson Company's market for the Model A has changed significantly, and Carson has had
to drop the
price per unit from $265 to $125. There are some units in the work in process inventory that
have
costs of $150 per unit associated with them. Carson could sell these units in their current
state for
$100 each. It will cost Carson $10 per unit to complete these units so that they can be
sold for $125 D
each.
When the incremental revenues and expenses are analyzed, the company is better off by:
A. $10 per unit if the sell the units in their current state.
B. $125 per unit if they complete the units.
C. $25 per unit if they sell the units in their current state.
D. $15 per unit if they complete the units

Columbia Hospital for Women is planning to expand its labor and delivery
room facilities. Although
variable costs per patient will remain unchanged, fixed costs will increase by
20 percent. Last year's
costs are below.
Variable costs $50 per patient
Fixed costs $20,000 per month
Calculate the future total cost assuming 100 patients are expected each
D
month.
A. $20,000
B. $25,000
C. $20,500
D. $29,000
. Conversion cost does not include
A. factory depreciation.
B. direct material. B
C. supervisors' salaries.
D. direct labor.

. Costs that do not change with

changes in activity levels are known as:
A. opportunity costs.
B
B. fixed costs.
C. sunk costs.
D. variable costs.

Costs that do not change with changes

in activity levels are known as:
A. opportunity costs.
B
B. fixed costs.
C. sunk costs.
D. variable costs.

A cost that remains constant in total but

varies on a per-unit basis with changes in
activity is called
a(n)
D
A. expired cost.
B. mixed cost.
C. variable cost.
D. fixed cost.

The distinction between direct and indirect

costs depends on whether a cost
A. is controllable or non-controllable.
B. is variable or fixed.
C
C. can be conveniently and physically
traced to a cost object under consideration.
D. will increase with changes in levels of
activity.
An example of a fixed cost is
A. cost of electricity.
B. straight-line depreciation. B
C. total indirect material cost.
D. total hourly wages.

The following four months of data were collected on utility cost and the
number of labor hours in a
factory.
Month Utility cost Labor hours
January $22,100 3,975
February 24,600 5,430
March 23,500 4,400
April 20,140 3,200
A
Using the high-low method, compute the fixed cost of electricity.
A. $13,740
B. $10,860
C. $6,400
D. none of the answers are correct

The formula for cost of goods sold for a manufacturer is

A. direct material plus direct labor plus overhead incurred plus
beginning Work in Process
Inventory.
B. beginning Finished Goods Inventory plus Cost of Goods
Manufactured minus ending Finished B
Goods Inventory.
C. direct material plus direct labor plus applied overhead.
D. beginning Work in Process Inventory plus Cost of Goods
Manufactured minus ending Work in
Process Inventory.

The formula to compute cost of goods manufactured is

A. direct material used plus direct labor plus overhead incurred.
B. direct material used plus direct labor plus overhead incurred
plus beginning Work in Process
Inventory.
C. beginning Work in Process Inventory plus purchases of raw D
material minus ending Work in
Process Inventory.
D. beginning Work in Process Inventory plus direct labor plus
direct material used plus overhead
incurred minus ending Work in Process Inventory.

The high-low method

A. is not as accurate as other methods
B. can be affected by the presence of
D
outliers
C. has the advantage of objectivity
D. all of the answers are correct
The indirect costs of converting raw
material into finished goods are called
A. conversion costs.
D
B. period costs.
C. prime costs.
D. overhead costs.

Maxwell Company makes treadmills. The company controller wants to

calculate the fixed and
variable costs associated with the janitorial costs incurred in the factory.
Data for the past four months were collected.
Month Janitorial costs Machine hours
September $ 11,000 575

B
October 11,400 610
November 10,200 510
December 10,725 550
Using the high-low method calculate the fixed cost of the janitorial services
A. $7,320
B. $4,080
C. $6,120
D. none of the answers are correct

Maxwell Company makes treadmills. The company controller wants to calculate the fixed
and
variable costs associated with the janitorial costs incurred in the factory.
Data for the past four months were collected.
Month Janitorial costs Machine hours
September $ 11,000 575
October 11,400 610
November 10,200 510
December 10,725 550
B
What would Maxwell Company's estimate of total janitorial cost be at a level of 625
machine hours?
A. $6,120
B. $11,580
C. $7,500
D. $4,080

Period costs
A. are expensed in the same period in which
they are incurred.
B. are associated with the periodic inventory
method.
A
C. are always variable costs.
D. remain unchanged over a given period of
time.

Per-unit fixed costs

A. increase as output increases
B. decrease as output decreases
NO ANSWER
C. can be misleading and lead to
poor decisions
D. stay the same as output changes
. Per-unit variable costs
A. decrease as output decreases
B. remain constant within the relevant
range B
C. increase as output increases
D. can be misleading and lead to poor
decisions

Product costs are deducted from

revenue
A. to minimize taxable income.
B
B. as goods are sold.
C. as expenditures are made.
D. when production is completed.

The term "relevant range" as used in

cost accounting means the range over
which
A. relevant costs are incurred. C
B. costs may fluctuate.
C. cost relationships are valid.
D. production may vary.

. The term "prime cost" refers to

A. all manufacturing costs other than direct
labor and raw material costs.
B. all manufacturing costs incurred to produce
units of output.
D
C. raw material purchased and direct labor
costs.
D. the raw material used and direct labor costs.

Total cost = Fixed cost + Variable Rate ´x

Output
In the cost formula above which element
would be the slope?
D
A. output
B. fixed cost
C. total cost
D. variable rat
Using the high-low method, the variable rate of
a mixed cost equals
A.
B. total cost at high point - (variable rate x
output at high point)
C
C.
D. total cost a high point - (variable rate x
output at low point

Valley Company incurred a total cost of $5,000 to

produce 300 units of output. A total of 450 hours
was incurred for this effort. If the variable cost was
$10 per direct labor hour, then the fixed cost was
A. $3,000. C
B. $4,500.
C. $ 500.
D. $2,000.

Valley Company incurred a total cost of $17,000 to

produce 500 units of output. A total of 800 hours
was incurred for this effort. If the variable cost was
$20 per direct labor hour, then the fixed cost was
A. $ 1,000 A
B. $ 7,000
C. $16,000
D. $17,000

When cost relationships are linear, total

variable prime costs will vary in
proportion to changes in
A. total overhead cost. B
B. production volume.
C. total material cost.
D. direct labor hours.

When the number of units manufactured

increases, the most significant change in unit cost
will be
reflected as a(n)
A. decrease in the fixed element.
A
B. decrease in the variable element.
C. increase in the mixed element.
D. increase in the fixed element.
Which of the following is not a product
cost component?
A. commission on the sale of a product
A
B. rent on a factory building
C. janitorial supplies used in a factory
D. indirect production labor wages

Which of the following replaces the retailing

component "Purchases" in computing Cost of
Goods
Sold for a manufacturing company?
A. total prime cost
D
B. direct material used
C. cost of goods available for sale
D. cost of goods manufactured

. Within the relevant range, variable costs

A. are the same total amount at different activity
levels.
B. are the same amount per unit at any activity
level.
B
C. are a different amount per unit at different
activity levels.
D. None of these are correct.