Which one of the following represents a period cost?
Fringe benefits associated with factory workers
Labor costs associated with quality control
Overhead allocated to the manufacturing operations
The VP of Sales' salary and benefi
For inventoriable costs to become expenses under the matchingprinciple,
the product must be finished and in stock.
the product must be expensed based on itspercentage-of-completion.
all accounts payable must be settled.
the product to which they attach must be sold
A manufacturing company reports cost of goods manufactured asa(n)
current asset on the balance sheet.
component of the raw materials inventory on the balancesheet.
administrative expense on the income statement.
component in the calculation of cost of goods sold on the incomestatement
Multiple Choice Question 100
On the costs of goods manufactured schedule, depreciation onfactory equipment
is not listed because it is not a product cost.
is not an inventoriable cost.
is not listed because it is included with Depreciation Expenseon the income statement.
appears in the manufacturing overhead section.
What is work in process inventory generally described as?
Beginning stage production costs associated with labor costsdealing with bringing in raw materials from the shipping docks
Costs applicable to units that have been started in productionbut are only partially completed
Costs associated with the end stage of manufacturing that arealmost always complete and ready for customers
Costs strictly associated with direct labor
Which one of the following does not appear on thebalance sheet of a manufacturing company?
Raw materials inventory
Finished goods inventory
Cost of goods manufactured
Work in process inventory
How have many companies significantly lowered inventory levelsand costs?
They utilize a balanced scorecard system.
They have a just-in-time method.
They focus on total quality management.
They use activity-based costing.
What is âbalancedâ in the balanced scorecard approach?
The number of defects found on each product
The number of products produced
The amount of costs allocated to products
The emphasis on financial and non-financial performancemeasureme
Which one of the following characteristics would likely beassociated with a just-in-time inventory method?
Minimal finished goods inventory on hand
A backlog of inventory orders not yet shipped
An understanding with customers that they may come to theshowroom and select from inventory on hand
Ending inventory of work in process that would allow severalproduction runs
Which one of the following represents a period cost?
Fringe benefits associated with factory workers |
Labor costs associated with quality control |
Overhead allocated to the manufacturing operations |
The VP of Sales' salary and benefi |
For inventoriable costs to become expenses under the matchingprinciple,
the product must be finished and in stock. |
the product must be expensed based on itspercentage-of-completion. |
all accounts payable must be settled. |
the product to which they attach must be sold |
A manufacturing company reports cost of goods manufactured asa(n)
current asset on the balance sheet. |
component of the raw materials inventory on the balancesheet. |
administrative expense on the income statement. |
component in the calculation of cost of goods sold on the incomestatement |
Multiple Choice Question 100
On the costs of goods manufactured schedule, depreciation onfactory equipment
is not listed because it is not a product cost. |
is not an inventoriable cost. |
is not listed because it is included with Depreciation Expenseon the income statement. |
appears in the manufacturing overhead section. |
What is work in process inventory generally described as?
Beginning stage production costs associated with labor costsdealing with bringing in raw materials from the shipping docks |
Costs applicable to units that have been started in productionbut are only partially completed |
Costs associated with the end stage of manufacturing that arealmost always complete and ready for customers |
Costs strictly associated with direct labor |
Which one of the following does not appear on thebalance sheet of a manufacturing company?
Raw materials inventory |
Finished goods inventory |
Cost of goods manufactured |
Work in process inventory |
How have many companies significantly lowered inventory levelsand costs?
They utilize a balanced scorecard system. |
They have a just-in-time method. |
They focus on total quality management. |
They use activity-based costing. |
What is âbalancedâ in the balanced scorecard approach?
The number of defects found on each product |
The number of products produced |
The amount of costs allocated to products |
The emphasis on financial and non-financial performancemeasureme |
Which one of the following characteristics would likely beassociated with a just-in-time inventory method?
Minimal finished goods inventory on hand |
A backlog of inventory orders not yet shipped |
An understanding with customers that they may come to theshowroom and select from inventory on hand |
Ending inventory of work in process that would allow severalproduction runs |
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Related questions
1) All of the following are examples of product costs except:
depreciation on the company's administrative offices.
salary of the plant manager.
insurance on the factory equipment.
rental costs of the factory facility.
2) Period costs:
are treated as expenses in the period they are incurred
are directly traceable to products
include direct labor
are also referred to as manufacturing overhead costs
.
3) Axle and Wheel Manufacturing currently produces 1,000 axles per month. The following per unit data apply for sales to regular customers:
Direct materials $30
Direct manufacturing labor 5
Variable manufacturing overhead 10
Fixed manufacturing overhead 40
Total manufacturing costs $85
The plant has capacity for 2,000 axles and is considering expanding production to 1,500 axles. What is the total cost of producing 1,500 axles?
a. $85,000
b. $170,000
c. $107,500
d. $102,500
4) In the preparation of the schedule of Cost of Goods Manufactured, the accountant incorrectly included as part of manufacturing overhead the rental expense on the firm's retail facilities. This inclusion would:
overstate period expenses on the income statement.
overstate the cost of goods sold on the income statement.
understate the cost of goods manufactured.
have no effect on the cost of goods manufactured.
5) In CVP analysis, focusing on target net income rather than operating income:
a. will increase the breakeven point
b. will decrease the breakeven point
c. will not change the breakeven point
d. does not allow calculation of breakeven point
6) A variable cost is constant if expressed on a per unit basis but the total dollar amount changes as the number of units increases or decreases.
a. True
b. False
7) As activity increases within the relevant range, fixed costs remain constant on a per unit basis.
a. True
b. False
8) Which of the following statements is correct with regard to a CVP graph?
A CVP graph shows the maximum possible profit.
A CVP graph shows the break-even point as the intersection of the total sales revenue line and the total expense line.
A CVP graph assumes that total expense varies in direct proportion to unit sales.
A CVP graph shows the operating leverage as the gap between total sales revenue and total expense at the actual level of sales.
9) How would the following costs be classified (product or period) under variable costing at a retail clothing store?
| Cost of purchasing clothing | Sales commissions | |
| a. | Product | Product |
| b. | Product | Period |
| c. | Period | Product |
| d. | Period | Period |
10) The principal difference between variable costing and absorption costing centers on:
whether variable manufacturing costs should be included as product costs.
whether fixed manufacturing costs should be included as product costs.
whether fixed manufacturing costs and fixed selling and administrative costs should be included as product costs.
none of these.
11) Joe has a hot dog cart that he parks on the NY sidewalk and sells hotdogs during the day. The variable cost of a hot dog is $.90. The selling price of the hot dog is $2.00. The fixed cost is $3,000 per month which covers the loan for the cart and the salary Joe needs to make to live. How many hotdogs must Joe sell in one month in order to break even?
3,300 hot dogs
3,000 hot dogs
2,727.27 hot dogs
2,728 hot dogs
12) Shun Corporation manufactures and sells a hand held calculator. The following information relates to Shun's operations for last year:
| Unit product cost under variable costing.......................... | $5.20 per unit | |
| Fixed manufacturing overhead cost for the year.............. | $260,000 | |
| Fixed selling and administrative cost for the year............ | $180,000 | |
| Units (calculators) produced and sold.............................. | 400,000 |
What is Shun's unit product cost under absorption costing for last year?
$4.10
$4.55
$5.85
$6.30.
Use the following information to answer questions 13 to 15:
Barnett Company uses the weighted-average method in its process costing system. The company adds materials at the beginning of the process in Department M. Conversion costs were 75% complete with respect to the 4,000 units in work in process at May 1 and 50% complete with respect to the 6,000 units in work in process at May 31. During May, 14,000 units were started, 12,000 units were completed and transferred to the next department.
13) Calculate the number of equivalent units for materials.
10,000 units
12,000 units
14,000 units
15,000 units
18,000 units
14) Calculate the number of equivalent units for conversion?
10,000 units
12,000 units
14,000 units
15,000 units
18,000 units
15) An analysis of the costs relating to work in process at May 1 and to production activity for May follows:
| Materials | Conversion | ||
| Work in process 5/1....................... | $13,800 | $3,740 | |
| Costs added during May................ | $42,000 | $26,260 |
The total cost per equivalent unit for May was:
$5.02
$5.10
$5.12
$5.25
Joint Costing
Am I on the right track to correct answers? May you providefeedback for me? If I am not on the right track, then, can you showme why or why not?
A. Rockwell Company manufactures products C and R from a jointprocess. The total joint costs are $120,000. The net realizablevalue at split off was $140,000 for 8,000 units of product C and$60,000 for 2,000 units of product R.
1. Using the information in Part a,calculate the amount of joint costs to be allocated to Products Cand R using the NET REALIZABLE VALUE METHOD.
$ 84,000_________ allocated to ProductC $ 36,000________allocated to Product R
B. Darvin Company manufactures products A and B from a jointprocess, which also yields a by-product, X. Darvin accounts for therevenues from its by-product sales as other revenue.
Additional information follows: A BX Total
Unitsproduced 9,000 15,000 6,000 30,000
JointCosts ? ? ? $117,000
Sales value @ split off point $100,000 $100,000 $100,000$300,000
2. Using the information in Part b, calculated the amount ofjoint costs to be allocated to the products :
PHYSICAL UNITSMETHOD $ 43,875___ A $73,125_____B $0______ X
NET REALIZABLE VALUE METHOD $58,500___A $ 58,500____B $ 0______ X
C. Meyer Corp. manufactures products W, X, Y, and Z from a jointprocess. The JOINT COSTS amount to $120,000. Additional informationfollows:
PRODUCT Unitsproduced Sales Value @ split offpoint Further processingcosts Sales value after further
processing
W 7,000 $70,000 $7,500 $90,000
X 5,000 $60,000 $6,000 $70,000
Y 4,000 $40,000 $4,000 $50,000
Z 4,000 $30,000 $3,500 $32,000
Totals 20,000 $200,000 $21,000 $242,000
3. Using the information in Part c, find the following:
Product | Incremental Revenue | Incremental Cost | Process further? yes or no | *Net Realizable Value | $Amt allocated to product using NRVmethod |
w | $20,000 | $7,500 | Yes | $62,500 | $40,800 |
x | $10,000 | $6,000 | Yes | $54,000 | $36,000 |
y | $10,000 | $4,000 | Yes | $36,000 | $24,000 |
z | $2,000 | $3,500 | No | $30,000 | $19,200 |
* must consider whether or not product will be sold at splitor processed further
Answer the following questions related to jointcosts:
Are joint costs allocated to By-products? (yes or )___NO____
What are 2 ways that the proceeds fromby-products can be shown on the Income Statement?
Use the proceeds from the by-productto reduce the joint cost.
The proceeds from the by-product areshown as other revenue in the revenue section of the incomestatement.
The two asset recognition methods:The net realizable value method that shows the net realizable valueof the by-products on the incomestatement as a deduction from thetotal manufacturing cost of the joint products in the period inwhich the by-product is produced. OR The other income at productionpoint method that shows the net realizable value of by-products onthe income statement as other income or other sales revenue in theperiod in which the by-product is
The two revenue methods:The other income at selling point method shows the net salesrevenue from a by-product sold at time of sale on the incomestatement as other income or other sales revenue. OR Themanufacturing cost reduction at selling point method shows the netsales revenue from a by-product sold at time of sale on the incomestatement as a reduction of total manufacturing cost.
What is the difference between BY-PRODUCTS and SCRAP?
By-products are incidental products with a relatively low orminor value in comparison with the sales value of the jointproducts, yet have a positive net realizable value; the proceedsfrom by-products can be shown on the income statement as otherrevenue or as a decrease to the joint cost. On the other hand,scrap is an incidental product that has a negative net realizablevalue; the disposal cost related to the scrap is added to jointcost, which is allocated to the main products.
