Question 1

The contribution margin for September was:

Accepted Answer

A)  $3,878,400
B)  $2,122,900
C)  $2,591,500
D)  $1,627,700E) B) and D)
F) All of the above

Question 2

Prime cost equals manufacturing overhead cost.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements about product costs is true?

Accepted Answer

A)  Product costs are deducted from revenue when the production process is completed.
B)  Product costs are deducted from revenue as expenditures are made.
C)  Product costs associated with unsold finished goods and work in process appear on the balance sheet as assets.
D)  Product costs appear on financial statements only when products are sold.E) A) and B)
F) A) and C)

Question 4

For financial reporting purposes, the total amount of period costs incurred to sell 9,000 units is closest to:

Accepted Answer

A)  $35,700
B)  $9,000
C)  $53,550
D)  $44,550E) B) and C)
F) A) and C)

Question 5

For financial reporting purposes, the total amount of product costs incurred to make 4,000 units is closest to:

Accepted Answer

A)  $57,200
B)  $8,800
C)  $44,400
D)  $53,200E) A) and B)
F) None of the above

Question 6

Dizzy donates $2 of every entrance fee to a local homeless shelter.This charitable contribution would best be described as a:

Accepted Answer

A)  fixed cost
B)  mixed cost
C)  step-variable cost
D)  true variable costE) A) and C)
F) B) and C)

Question 7

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory?

Accepted Answer

A)  The cost of the glue in a chair.
B)  The amount paid to the individual who stains a chair.
C)  The workman's compensation insurance of the supervisor who oversees production.
D)  The factory utilities of the department in which production takes place.E) All of the above
F) None of the above

Question 8

Prime cost is the sum of direct materials cost and direct labor cost.

Accepted Answer

A) True 
 B)False

Question 9

A fixed cost fluctuates in total as activity changes but remains constant on a per unit basis over the relevant range.

Accepted Answer

A) True 
 B)False

Question 10

An example of a committed fixed cost is:

Accepted Answer

A)  management training seminars.
B)  a long-term equipment lease.
C)  research and development.
D)  advertising.E) B) and C)
F) None of the above

Question 11

Depreciation on equipment a company uses in its selling and administrative activities would be classified as a period cost.

Accepted Answer

A) True 
 B)False

Question 12

Fixed costs expressed on a per unit basis do not change with changes in activity.

Accepted Answer

A) True 
 B)False

Question 13

The gross margin for September was:

Accepted Answer

A)  $2,122,900
B)  $2,591,500
C)  $1,627,700
D)  $4,347,000E) C) and D)
F) A) and C)

Question 14

Which of the following costs could contain both variable and fixed cost elements with respect to the total output of the company?

Accepted Answer

A)  Sales commissions.
B)  Manufacturing overhead.
C)  Direct materials.
D)  Administrative salaries.E) A) and C)
F) All of the above

Question 15

To the nearest whole dollar, what should be the total lease cost at a sales volume of 29,200 units in a month? (Assume that this sales volume is within the relevant range.)

Accepted Answer

A)  $712,140
B)  $697,200
C)  $727,080
D)  $668,548E) A) and C)
F) All of the above

Question 16

In making the decision to invest in the model 220 machine, the opportunity cost was:

Accepted Answer

A)  $348,000
B)  $340,000
C)  $360,000
D)  $411,000E) B) and C)
F) A) and B)

Question 17

If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Accepted Answer

A)  $33,300
B)  $31,050
C)  $28,050
D)  $39,900E) A) and B)
F) A) and C)

Question 18

Which of the following costs is classified as both a prime cost and a conversion cost?

Accepted Answer

A)  Direct materials.
B)  Direct labor.
C)  Variable overhead.
D)  Fixed overhead.E) C) and D)
F) A) and D)

Question 19

In a manufacturing company, all costs are period costs.

Accepted Answer

A) True 
 B)False

Question 20

Contribution margin and gross margin mean the same thing.

Accepted Answer

A) True 
 B)False

Exam 1: Managerial Accounting and Cost Concepts

Depreciation on equipment a company uses in its selling and administrative activities would be classified as a period cost.

Correct AnswerverifiedShow Answer

In a manufacturing company, all costs are period costs.

Correct AnswerverifiedShow Answer

To the nearest whole dollar, what should be the total lease cost at a sales volume of 29,200 units in a month? (Assume that this sales volume is within the relevant range.)

Correct AnswerverifiedShow Answer

An example of a committed fixed cost is:

Correct AnswerverifiedShow Answer

If 3,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

Correct AnswerverifiedShow Answer

For financial reporting purposes, the total amount of product costs incurred to make 4,000 units is closest to:

Correct AnswerverifiedShow Answer

The gross margin for September was:

Correct AnswerverifiedShow Answer

Which of the following costs could contain both variable and fixed cost elements with respect to the total output of the company?

Correct AnswerverifiedShow Answer

Dizzy donates $2 of every entrance fee to a local homeless shelter.This charitable contribution would best be described as a:

Correct AnswerverifiedShow Answer

A fixed cost fluctuates in total as activity changes but remains constant on a per unit basis over the relevant range.

Correct AnswerverifiedShow Answer

Contribution margin and gross margin mean the same thing.

Correct AnswerverifiedShow Answer

Which of the following statements about product costs is true?

Correct AnswerverifiedShow Answer

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory?

Correct AnswerverifiedShow Answer

The contribution margin for September was:

Correct AnswerverifiedShow Answer

In making the decision to invest in the model 220 machine, the opportunity cost was:

Correct AnswerverifiedShow Answer

Prime cost is the sum of direct materials cost and direct labor cost.

Correct AnswerverifiedShow Answer

Fixed costs expressed on a per unit basis do not change with changes in activity.

Correct AnswerverifiedShow Answer

Which of the following costs is classified as both a prime cost and a conversion cost?

Correct AnswerverifiedShow Answer

Prime cost equals manufacturing overhead cost.

Correct AnswerverifiedShow Answer

For financial reporting purposes, the total amount of period costs incurred to sell 9,000 units is closest to:

Correct AnswerverifiedShow Answer

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