Question :
31.Anton believes his company’s overhead costs driven (affected) by the : 1257006
31.Anton believes his company’s overhead costs are driven (affected) by the number of machine hours because the production process is heavily automated. During the period, the company produced 3,000 units of Product A requiring a total of 100 machine hours and 2,000 units of Product B requiring a total of 25 machine hours. What allocation rate should be used if the company incurs overhead costs of $10,000?
A. $2 per unit
B. $2 per machine hour
C. $80 per unit
D. $80 per machine hour
32.The following information relates to Cruz Manufacturing for 2013: Based on this information, what is the company’s cost of goods sold for 2013?
A. $86,000
B. $120,000
C. $114,000
D. $170,000
33.The following information relates to Marshall Manufacturing’s 2013 accounting period: Based on this information, what is the company’s net income for 2013?
A. $40,000
B. $70,000
C. $30,000
D. $42,000
34.Costs such as transportation-out, sales commissions, uncollectible accounts receivable, and advertising costs are sometimes called:
A. upstream costs.
B. downstream costs.
C. direct costs.
D. indirect costs.
35.All of the following are downstream costs except:
A. packaging costs
B. advertising
C. research and development
D. sales commissions
36.Select the incorrect statement regarding upstream and downstream costs.
A. Companies normally incur significant downstream costs.
B. To be profitable, companies must recover the total cost of developing, producing, and delivering products.
C. Pricing decisions must consider both upstream and downstream costs in addition to manufacturing costs.
D. Upstream and downstream costs are reported as product costs on the income statement.
37.Select the incorrect statement regarding service companies.
A. Because service companies do not carry inventory, it is impossible to determine product costs.
B. Because the products of service companies are consumed immediately, there is no finished goods inventory on their balance sheets.
C. Managers of service companies are expected to control costs, improve quality, and increase productivity just like managers of manufacturing companies.
D. Material, labor, and overhead costs of service companies are treated as period costs.
38.Identify the false statement regarding how product costs in a manufacturing company differ from product costs in a service or merchandising company.
A. Both manufacturing companies and service companies incur costs for supplies.
B. Manufacturing companies accumulate product costs in inventory accounts, while service companies do not.
C. Products of service companies such as restaurants are consumed immediately.
D. Most labor costs for merchandising companies are treated as product costs.
39.Costs associated with holding inventory often include:
A. theft, damage, and obsolescence.
B. financing.
C. warehouse space.
D. supervision.
E. All of these.
40.A company that uses a just in time inventory system:
A. has finished goods inventory on hand at all times in order to speed up shipments of customer orders.
B. may find that having less inventory actually leads to increased customer satisfaction.
C. assesses its value chain to create new value-added activities.
D. adopts a systematic, problem-solving attitude.
