Question : 11) Which of the following statements a fixed cost in : 1186151

11) Which of the following statements is a fixed cost in a clothing store?

A) store manager’s salary

B) electricity

C) sales commissions

D) inventory

E) paper for the cash register

12) If each furnace required a hose that costs $20 and 2,000 furnaces are produced for the month, the $40,000 total cost for hoses

A) is considered to be a direct fixed cost.

B) is considered to be a direct variable cost.

C) is considered to be an indirect fixed cost.

D) is considered to be an indirect variable cost.

E) is considered to be variable or fixed, depending on the relevant range.

Use the information below to answer the following question(s).

Macadamia Co. produced and sold 40,000 units last year. Per unit revenue and costs were as follows:

Revenue

$100.00

Cost of Goods Sold:

Direct Materials

$15.00

Direct Labour

30.00

Variable Manufacturing Overhead

20.00

Fixed Manufacturing Overhead

10.00

Total Cost of Goods Sold

$75.00

Gross Margin

$25.00

Selling and Administrative Costs:

Sales Commissions (10% of Sales)

$10.00

Administrative Salaries

20.00

Total Selling and Administrative

$30.00

Operating Income

<$5.00>

Fixed manufacturing overhead and administrative salaries are fixed costs. The per unit amounts are based on last year’s production.

13) Calculate last year’s operating income when the company produced and sold 40,000 units.

A) $0

B) $<200,000>

C) $<500,000>

D) $<800,000>

E) $<1,000,000>

14) Calculate this year’s operating income if the company plans to produce and sell 50,000 units.

A) $50,000

B) $0

C) $<250,000>

D) $<550,000>

E) $250,000

15) Calculate this year’s operating income if the company plans to produce and sell 60,000 units.

A) $150,000

B) $0

C) $<300,000>

D) $<650,000>

E) $300,000

16) Cost behaviour refers to

A) how costs react to a change in the level of activity.

B) whether a cost is incurred in a manufacturing, merchandising, or service company.

C) classifying costs as either inventoriable or period costs.

D) whether a particular expense has been ethically incurred.

E) how costs react to a change in selling price.

17) A mixed cost is

A) a fixed cost.

B) a cost with fixed and variable elements.

C) a variable cost.

D) always an indirect cost.

E) a cost with direct and indirect elements.

18) Variable costs

A) are always indirect costs.

B) increase in total when the actual level of activity increases.

C) include most personnel costs and depreciation on machinery.

D) can always be traced directly to the cost object.

E) change in relation to selling price.

19) The relevant range is important because

A) it specifies which costs should be used for a given decision.

B) it provides a basis for determining a range of acceptable cost alternatives.

C) it is required to determine inventoriable costs under Canadian GAAP.

D) it specifies the limits beyond which the relationship of cost to cost drivers may not be valid.

E) it determines the time horizon.

20) Which of the following statements about the key features of cost accounting and cost management is true?

A) When making decisions about what products to produce, managers need to know how revenue and costs vary with changes in output levels.

B) Managers need to understand that period costs remain the same from one period to the next.

C) The costing system allocates direct costs and traces indirect costs to products.

D) When making decisions, managers must understand that all revenue and costs are relevant.

E) Cost accounting is used for managerial decision making, not for financial statements.

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July 1, 2023

36.Labor and overhead are often grouped together and referred to as

A.prime costs.

B.conversion costs.

C.total manufacturing costs.

D.equivalent unit costs.

37.Which of the following statements about process costing is true?

A.Total transferred-in cost is equal to the total transferred-out cost during a period.

B.The costs of inventory completed in its final department in the manufacturing process will be transferred to Finished Goods inventory.

C.If a department has transferred-in costs, it means that the inventory accounts were not closed correctly at the end of the last period.

D.None of the answer choices are correct.

38.A cost incurred by the Baking Department that is transferred to the Packaging Department is called a

A.conversion cost by the Baking Department.

B.transferred-out cost by the Packaging Department.

C.equivalent unit cost by the Baking Department.

D.transferred-in cost by the Packaging Department.

39.When direct labor costs are incurred in the Mixing Department, the journal entry to record the transaction includes a

A.debit to Wages Payable.

B.credit to Manufacturing Overhead.

C.credit to Work in Process, Mixing Department.

D.debit to Work in Process, Mixing Department.

40.In a process costing system, manufacturing overhead is added to Work in Process

A.using a predetermined overhead rate or based on actual overhead.

B.only in the final production department.

C.at the same rate as the direct materials are added.

D.only when Work in Process is transferred to Finished Goods.

41.Transferred-in costs are recorded with a journal entry that includes a credit to

A.Raw Materials.

B.Manufacturing Overhead.

C.Work in Process.

D.Finished Goods.

42.Which of the following will never be a component of the cost of Work in Process in a company’s initial production department?

A.Direct material

B.Direct labor

C.Transferred-in costs

D.Manufacturing overhead

43.How are equivalent units calculated in a process costing system?

A.By adding the units started to the equivalent units in beginning and ending inventory

B.By adding the units completed to the equivalent units in ending Work in Process

C.By subtracting the equivalent units in beginning inventory from the total units to account for

D.By adding the units started to the equivalent units in ending inventory

44.In the calculation of the cost per equivalent unit, the denominator

A.is the total work done during the period plus the equivalent units in ending inventory.

B.includes both the number of units completed and the number of equivalent units in ending Work in Process.

C.equals the work done during the period less the work remaining to finish ending inventory.

D.is the work done for the current and preceding departments.

45.The Baking Department began the period with 16,000 units which were 45% complete. During the period, the department received another 78,000 units from the previous department, and at the end of the period, 9,000 units remained which were 40% complete. Conversion costs are added evenly throughout the process and materials are added at the beginning of the process. How much are equivalent units for conversion costs in the Baking Department’s Work in Process inventory at the end of the period?

A.5,400 units

B.3,600 units

C.3,000 units

D.9,000 units