Question : 11.Which of the following costs generally can be traced directly : 1257127

11.Which of the following costs generally can be traced directly to units of product?

A. Indirect materials

B. Overhead costs

C. Assembly labor

D. Indirect materials and assembly labor

12.Some costs that possibly could be traced directly to cost objects are nonetheless classified as indirect costs because:

A. Such costs cannot be traced to objects in a cost-effective manner.

B. Such practice results in a more accurate accumulated cost for the object.

C. Generally accepted accounting principles require some costs to be treated as indirect.

D. All of these answers are correct.

13.Which of the following statements is true?

A. Indirect costs can easily be traced to a cost object; direct costs cannot be easily traced to a cost object.

B. Both direct and indirect costs can easily be traced to a cost object.

C. Neither direct nor indirect costs are easily traced to a cost object.

D. Direct costs can be traced easily to a cost object, but indirect costs cannot be easily traced to a cost object.

14.Overhead costs include:

A. Direct and indirect costs.

B. Indirect costs only.

C. Direct costs only.

D. Neither direct nor indirect costs.

15.Overhead costs:

A. Cannot be traced to cost objects in a cost-effective manner, but are instead allocated to cost objects.

B. Cannot be allocated to cost objects.

C. Are always variable costs.

D. Are only incurred by manufacturing companies.

16.Preston Company has three divisions. The company should consider a cost to be a direct cost of a division if:

A. It meets guidelines imposed by generally accepted accounting principles.

B. It can be traced to a division in a cost-effective manner.

C. It is a variable cost.

D. It can be allocated to a division.

17.Which of the following statements is true regarding the salary of the manager of a fast food hamburger restaurant?

A. The salary is a fixed cost that is directly traceable to the cost of making hamburgers.

B. The salary is a variable cost that is directly traceable to the cost of operating a specific restaurant.

C. The salary is a variable cost that cannot be traced to the cost of operating a specific restaurant.

D. None of these answers is correct.

18.Cost allocation involves:

A. identifying a cost driver for each cost to be allocated.

B. calculating an allocation rate for each cost to be allocated.

C. multiplying the allocation rate by the weight of the cost driver.

D. All of these answers are correct.

19.Craig Manufacturing Company operates its three production departments within a single facility. Each department produces its own products and maintains its own production equipment. Although they share a common facility, each department is overseen by a separate supervisor. Which one of the following costs is a direct cost of each department?

A. Lease payment on facility

B. Depreciation on the facility

C. Production supervisor salary

D. Plant manager salary

20.Blankenship Company operates a factory with two departments, X and Y. The utilities to heat and light the manufacturing facility would most likely be allocated to departments X and Y on the basis of:

A. Square footage occupied.

B. Machine hours.

C. Direct labor hours.

D. Units sold.

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July 1, 2023

Multiple Choice Questions

66.A merchandiser:

A.Earns net income by buying and selling merchandise.

B.Receives fees only in exchange for services.

C.Earns profit from commissions only.

D.Earns profit from fares only.

E.Buys products from consumers.

67.Cost of goods sold:

A.Is another term for merchandise sales.

B.Is the term used for the expense of buying and preparing merchandise for sale.

C.Is another term for revenue.

D.Is also called gross margin.

E.Is a term only used by service firms.

68.A company has sales of $695,000 and cost of goods sold of $278,000. Its gross profit equals:

A.$(417,000).

B.$695,000.

C.$278,000.

D.$417,000.

E.$973,000.

69.A company has sales of $375,000 and its gross profit is $157,500. Its cost of goods sold equals:

A.$(217,000).

B.$375,000.

C.$157,500.

D.$217,500.

E.$532,500.

70.The following statements regarding gross profit are true except:

A.Gross profit is also called gross margin.

B.Gross profit less other operating expenses equals income from operations.

C.Gross profit is not calculated on the multiple-step income statement.

D.Gross profit must cover all operating expenses to yield a return for the owner of the business.

E.Gross profit equals net sales less cost of goods sold.

71.The following statements regarding merchandise inventory are true except:

A.Merchandise inventory is reported on the balance sheet as a current asset.

B.Merchandise inventory refers to products a company owns and intends to sell.

C.Merchandise inventory may include the costs of freight in and making them ready for sale.

D.Merchandise inventory appears on the balance sheet of a service company.

E.Purchasing merchandise inventory is part of the operating cycle for a business.

72.The following statements are true regarding the operating cycle of a merchandising company except:

A.The operating cycle begins with the purchase of merchandise.

B.The operating cycle is shortened by credit sales.

C.The operating cycle ends with the collection of cash from the sale of merchandise.

D.The operating cycle can vary in length among different merchandising companies.

E.The operating cycle sometimes involves accounts receivable.

73.Merchandise inventory:

A.Is a long-term asset.

B.Is a current asset.

C.Includes supplies the company will use in future periods.

D.Is classified with investments on the balance sheet.

E.Must be sold within one month.

74.The operating cycle for a merchandiser that sells only for cash moves from:

A.Purchases of merchandise to inventory to cash sales.

B.Purchases of merchandise to inventory to accounts receivable to cash sales.

C.Inventory to purchases of merchandise to cash sales.

D.Accounts receivable to purchases of merchandise to inventory to cash sales.

E.Accounts receivable to inventory to cash sales.

75.The current period's ending inventory is:

A.The next period's beginning inventory.

B.The current period's cost of goods sold.

C.The prior period's beginning inventory.

D.The current period's net purchases.

E.The current period's beginning inventory.