Results Reporter

Out of 26 questions, you answered 8 correctly with a final grade of 31% 8 correct (31%) 18 incorrect (69%) 0 unanswered (0%)

Your Results:
The correct answer for each question is indicated by a .

1 CORRECT

Expense is defined as the cost incurred when an asset is used up or sold for the purpose of generating A) revenue B) that is assigned to goods that were purchased for resale C) that is assigned to goods manufactured for resale D) that is inventoriable E) none of the above. Feedback: Easy LO: 1 Expense is defined as the cost incurred when an asset is used up or sold for the purpose of generating revenue.

2 INCORRECT

Product cost is defined as the cost incurred when an asset is used up or sold for the purpose of generating A) revenue B) that is assigned to goods that were purchased for resale C) that is assigned to goods manufactured for resale D) that is inventoriable E) all except a. Feedback: Easy LO: 1 Product cost is defined as the cost that is assigned to goods that were purchased for resale or goods manufactured for resale and is inventoriable.

3 INCORRECT

Anderson company produced 100 units that cost $1,800, and sold 90 of them for $29 a unit. Selling expenses amounted to $360. Net profit amounts to A) $990 B) $630 C) $450 D) $360 E) none of the above

Feedback: Easy LO: 2 NI = (90 * 29) [(90 * 18) + 360] = $630.

4 INCORRECT

Anderson Company produced 100 units that cost $1,800, and sold 90 of them for $29 a unit. Selling expenses amounted to $360. Cost of sales amounts to A) $990 B) $1,620 C) $1,800 D) $1,980 E) none of the above Feedback: Easy LO :2 CGS = 90 * 18 = $1,620.

5 INCORRECT

Cost management information may be used in A) service organizations B) merchandising firms C) manufacturing firms D) all of the above E) b and c only. Feedback: Easy LO: 2 Cost management information may be used in service organizations, merchandising firms, and manufacturing firms.

6 CORRECT

Conversion costs include A) all costs of transforming material into finished goods B) material and labor costs of converting goods into finished goods C) material and overhead for transforming goods into finished goods D) product costs except for labor costs E) none of the above. Feedback: Medium LO: 3 Conversion costs include all costs of transforming material into finished goods.

7 INCORRECT

Prime costs include A) all costs of transforming material into finished goods B) material and labor costs of converting goods into finished goods C) material and overhead for transforming goods into finished goods D) product costs except for labor costs E) none of the above. Feedback: Medium LO: 3 Prime costs include material and labor costs of

converting goods into finished goods.

8 INCORRECT

Assuming that inventory beginning amounts to 50, inventory ending amounting to 65 units, and sales total of 95 units, the production for the period should have been, A) 90 B) 105 C) 110 D) 115 E) none of the above Feedback: Medium LO: 3 95 + 65 50 = 110.

9 INCORRECT

A cost driver is any discrete task that an organization undertakes to make or deliver a A) good or service a characteristic of an activity or event that causes costs to be incurred B) by that activity or event C) any task that relates to production efforts D) a and c E) a and b. Feedback: Medium LO: 3 A cost driver is a characteristic of an activity or event that causes costs to be incurred by that activity or event.

10 CORRECT

Activity is any discrete task that an organization undertakes to make or deliver a A) good or service a characteristic of an activity or event that causes costs to be incurred B) by that activity or event C) any task that relates to production efforts D) a and c E) a and b. Feedback: Medium LO: 3 Activity is any discrete task that an organization undertakes to make or deliver a good or service.

11 INCORRECT

As volume changes A) unit variable cost and total fixed costs change B) unit fixed costs and total variable costs change C) unit variable cost and unit fixed costs change D) total variable costs and total fixed costs change E) none of the above.

Feedback: Medium LO: 4 As volume changes, unit fixed costs and total variable costs change.

12 INCORRECT

Arnold Company produces 200 units of a product at $45 a unit. From this cost, fixed cost amounts to a total of $3,600. Variable cost per unit amounts to A) $45 B) $35 C) $27 D) $18 E) none of the above. Feedback: Medium LO: 4 VC/unit: (200 * 45) 3,600 = 5,400; 5,400/200 = $27.

13 CORRECT

Arnold Company produces 200 units of a product at $45 a unit. From this cost, fixed cost amounts to a total of $3,600. If production increases to 300 within the relevant range, total fixed cost would amount to A) $3,600 B) $4,200 C) $4,800 D) $5,400 E) none of the above Feedback: Medium LO: 4 Fixed costs do not change with increased production and still remain at $3,600.

14 INCORRECT

Arnold Company produces 200 units of a product at $45 a unit. From this cost, fixed cost amounts to a total of $3,600. If production increases to 300 within the relevant range, cost per unit would amount to A) $45 B) $42 C) $39 D) $36 E) none of the above. Feedback: Difficult LO: 4 Unit cost: 3,600 + (27 * 300) = $11,700; 11,700 / 300 = $39.

15 INCORRECT

Cost hierarchy is viewed in terms of A) unit level and batch-level costs B) unit level, batch-level, and product-level costs C) product-level, facility-level, and customer-level costs D) a and c

E) none of the above. Feedback: Medium LO: 4 Cost hierarchy is viewed in terms of unit level, batch-level, product-level, facility-level, and customer-level costs.

16 INCORRECT

Design cost in manufacturing is an example of A) unit-level costs B) batch-level costs C) product-level costs D) facility-level costs E) customer-level costs. Feedback: Medium LO: 4 Design cost in manufacturing is an example of product-level costs.

17 CORRECT

Mom's Cookie Shop employs 5 workers at $9 an hour for an eight hour shift. Each worker should be able to make and box 80 cookies an hour. Today, a total of 2,800 cookies were made and boxed. Cost of labor supplied and used amount to A) $360 and $315 respectively B) $315 and $360 respectively C) $315 and $315 respectively D) $360 and $360 respectively E) none of the above. Feedback: Difficulty LO: 5 Cost of labor supplied: 5 * 8 * $9 = $360.Cost of labor used: 2,800 / 80 = 35; 35 * 9 = 315.

18 INCORRECT

Ryan has decided to go to school which costs him a total of $19,500 and give up a job that paid him $24,900 for the year. But instead, he can hope to earn $29,900 after he graduates. Ryan's opportunity cost amounts to A) $19,500 B) $24,900 C) $29,900 D) $44,400 E) none of the above. Feedback: Difficult LO: 5 Opportunity cost is cost of the benefit given up which is what the job paid him (24,900) before he accepted to give it up and go to school instead.

19 INCORRECT

Anderson company had a product that costs $7,200 for an output of 90 units. Material cost is $2,700 of this total. Fixed cost amounts to $2,250. Marketing expenses are fixed and amount to $1,850. Selling price is $125 per unit and a total of 85 units were sold for the period. Income under absorption costing amounts to

A) $1,725 B) $1,850 C) $1,900 D) $1,975 E) none of the above Feedback: Medium LO: 6/7 Income: (85 * 125) [(85 * 80) + 1,850] = $1,975.

20 CORRECT

Anderson company had a product that costs $7,200 for an output of 90 units. Material cost is $2,700 of this total. Fixed cost amounts to $2,250. Marketing expenses are fixed and amount to $1,850. Selling price is $125 per unit and a total of 85 units were sold for the period. Income under throughput costing amounts to A) $1,725 B) $1,850 C) $1,900 D) $1,975 E) none of the above Feedback: Difficult LO: 7/8 Income: (85 * 125) [(85 * 30) + (90 * 25) + 2,250 + 1,850] = $1,725.

21 INCORRECT

Anderson Company had a product that costs $7,200 for an output of 90 units. Material cost is $2,700 of this total. Fixed cost amounts to $2,250. Marketing expenses are fixed and amount to $1,850. Selling price is $125 per unit and a total of 85 units were sold for the period. The difference in income between absorption costing and variable costing amounts to $125 more under absorption costing, and it is due to the fixed costs in A) inventory. $125 more under variable costing, and it is due to the additional fixed B) costs written off to cost of sales. $250 more under absorption costing, and it is due to the fixed costs in C) inventory. $250 more under variable costing, and it is due to the fixed costs D) written off to cost of sales. E) None of the above. Feedback: Difficult LO: 7 Difference in income amount to $125 [(2,250/90) * 5] which is composed of fixed cost per unit of $25 times units left in inventory: 25 * 5 =$125.

22 CORRECT

The difference between income under absorption costing as compared to variable costing equals to A) fixed manufacturing cost for units produced and not yet sold. fixed selling and manufacturing cost for units produced and not yet B) sold. C) fixed selling expense for units produced and not yet sold. D) total production cost for units produced and not yet sold.

E) none of the above. Feedback: Medium LO: 7 Fixed manufacturing cost of production is expensed under variable costing and is deferred as part of production cost in absorption costing.

23 CORRECT

Arman quit his work where he made $20,000 a year to start graduate school that costs him $28,000 a year in the hope of getting a job that promises to pay $37,000 a year, with the expectation of starting his own business in three years that would bring him $75,000 a year. Arman's opportunity cost is A) $20,000 B) $28,000 C) $37,000 D) $75,000 E) none of the above Feedback: Medium LO: 5 Opportunity cost is the benefit that you lose (your current job) because of choosing another alternative (going to school).

24 INCORRECT

Ajax Company has a union contract where the worker's have to be paid a minimum of $750 a month regardless of output. The workers' pay should be considered a A) discretionary cost B) committed cost C) sunk cost D) opportunity cost E) none of the above Feedback: Medium LO: 5 The worker's pay is a committed cost because they have to be paid regardless of output.

25 INCORRECT

Hotdog Distribution Company operates four hundred hotdog stands in the New York area. Depreciation expense for the four hundred carts amounts to $32,000 a year, or $80 per cart. Depreciation with regard to number of hotdog stands should be considered a A) fixed cost B) variable cost C) mixed cost D) discretionary cost E) none of the above. Feedback: Difficult LO: 5 Depreciation as a factor of number of carts is a variable cost.

26 INCORRECT

You produced 5,000 units of a product that cost $8 a unit inclusive of $10,000 in fixed cost factored into the cost per unit. 4,000 units of this product were sold, and there was no beginning inventory. Income under absorption costing as compared to variable costing will be

A) $8,000 higher B) $8,000 lower C) $2,000 higher D) $2,000 lower E) equal for both methods. Feedback: Medium LO: 7 Fixed cost per unit: 10,000 / 5000 = $2; $2 * 1,000 = $2,000. This is the amount of fixed manufacturing cost which is deferred under absorption costing resulting in higher income of the same amount.