Quiz 1 Intro and Cost Behaviors

COST ACCOUNTING AND CONTROL
QUIZ 1 – INTRODUCTION TO COST ACCOUNTING AND COST BEHAVIORS
NAME: _______________________________________________ SECTION: ___________________________
I. THEORIES:
1. Cost is the monetary measure of the amount of resources given up in obtaining goods and services. Cost may be
classified as unexpired or expired. Which of the following costs is not always considered to be expired
immediately upon being recognized?
a. Salesmen’ commission
b. Depreciation expense for factory equipment
c. Cost of goods sold
d. Salary of the company president
2. Product costs or inventoriable costs

a. Are charged to expense when products become part of the finished goods inventory
b. Include only the prime costs of producing a product
c. Are treated as assets before the products are sold
d. Include only the conversion costs of producing the products
3. Which of the following costs is not a product cost?

a. Wages paid to workers for rework on defective products
b. Wages paid to truck loaders who load finished goods onto outgoing delivery trucks.
c. Fringe benefits paid to factory workers.
d. Wages paid to workers for idle time due to machine breakdown in a production department.
4. Direct labor cost is a

a. Prime cost
b. Conversion cost
c. Indirect materials
d. All of the above
5. For product costing purposes, an indirect factory cost

a. Is not directly chargeable to the company
b. Is chargeable to prime cost
c. Is chargeable to conversion cost
d. Is never included in the computation of product cost
6. The variable portion of the semi-variable cost of electricity for a manufacturing plant is a
Product Cost Prime Cost Conversion Cost
a. No No Yes
b. Yes Yes Yes
c. Yes Yes Yes
d. Yes No Yes
7. Which of the following statements about cost behavior is correct?

a. Within the relevant range, total variable costs may vary directly with activity, while total fixed cost remain
unchanged for a given period despite fluctuations in activity.
b. Within the relevant range, variable cost per unit varies directly with activity, while fixed cost per unit
remains unchanged for a given period despite fluctuations in activity.
c. Within the relevant range, fixed cost per unit varies directly with activity, while variable cost per unit
remains unchanged for a given period despite fluctuations in activity.
d. Within the relevant range, total variable cost may vary inversely with activity, while total fixed cost remain
unchanged for a given period despite fluctuations in activity.
8. Depreciation using straight-line method is classified as

a. Variable cost c. Relevant cost
b. Fixed cost d. Opportunity cost
9. Within the relevant range, unit variable costs

a. Are constant per unit regardless of units produced or sold
b. Vary directly with activity level
c. Vary inversely with activity level
d. Are at the minimum
1
10. When production (in units) decreases, the average cost per unit of product increases. This increase in the average
cost per unit is due to the
a. Increase in variable cost per unit
b. Increase in fixed cost per unit
c. Increase in total variable cost
d. Increase in total fixed cost
11. Mixed costs are costs that have

a. Variable and fixed cost
b. Manufacturing and administrative components
c. Selling and administrative cost components
d. Direct and indirect cost components
12. This is a framework that translates an organization’s strategy into clear and objective performance measures (both
leading and lagging) that focus on customers, internal business processes, employees, and shareholders
a. Balanced score card
b. Organizational strategy
c. Lead indicator
d. Lag indicator
13. This ethical professional practice means that individuals will develop and maintain the skills needed to practice
their profession.
a. Competence
b. Confidentiality
c. Integrity
d. Credibility
14. This ethical professional practice means that individuals will not participate in activities that would discredit their
company or profession.
a. Competence
b. Confidentiality
c. Integrity
d. Credibility
15. This ethical professional practice means a cost accountant should not intentionally miscalculate product cost data
to materially misstate a company’s financial position or results of operations.
Competence
a. Competence
b. Confidentiality
c. Integrity
d. Credibility
II. PROBLEMS:
For Questions 1-2. Following are the costs incurred by Abtina Manufacturing Corporation during the previous month:
Direct materials 5,000
Indirect materials 2,000
Direct labor 6,000
Indirect labor 1,000
Factory utilities 4,000
Advertising costs 8,000
Sales commissions 12,000
Depreciation on administration building 3,000
Salaries of administrative personnel 20,000
Depreciation – delivery equipment 2,000
Overtime pay – factory workers 1,500
Rework cost on defective products discovered during quality 2,500
inspection
1. Total product costs:

a. 67,000 c. 22,000
b. 45,000 d. 18,000
2
2. Total period costs:
a. 67,000 c. 49,000
b. 45,000 d. 22,000
For Questions 3-9. Data about Maritz Company’s production and inventories for the month of June are as follows:
Purchases - direct materials 143 ,440
Freight-in 5,000
Purchase returns and allowances 2,440
Direct labor 175,000
Actual factory overhead 120,000
Inventories: June 1 June 30

Finished Goods 68,000 56,000
Work-in-Process 110,000 135,000
Direct materials 52,000 44,000
Maritz Company applies factory overhead to production at 80% of direct labor cost. Over—or under applied overhead
is closed to cost of goods sold at year-end. The company’s accounting period is on the calendar year basis.
3. Maritz Company’s prime cost for June was

a. 154,000 c. 198,000
b. 329,000 d. 315,000
4. Maritz Company’s conversion cost for June was

a. 315,000 c. 329,000
b. 295,000 d. 444,000
5. For the month of June, Maritz Company’s total manufacturing cost was
a. 469,000 c. 644,000
b. 444,000 d. 449,000
6. For June, Maritz Company’s cost of goods transferred to the finished goods inventory account was
a. 579,000 c. 469,000
b. 461,000 d. 444,000
7. Maritz Company’s cost of goods sold for June was

a. 441,000 c. 456,000
b. 481,000 d. 444,000
8. The amount of over-/under-applied overhead factory for the month of June was
a. 140,000 over-applied c. 20,000 over-applied
b. 120,000 under-applied d. 20,000 under-applied
9. The cost of goods sold for the month of June should be increased (decreased) by the amount of over-/under-
applied factory overhead?
a. 20,000 c. (120,000)
b. (20,000) d. 0
10. Bonus: What is an orange?

a. color b. fruit

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COST ACCOUNTING AND CONTROL

QUIZ 1 – INTRODUCTION TO COST ACCOUNTING AND COST BEHAVIORS

NAME: _____________________ SECTION: _

2. Product costs or inventoriable costs

3. Which of the following costs is not a product cost?

4. Direct labor cost is a

5. For product costing purposes, an indirect factory cost

7. Which of the following statements about cost behavior is correct?

8. Depreciation using straight-line method is classified as

9. Within the relevant range, unit variable costs

11. Mixed costs are costs that have

1. Total product costs:

Inventories: June 1 June 30

3. Maritz Company’s prime cost for June was

4. Maritz Company’s conversion cost for June was

7. Maritz Company’s cost of goods sold for June was

10. Bonus: What is an orange?

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