Variable Cost

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ACT 2131 –
QUIZ 1 solution

MATRIX NO: ______________________

Answer all questions by using OMR form given

1.  Managerial accounting: 
A. has its primary emphasis on the future.
B. is required by regulatory bodies such as the SEC.
C. focuses on the organization as a whole, rather than on the organization's segments. D. Responses a, b, and c are all correct.

2. The plans of management are expressed formally in: 
A. the annual report to shareholders.
B. Form 10-Q submitted to the Securities and Exchange Commission. C. performance reports.
D. budgets.

3. The costs of direct materials are classified as:

   
A. Choice A
B. Choice B
C. Choice C
D. Choice D

4. The three basic elements of manufacturing cost are direct materials, direct labor, and:  A. cost of goods manufactured.
B. cost of goods sold.
C. work in process.
D. manufacturing overhead.

5. 25. Prime cost consists of direct materials combined with:  A. direct labor.
B. manufacturing overhead.
C. indirect materials.
D. cost of goods manufactured.

6.  Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice?

   
A. Choice A
B. Choice B
C. Choice C
D. Choice D

7.  The cost of fire insurance for a manufacturing plant is generally considered to be a:  A. product cost.
B. period cost.
C. variable cost.
D. all of these.

8.  Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?  A. Product cost
B. Manufacturing overhead
C. Period cost
D. Administrative cost

9. Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following?  A. Product cost

B. Manufacturing overhead
C. Direct labor
D. Period cost

10. Cost of goods manufactured will usually include: 
A. only costs incurred during the current period.
B. only direct labor and direct materials costs.
C. some costs incurred during the prior period as well as costs incurred during the current period. D. some period costs as well as some product costs.

11. Which two terms below describe the wages paid to security guards that monitor a factory 24 hours a day?  A. variable cost and direct cost
B. fixed cost and direct cost
C. variable cost and indirect cost
D. fixed cost and indirect cost

12. Within the relevant range, the difference between variable costs and fixed costs is:  A. variable costs per unit fluctuate and fixed costs per unit remain constant. B. variable costs per unit are constant and fixed costs per unit fluctuate. C. both total variable costs and total fixed costs are constant. D. both total variable costs and total fixed costs fluctuate.

13.  A lawnmower manufacturer computed a cost per unit of $53 by adding together last month's direct labor, direct materials, and manufacturing overhead and dividing that total by the 10,000 units produced last month. (There were no beginning or ending inventories.) If 9,000 units are going to be manufactured this month, we would expect that the:  A. cost per unit will remain the same.

B. cost per unit will decrease.
C. direction of change in unit costs cannot be determined.
D. cost per unit will increase.

14. The following costs were incurred in August:

  

Conversion costs during the month totaled: 
A. $127,000
B. $51,000
C. $52,000
D. $75,000

15.  The following costs were incurred in August:

  

Prime costs during the month totaled: 
A. $39,000
B. $59,000
C. $96,000
D. $38,000

16.  During the month of August, direct labor cost totaled $13,000 and direct labor cost was 20% of prime cost. If total manufacturing costs during August were $88,000, the manufacturing overhead was:  A. $75,000

B. $23,000
C. $65,000
D. $52,000

17. In...
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