Accounting: Costs and Multiple Choice

Topics: Costs, Variable cost, Fixed cost Pages: 6 (981 words) Published: September 5, 2013
Accounting 2082 Managerial Accounting
Exam 1 Sample Exam Questions

Printed Name: Date:

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Instructions: Circle your answers for the multiple choice questions on the exam. Fill out the scantron sheet carefully, using a #2 pencil. Your name (last, then first) and M number must be on the scantron sheet.

Type of QuestionNumber of QuestionsPoints per questionSuggested TimeTotal Points Multiple Choice20 questions3 points each50 mins.60 points

You may not use any notes, books, cell phones, other media devices or programmable calculators while taking this exam, but you may use a basic calculator.

Some of the questions are conceptual and will only take you about 1 minute each to answer. That leaves 40 minutes for the calculation questions. This does not leave time to ponder the answer or try 3 different ways to solve the problem. Either you know how to solve the problem or you don’t know. If you don’t know, take a guess and move on. Be sure not to get stuck for 10 minutes on one question, because you won’t be able to finish the exam and you’ll get a bad grade.

Multiple Choice (2 points each)
1. Manufacturing overhead consists of: 
A. all manufacturing costs.
B. indirect materials but not indirect labor.
C. all manufacturing costs, except direct materials and direct labor. D. indirect labor but not indirect materials.

2. A variable cost is a cost whose cost per unit varies as the activity level rises and falls.  A. True
B. False  
3. The traditional format income statement is used as an internal planning and decision-making tool. Its emphasis on cost behavior aids cost-volume-profit analysis, management performance appraisals, and budgeting.  A. True

B. False
4. The cost of leasing production equipment is classified as:


5. The salary paid to the production manager in a factory is:  A. a variable cost.
B. part of prime cost
C. part of conversion cost
D. both a variable cost and a prime cost

6. The following costs were incurred in September:


Prime costs during the month totaled: 
A. $79,000
B. $120,000
C. $62,000
D. $40,000

***Use the information below to answer multiple choice questions 7-8

A partial listing of costs incurred during December at Gagnier Corporation appears below:


7. The total of the manufacturing overhead costs listed above for December is:  A. $325,000
B. $365,000
C. $89,000
D. $40,000

8. The total of the product costs listed above for December is:  A. $310,000
B. $89,000
C. $635,000
D. $325,000

***Use the following information to answer multiple choice question #9 Nikkel Corporation, a merchandising company, reported the following results for July:

9. The gross margin for July is:
A. $358,500
B. $209,000
C. $233,700
D. $164,700

10. If the cost of direct materials used to make furniture is based on units of production, is this cost primarily:  A. sunk
B. fixed
C. differential
D. variable

11. Selling and administrative expenses are product costs under generally accepted accounting principles.   
A. True

B. False

12. Conversion cost consists of which of the following?  A. Manufacturing overhead cost.
B. Direct materials and direct labor cost.
C. Direct labor cost.
D. Direct labor and manufacturing overhead cost: 

13. Which of the following would NOT be treated as a product cost for external financial reporting purposes A.Depreciation on a factory building.
B. Salaries of factory workers.
C. Indirect labor in the factory.
D. Advertising expenses.

14. A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,700 and is paid at the beginning of the first year. Eighty percent of the premium...
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