Multiple Choice Questions 1. Which of the following statements is true? A. The word "cost" has the same meaning in all situations in which it is used. B. Cost data, once classified and recorded for a specific application, are appropriate for use in any application. C. Different cost concepts and classifications are used for different purposes. D. All organizations incur the same types of costs. E. Costs incurred in one year are always meaningful in the following year.
2. Which of the following is a product cost? A. Glass in an automobile. B. Advertising. C. The salary of the vice president-finance. D. Rent on a factory. E. Both "A" and "D." 3. The accounting records of Georgia Company revealed the following costs: direct materials used, $250,000; direct labor, $425,000; manufacturing overhead, $375,000; and selling and administrative expenses, $220,000. Georgia's product costs total: A. $1,050,000. B. $830,000. C. $895,000. D. $1,270,000. E. some other amount.
4. Costs that are expensed when incurred are called: A. product costs. B. direct costs. C. inventoriable costs. D. period costs. E. indirect costs.
5. Which of the following is not a period cost? A. Legal costs. B. Public relations costs. C. Sales commissions. D. Wages of assembly-line workers. E. The salary of a company's chief financial officer (CFO). 6. The accounting records of Reynolds Corporation revealed the following selected costs: Sales commissions, $65,000; plant supervision, $190,000; and administrative expenses, $185,000. Reynolds's period costs total: A. $250,000. B. $440,000. C. $375,000. D. $255,000. E. $185,000. 7. Yang Corporation recently computed total product costs of $567,000 and total period costs of $420,000, excluding $35,000 of sales commissions that were overlooked by the company's administrative assistant. On the basis of this information, Yang's income statement should reveal operating expenses of: A. $35,000. B. $420,000. C. $455,000. D. $567,000. E. $602,000. 8. Which of the following entities would most likely have raw materials, work in process, and finished goods? A. Exxon Corporation. B. Macy's Department Store. C. Wendy's. D. Southwest Airlines. E. Columbia University. 9. Selling and administrative expenses would likely appear on the balance sheet of: A. The Gap. B. Texas Instruments. C. Turner Broadcasting System. D. All of these firms. E. None of these firms.
10. Mideast Motors manufactures automobiles. Which of the following would not be classified as direct materials by the company? A. Wheel lubricant. B. Tires. C. Interior leather. D. CD player. E. Sheet metal used in the automobile's body. 11. Which of the following employees of a commercial printer/publisher would be classified as direct labor? A. Book binder. B. Plant security guard. C. Sales representative. D. Plant supervisor. E. Payroll supervisor. 12. Lake Appliance produces washers and dryers in an assembly-line process. Labor costs incurred during a recent period were: corporate executives, $500,000; assembly-line workers, $180,000; security guards, $45,000; and plant supervisor, $110,000. The total of Lake's direct labor cost was: A. $110,000. B. $180,000. C. $155,000. D. $235,000. E. $735,000. 13. Depreciation of factory equipment would be classified as: A. operating cost. B. "other" cost. C. manufacturing overhead. D. period cost. E. administrative cost. 14. Which of the following costs is not a component of manufacturing overhead? A. Indirect materials. B. Factory utilities. C. Factory equipment. D. Indirect labor. E. Property taxes on the manufacturing plant.
15. The accounting records of Diego Company revealed the following costs, among others:
Costs that would be considered in the calculation of manufacturing overhead total: A. $149,000. B. $171,000. C. $186,000. D. $442,000. E. some other amount. 16. Which of the following statements is true? A. Product costs affect only the balance sheet. B. Product costs affect only the income statement....
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