66. The model whose goal is to eliminate waste while satisfying the customer and providing a
positive return to the company is:
A. Total quality management.
B. Managerial accounting.
C. Customer orientation.
D. Continuous improvement.
E. Lean business model.
67. Benny, an employee of Parrott Company, used company assets for his own personal gain.
This is an example of
A. embezzlement.
B. fraud.
C. internal control.
D. ethics.
E. employment perks.
68. An employee is dissatisfied with the resolution of an ethical conflict at his place of
employment. According to the Institute of Management Accountants, the employee’s next step
should be to
A. contact the IMA.
B. contact the next level of management who is not involved in the ethical conflict.
C. make the president of the company aware of the ethical conflict.
D. report the incident to the State Board of Accountancy.
E. resign from the company.
69. A direct cost is a cost that is:
A. Identifiable as controllable.
B. Variable with respect to the volume of activity.
C. Fixed with respect to the volume of activity.
D. Traceable to a cost object.
E. Sunk with respect to a cost object.
70. An opportunity cost is:
A. An uncontrollable cost.
B. A cost of potential benefit lost.
C. A change in the cost of a component.
D. A direct cost.
E. A sunk cost.
71. Classifying costs by behavior involves:
A. Identifying fixed cost and variable cost.
B. Identifying cost of goods sold and operating costs.
C. Identifying all costs.
D. Identifying costs in a physical manner.
E. Identifying both quantitative and qualitative cost factors.
72. A classification of costs that is useful for assigning responsibility to and evaluating managers
is:
A. Classification by traceability.
B. Classification by behavior.
C. Classification by relevance.
D. Classification by function.
E. Classification by controllability.
73. A mixed cost:
A. Requires the future outlay of cash and is relevant for future decision making.
B. Does not change with changes in the volume of activity within the relevant range.
C. Is directly traceable to a cost object.
D. Contains a combination of fixed costs and variable costs.
E. Has already been incurred and cannot be avoided so it is irrelevant for decision making.
74. A fixed cost:
A. Requires the future outlay of cash and is relevant for future decision making.
B. Does not change with changes in the volume of activity within the relevant range.
C. Is directly traceable to a cost object.
D. Changes with changes in the volume of activity within the relevant range.
E. Has already been incurred and cannot be avoided so it is irrelevant for decision making.
75. Last year, Smith Company sold 10,000 units of its only product. If sales increase by 15% in
the current year, how will unit variable cost and unit fixed cost be affected?
Unit Variable Cost Unit Fixed Cost
A) Remains constant Remains constant
B) Increases Decreases
C) Decreases Remains constant
D) Remains constant Decreases
E) Remains constant Increases
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
76. A primary difference between variable costs and fixed costs is:
A. Variable costs per unit change in varying increments while fixed costs per unit change in
equal increments over the relevant range of activity.
B. Variable costs per unit fluctuate and fixed costs per unit remain constant over the relevant
range of activity.
C. Variable costs per unit are fixed and fixed costs per unit are variable over the relevant range
of activity.
D. Variable costs per unit change in equal increments while total fixed costs change in
proportion to the level of activity over the company’s relevant range.
E. Total variable costs are fixed and fixed costs per unit never change over the relevant range of
activity.
77. Period costs for a manufacturing company would flow directly to:
A. The current income statement.
B. Factory overhead.
C. The current balance sheet.
D. Job cost sheet.
E. The current manufacturing statement.
78. For product costs associated with a particular product to be expensed on the income
statement:
A. The product must be transferred to Finished Goods Inventory.
B. The product must still be in Goods In Process Inventory.
C. The product must be sold.
D. The product may be in any of the manufacturer’s inventory accounts.
E. The company must expect to sell the product during the next twelve months.
79. Costs that are first assigned to inventory are called:
A. Period costs.
B. Product costs.
C. General costs.
D. Administrative costs.
E. Fixed costs.
80. Costs that flow directly to the current income statement are called:
A. Period costs.
B. Product costs.
C. General costs.
D. Balance sheet costs.
E. Capitalized costs.
81. Product costs:
A. Are expenditures necessary and integral to finished products.
B. Are expenditures identified more with a time period rather than with finished products.
C. Include selling and administrative expenses.
D. Are costs that vary with the volume of activity.
E. Are costs that do not vary with the volume of activity.
82. Products that have been completed and are ready to be sold by the manufacturer are called:
A. Finished goods inventory.
B. Goods in process inventory.
C. Raw materials inventory.
D. Cost of goods sold.
E. Factory supplies.
83. Goods a company acquires to use in making products are called:
A. Cost of goods sold.
B. Raw materials inventory.
C. Finished goods inventory.
D. Goods in process inventory.
E. Conversion costs.
84. Products that are in the process of being manufactured but are not yet complete are called:
A. Raw materials inventory.
B. Conversion costs.
C. Cost of goods sold.
D. Goods in process inventory.
E. Finished goods inventory.
85. Another title for goods in process inventory is:
A. Indirect materials inventory.
B. Work in process inventory.
C. Conversion costs.
D. Direct materials inventory.
E. Raw materials inventory.
86. Which of the following represents the correct formula for calculating raw materials inventory
turnover for a manufacturer?
A. Raw materials purchased/Average raw materials inventory.
B. Average raw materials inventory/Raw materials used.
C. Raw materials used/Average raw materials inventory.
D. Ending raw materials/Raw materials used * 365.
E. Raw materials used/Beginning raw materials inventory *365.
87. Which of the following statements is correct concerning the Days’ sales in raw materials
inventory?
A. Reveals how much raw materials inventory is available in terms of the number of days’ sales.
B. The ratio does not need to be calculated as it is not important for a manufacturer.
C. Reveals how many times a company turns over its raw materials inventory in a period.
D. Most companies generally prefer a high ratio.
E. Is calculated by taking the Raw materials used/Average raw materials inventory .
88. The cost of labor that is not clearly associated with specific units or batches of product is
called:
A. Unspecified labor.
B. Direct labor.
C. Indirect labor.
D. Basic labor.
E. Joint labor.
89. Factory overhead costs normally include all of the following except:
A. Indirect labor costs.
B. Indirect material costs.
C. Selling costs.
D. Machinery oil.
E. Factory rent.
90. Labor costs that are clearly associated with specific units or batches of product because the
labor is used to convert raw materials into finished products called are:
A. Sunk labor.
B. Direct labor.
C. Indirect labor.
D. Finished labor.
E. All labor.
91. Costs that are incurred as part of the manufacturing process but are not clearly associated
with specific units of product or batches of production, including all manufacturing costs other
than direct material and direct labor costs, are called:
A. Administrative expenses.
B. Nonmanufacturing costs.
C. Sunk costs.
D. Factory overhead.
E. Preproduction costs.
92. Materials that are used in support of the production process but are not clearly identified with
units or batches of product are called:
A. Secondary materials.
B. General materials.
C. Direct materials.
D. Indirect materials.
E. Materials inventory.
93. The salary paid to the supervisor of an assembly line would normally be classified as:
A. Direct labor.
B. Indirect labor.
C. A period cost.
D. A general cost.
E. An assembly cost.
94. Which of the following items appears only in a manufacturing company’s financial
statements?
A. Cost of goods sold.
B. Cost of goods manufactured.
C. Goods available for sale.
D. Gross profit.
E. Net income.
95. Which of the following costs is not included in factory overhead?
A. Payroll taxes on the wages of supervisory factory workers.
B. Indirect labor.
C. Depreciation of manufacturing equipment.
D. Manufacturing supplies used.
E. Direct materials.
96. Which of the following is never included in direct materials costs?
A. Invoice costs of direct materials.
B. Outgoing delivery charges.
C. Materials storage costs.
D. Materials handling costs.
E. Moving products from the processing plant to the finished goods warehouse.
97. Raw materials that physically become part of the product and can be traced to specific units
or batches of product are called:
A. Raw materials sold.
B. Chargeable materials.
C. Goods in process.
D. Indirect materials.
E. Direct materials.
98. The three major cost components of a manufactured product are:
A. Marketing, selling, and administrative costs.
B. Indirect labor, indirect materials, and miscellaneous factory expenses.
C. Direct materials, direct labor, and factory overhead.
D. Differential costs, opportunity costs, and sunk costs.
E. General, selling, and administrative costs.
99. Which of the following costs would not be classified as factory overhead?
A. Property taxes on maintenance machinery.
B. Expired insurance on factory equipment.
C. Wages of the factory janitor.
D. Metal doorknobs used on wood cabinets produced.
E. Small tools used in production.
100. The total cost of goods completed during the accounting period for a manufacturer is
called:
A. Ending finished goods inventory.
B. Total manufacturing costs.
C. Ending goods in process inventory.
D. Cost of goods manufactured.
E. Cost of goods sold.
101. A manufacturing firm’s cost of goods manufactured is equivalent to a merchandising firm’s:
A. Cost of goods sold.
B. Cost of goods purchased.
C. Cost of goods available.
D. Beginning merchandise inventory.
E. Ending merchandise inventory.
102. Which one of the following items is normally not a manufacturing cost?
A. Direct materials.
B. Factory overhead.
C. General and administrative expenses.
D. Direct labor.
E. Conversion cost.
103. A manufacturing company has a beginning finished goods inventory of $14,600, raw
material purchases of $18,000, cost of goods manufactured of $32,500, and an ending finished
goods inventory of $17,800. The cost of goods sold for this company is:
A. $21,200.
B. $29,300.
C. $32,500.
D. $47,100.
E. $27,600.
104. Juliet Corporation has accumulated the following accounting data for the year:
Finished goods inventory, January 1 ………. $3,200
Finished goods inventory, December 31 …… 4,000
Total cost of goods sold ……………………. 4,200
The cost of goods manufactured for the year is:
A. $ 200.
B. $1,000.
C. $5,000.
D. $6,400.
E. $8,200.
105. A company’s prime costs total $3,000,000 and its conversion costs total $7,000,000. If
direct materials are $1,000,000 and factory overhead is $5,000,000, then direct labor is:
A. $4,000,000.
B. $14,000,000.
C. $2,000,000.
D. $1,000,000.
E. $3,000,000.
106. A manufacturing statement is also known as a schedule or listing of the:
A. Raw materials processed.
B. Factory supplies used.
C. Cost of goods manufactured.
D. Total finished goods.
E. Cost of goods sold.
107. The following information relates to the manufacturing operations of the IMH Publishing
Corporation for the year:
Beginning Ending
Raw materials inventory……………………… $ 57,000 $60,000
Finished goods………………………………… 68,000 60,000
The raw materials used in manufacturing during the year totaled $118,000. Raw materials
purchased during the year amount to:
A. $107,000.
B. $115,000.
C. $118,000.
D. $121,000
E. $126,000.
108. Ajax Company accumulated the following account information for the year:
Beginning raw materials inventory $6,000
Indirect materials cost 2,000
Indirect labor cost 5,000
Maintenance of factory equipment 2,800
Direct labor cost 7,000
Using the above information, total factory overhead costs would be:
A. $ 9,800.
B. $16,800.
C. $15,800.
D. $13,000.
E. $ 7,800.
109. The following information is available for the year ended December 31:
Beginning raw materials inventory $2,500
Raw materials purchases 4,000
Ending raw materials inventory 3,000
Office supplies expense 1,000
The amount of raw materials used in production for the year is:
A. $4,100.
B. $5,100.
C. $3,500.
D. $6,500.
E. $4,000.
110. A financial report that summarizes the amounts and types of costs that were incurred in the
manufacturing process during the period is a:
A. Materiality statement.
B. Managerial statement.
C. Manufacturing statement.
D. Merchandise statement.
E. Monetary statement.