Chapter 2 – Basic Cost Management Concepts and Accounting for Mass Customization Operations
48. Which of the following statements is (are) correct?
49. Conversion costs are:
50. Prime costs are comprised of:
51. The costs of direct materials are classified as:
Conversion cost
Manufacturing cost
Prime cost
Yes
Yes
Yes
Yes
Yes
Yes
Yes
52. What would the cost of fire insurance for a manufacturing plant generally be categorized
as?
53. How should a company that manufactures automobiles classify its partially completed
vehicles?
54. Which of the following statements is true?
A. Product costs affect only the balance sheet.
55. In a manufacturing company, the cost of goods completed during the period would
include which of the following elements?
56. Which of the following equations is used to calculate cost of goods sold during the
period?
57. Work-in-process inventory is composed of:
58. Harrison Industries began July with a finished-goods inventory of $48,000. The finished-
goods inventory at the end of July was $56,000 and the cost of goods sold during the month
was $125,000. The cost of goods manufactured during July was:
59. Texas Plating Company reported a cost of goods manufactured of $520,000, with the
firm’s year-end balance sheet revealing work in process and finished goods of $70,000 and
$134,000, respectively. If supplemental information disclosed raw materials used in
production of $80,000, direct labor of $140,000, and manufacturing overhead of $240,000,
the company’s beginning work in process must have been:
60. The accounting records of Falcon Company revealed the following information:
Raw materials used
Direct labor
Manufacturing overhead
Work-in-process inventory, 1/1
Finished-goods inventory, 1/1
Work-in-process inventory, 12/31
Finished-goods inventory, 12/31
Falcon’s cost of goods manufactured is:
2-27
61. The accounting records of Stingray Company revealed the following information:
Total manufacturing costs
Work-in-process inventory, 1/1
Finished-goods inventory, 1/1
Work-in-process inventory, 12/31
Finished-goods inventory, 12/31
Stingray’s cost of goods sold is:
62. The accounting records of Upton Company revealed the following information:
Cost of goods manufactured
Work-in-process inventory, 1/1
Finished-goods inventory, 1/1
Work-in-process inventory, 12/31
Finished-goods inventory, 12/31
Chapter 2 – Basic Cost Management Concepts and Accounting for Mass Customization Operations
Upton’s cost of goods sold is:
63. For the year just ended, Porter Corporation’s manufacturing costs (raw materials used,
direct labor, and manufacturing overhead) totaled $1,500,000. Beginning and ending work-in–
process inventories were $60,000 and $90,000, respectively. Porter’s balance sheet also
revealed respective beginning and ending finished-goods inventories of $250,000 and
$180,000. On the basis of this information, how much would the company report as cost of
goods manufactured (CGM) and cost of goods sold (CGS)?
64. Rainier Industries has Raw materials inventory on January 1, 20×8 of $32,500 and Raw
materials inventory on December 31, 20×8 of $26,700. If purchases of raw materials were
$135,000 during the year, what was the amount of raw materials used during the year?
65. Rainier Industries has Raw materials inventory on January 1, 20×8 of $32,500 and Raw
materials inventory on December 31, 20×8 of $26,700. If raw materials used during the year
were $135,000 what was the amount of raw materials purchased during the year?
66. Peyton Manufacturing has the following data:
Work-in-process inventory, Jan. 1, 20×8 $ 43,000
Work-in-process inventory, Dec. 31, 20×8 48,500
Conversion costs during the year 415,000
If direct materials used during the year were $135,000, what was cost of goods
manufactured?
67. Peyton Manufacturing has the following data:
Work-in-process inventory, Jan. 1, 20×8 $ 43,000
Work-in-process inventory, Dec. 31, 20×8 48,500
Conversion costs during the year 415,000
If the cost of goods manufactured for the year was $565,000, what was the amount of direct
materials used during the year?
68. Dorsett Technologies had finished goods inventory on January 1, 20X8 of $29,300 and
finished goods inventory on December 31, 20X8 of $24,100. If the cost of goods
manufactured for the year was $385,000, what was the cost of goods sold for the year?
69. Dorsett Technologies had finished goods inventory on January 1, 20X8 of $29,300 and
finished goods inventory on December 31, 20X8 of $24,100. If the cost of goods sold for the
year was $427,500, what was the cost of goods manufactured for the year?
70. Amaz-a-nation reported the following data for the year just ended: sales revenue,
$1,750,000; cost of goods sold, $980,000; cost of goods manufactured, $560,000; and selling
and administrative expenses, $170,000. Amaz-a-nation’s gross margin would be:
71. Tempest Enterprises began operations on January 1, 20×1, with all of its activities
conducted from a single facility. The company’s accountant concluded that the year’s building
depreciation should be allocated as follows: selling activities, 20%; administrative activities,
35%; and manufacturing activities, 45%. If Tempest sold 40% of 20×1 production during that
year, what percentage of the depreciation would appear (either directly or indirectly) on the
20×1 income statement?
72. An employee accidentally overstated the year’s advertising expense by $50,000. Which of
the following correctly depicts the effect of this error?
73. Which of the following would likely be a suitable cost driver for the amount of direct
materials used?
74. The choices below depict five costs of Garfield Industries and a possible driver for each
cost. Which of these choices likely contains an inappropriate cost driver?
75. What is the primary trade-off that an accountant must consider when deciding whether to
identify cost drivers?
76. Variable costs are costs that:
77. As activity decreases, unit variable cost:
78. As activity increases, unit variable cost:
79. Which of the following is not an example of a variable cost?
80. Fixed costs are costs that:
81. The fixed cost per unit:
82. Which of the following is an example of a fixed cost?
84. The true statement about cost behavior is that:
85. The relevant range for Maxco Industries is 10,000 to 16,000 units of product. The variable
costs per unit are $6 when a company produces 12,000 units of product. What are the variable
costs per unit when 14,000 units are produced?
86. The fixed costs per unit are $10 when a company produces 10,000 units of product. What
are the fixed costs per unit when 8,000 units are produced?
87. Total costs are $180,000 when 10,000 units are produced; of this amount, variable costs
are $64,000. What are the total costs when 13,000 units are produced?
88. When 5,000 units are produced variable costs are $35 per unit and total costs are
$200,000. What are the total costs when 8,000 units are produced?
89. Collins Company, which pays a 10% commission to its salespeople, reported sales
revenues of $210,000 for the period just ended. If fixed and variable sales expenses totaled
$56,000, what would these expenses total at sales of $168,000?
90. How would a 5% sales commission paid to sales personnel be classified in a
manufacturing company?