acct ch. 1 – Flashcards

The term "relevant range" as used in cost accounting means the range over which A. relevant costs are incurred. B. costs may fluctuate. C. cost relationships are valid. D. production may vary.

When cost relationships are linear, total variable prime costs will vary in proportion to changes in A. total overhead cost. B. production volume. C. total material cost. D. direct labor hours.

An example of a fixed cost is A. cost of electricity. B. straight-line depreciation. C. total indirect material cost. D. total hourly wages.

A cost that remains constant in total but varies on a per-unit basis with changes in activity is called a(n) A. expired cost. B. mixed cost. C. variable cost. D. fixed cost.

Product costs are deducted from revenue A. to minimize taxable income. B. as goods are sold. C. as expenditures are made. D. when production is completed.

When the number of units manufactured increases, the most significant change in unit cost will be reflected as a(n) A. decrease in the fixed element. B. decrease in the variable element. C. increase in the mixed element. D. increase in the fixed element.

Which of the following is not a product cost component? A. commission on the sale of a product B. rent on a factory building C. janitorial supplies used in a factory D. indirect production labor wages

Period costs A. are expensed in the same period in which they are incurred. B. are associated with the periodic inventory method. C. are always variable costs. D. remain unchanged over a given period of time.

The indirect costs of converting raw material into finished goods are called A. conversion costs. B. period costs. C. prime costs. D. overhead costs.

. Conversion cost does not include A. factory depreciation. B. direct material. C. supervisors' salaries. D. direct labor.

The distinction between direct and indirect costs depends on whether a cost A. is controllable or non-controllable. B. is variable or fixed. C. can be conveniently and physically traced to a cost object under consideration. D. will increase with changes in levels of activity.

. All costs related to the manufacturing function in a company are A. prime costs. B. conversion costs. C. product costs. D. direct costs.

. The term "prime cost" refers to A. all manufacturing costs other than direct labor and raw material costs. B. all manufacturing costs incurred to produce units of output. C. raw material purchased and direct labor costs. D. the raw material used and direct labor costs.

The formula to compute cost of goods manufactured is A. direct material used plus direct labor plus overhead incurred. B. direct material used plus direct labor plus overhead incurred plus beginning Work in Process Inventory. C. beginning Work in Process Inventory plus purchases of raw material minus ending Work in Process Inventory. D. beginning Work in Process Inventory plus direct labor plus direct material used plus overhead incurred minus ending Work in Process Inventory.

The formula for cost of goods sold for a manufacturer is A. direct material plus direct labor plus overhead incurred plus beginning Work in Process Inventory. B. beginning Finished Goods Inventory plus Cost of Goods Manufactured minus ending Finished Goods Inventory. C. direct material plus direct labor plus applied overhead. D. beginning Work in Process Inventory plus Cost of Goods Manufactured minus ending Work in Process Inventory.

Costs that do not change with changes in activity levels are known as: A. opportunity costs. B. fixed costs. C. sunk costs. D. variable costs.

Valley Company incurred a total cost of $5,000 to produce 300 units of output. A total of 450 hours was incurred for this effort. If the variable cost was $10 per direct labor hour, then the fixed cost was A. $3,000. B. $4,500. C. $ 500. D. $2,000.

Valley Company incurred a total cost of $17,000 to produce 500 units of output. A total of 800 hours was incurred for this effort. If the variable cost was $20 per direct labor hour, then the fixed cost was A. $ 1,000 B. $ 7,000 C. $16,000 D. $17,000

Columbia Hospital for Women is planning to expand its labor and delivery room facilities. Although variable costs per patient will remain unchanged, fixed costs will increase by 20 percent. Last year's costs are below. Variable costs $50 per patient Fixed costs $20,000 per month Calculate the future total cost assuming 100 patients are expected each month. A. $20,000 B. $25,000 C. $20,500 D. $29,000

. Costs that do not change with changes in activity levels are known as: A. opportunity costs. B. fixed costs. C. sunk costs. D. variable costs.

. Carson Company's market for the Model A has changed significantly, and Carson has had to drop the price per unit from $265 to $125. There are some units in the work in process inventory that have costs of $150 per unit associated with them. Carson could sell these units in their current state for $100 each. It will cost Carson $10 per unit to complete these units so that they can be sold for $125 each. Based on the information about Carson, which of the following is not considered a relevant value for this problem? A. $265 = former price B. $10 = cost to complete units C. $100 = price for partially completed units D. $125 = current price

Carson Company's market for the Model A has changed significantly, and Carson has had to drop the price per unit from $265 to $125. There are some units in the work in process inventory that have costs of $150 per unit associated with them. Carson could sell these units in their current state for $100 each. It will cost Carson $10 per unit to complete these units so that they can be sold for $125 each. When the incremental revenues and expenses are analyzed, the company is better off by: A. $10 per unit if the sell the units in their current state. B. $125 per unit if they complete the units. C. $25 per unit if they sell the units in their current state. D. $15 per unit if they complete the units

. Within the relevant range, variable costs A. are the same total amount at different activity levels. B. are the same amount per unit at any activity level. C. are a different amount per unit at different activity levels. D. None of these are correct.

Which of the following replaces the retailing component "Purchases" in computing Cost of Goods Sold for a manufacturing company? A. total prime cost B. direct material used C. cost of goods available for sale D. cost of goods manufactured

Total cost = Fixed cost + Variable Rate ´x Output In the cost formula above which element would be the slope? A. output B. fixed cost C. total cost D. variable rat

The high-low method A. is not as accurate as other methods B. can be affected by the presence of outliers C. has the advantage of objectivity D. all of the answers are correct

Per-unit fixed costs A. increase as output increases B. decrease as output decreases C. can be misleading and lead to poor decisions D. stay the same as output changes

. Per-unit variable costs A. decrease as output decreases B. remain constant within the relevant range C. increase as output increases D. can be misleading and lead to poor decisions

Using the high-low method, the variable rate of a mixed cost equals A. B. total cost at high point - (variable rate x output at high point) C. D. total cost a high point - (variable rate x output at low point

Botana Company constructed the following formula for monthly utility cost. Total utility cost = $1,200 + $8.10 x´ labor hours Assume that 775 labor hours are budgeted for the month of April. Calculate the total variable utility cost for the month of April A. $7,477.50 B. $5,077.50 C. $1,200 D. $6,277.50

Maxwell Company makes treadmills. The company controller wants to calculate the fixed and variable costs associated with the janitorial costs incurred in the factory. Data for the past four months were collected. Month Janitorial costs Machine hours September $ 11,000 575 October 11,400 610 November 10,200 510 December 10,725 550 Using the high-low method calculate the fixed cost of the janitorial services A. $7,320 B. $4,080 C. $6,120 D. none of the answers are correct

Maxwell Company makes treadmills. The company controller wants to calculate the fixed and variable costs associated with the janitorial costs incurred in the factory. Data for the past four months were collected. Month Janitorial costs Machine hours September $ 11,000 575 October 11,400 610 November 10,200 510 December 10,725 550 What would Maxwell Company's estimate of total janitorial cost be at a level of 625 machine hours? A. $6,120 B. $11,580 C. $7,500 D. $4,080

The following four months of data were collected on utility cost and the number of labor hours in a factory. Month Utility cost Labor hours January $22,100 3,975 February 24,600 5,430 March 23,500 4,400 April 20,140 3,200 Using the high-low method, compute the fixed cost of electricity. A. $13,740 B. $10,860 C. $6,400 D. none of the answers are correct