Response to the following multiple choice questions:
1. Accumulating costs means that
a. Costs must be summed and entered on the income statement.
b. Each cost must be linked to some cost object.
c. Costs must be measured and tracked.
d. Costs must be allocated to units of production.
e. Costs have expired and must be transferred from the balance sheet to the income statement.
2. Product (or manufacturing) costs consist of
a. Direct materials, direct labor, and selling costs.
b. Direct materials, direct labor, overhead, and operating expense.
c. Prime costs and conversion costs.
d. Prime costs and overhead.
e. Selling and administrative costs.
3. Last year, Wachman produced and sold 1,000 units at a price of $75 each. Total selling and administrative expense was $30,000.
Wachman Company produces a product with the following per-unit costs:
Direct materials ................$15
Direct labor ........................6
Manufacturing overhead .......10
Conversion cost per unit was
a. $15.
b. $21.
c. $31.
d. $16.
e. none of the above.
4. The accountant in a factory that produces biscuits for fast-food restaurants wants to assign costs to boxes of biscuits. Which of the following costs can be traced directly to boxes of biscuits?
a. The cost of flour and baking soda
b. The wages of the mixing labor
c. The cost of the boxes
d. The cost of packing labor
e. All of the above
5. Which of the following is an indirect cost?
a. The cost of denim in a jeans factory
b. The cost of mixing labor in a factory that makes over-the-counter pain relievers
c. The cost of restriping the parking lot at a perfume factory
d. The cost of bottles in a shampoo factory
e. All of the above
6. Bobby Dee's is an owner-operated company that details (thoroughly cleans-inside and out) automobiles. Bobby Dee's is which of the following?
a. Retailer
b. Wholesaler
c. Manufacturing firm
d. Service firm
e. None of the above
7. Kellogg's makes a variety of breakfast cereals. Kellogg's is which of the following?
a. Retailer
b. Wholesaler
c. Manufacturing firm
d. Service firm
e. None of the above
8. Target is which of the following?
a. Retailer
b. Wholesaler
c. Manufacturing firm
d. Service firm
e. None of the above