acis 2116 quick study

t or f raw materials include direct materials and exclude indirect materials

false

cost claddication for financial statments

product and period cost

cost classifcation for decsion making

relevant and irrelevant

contribution format income statement

it subtracts varaiable expenses from sales to derive a contribution margin

cost of goods sold equation

cost of goods sold= beginning merchandise inventory + purchases - ending merchandise inventory

Which of the following statments is false?

1. conversion costs include MOH

2. prime costs include direct labor

3. conversion costs include direct labor

4. prime costs include MOH

prime costs include MOH

Which of the following statements is true?

• Product costs and variable costs are synonyms.

• Product costs are excluded from the calculation of gross margin.

• Product costs are included in inventory as reported on the balance sheet.

• Product costs include sales commissions and advertising.

product costs are included in inventory as reported on the balance sheet

If sales are $100,000, fixed expenses are $30,000, and variable expenses are $50,000, then the contribution margin must be:

50000

If sales are $100,000, fixed expenses are $30,000, and the contribution margin is $40,000, then the net operating income must be:

10,000

If the conversion costs are $70,000, direct labor costs are $20,000, and direct material costs are $40,000, then the manufacturing overhead must be:

50,000

Assume that a company purchased a piece of equipment five years ago for $250,000. Now the company is deciding whether to replace this piece of equipment with a newer model. In this "keep or replace" decision, the purchase price of the old piece of equipment is an example of a:

sunk cost

Which of the following statements is false when considering cost behavior within the relevant range?

• A variable cost varies, in total, in direct proportion to changes in the level of activity.

• The variable cost per unit varies inversely with changes in the level of activity.

• A fixed cost remains constant, in total, regardless of changes in the level of activity.

• The average fixed cost per unit varies inversely with changes in the level of activity.

variable cost per unit varies inversley with changes in the level of activity

Which of the following statements is false when considering cost behavior within the relevant range?

• The total amount of a variable cost will change as the level of activity changes.

• A variable cost is constant if expressed on a per unit basis.

• A fixed cost varies, in total, in direct proportion to changes in the level of activity.

• The average fixed cost per unit varies inversely with changes in the level of activity.

a fixed cost varies, in total, in direct porportion to changes in the level of activity

Which of the following statements is false regarding job-order costing?

• It is used in situations where many different products, each with unique features, are produced each period.

• It is used for manufacturing companies, but not service companies.

• It accumulates each job’s costs on a job cost sheet.

• It can be used to calculate a job’s unit product cost.

it is used for manufacturing companies, but not service comapnies

Which of the following statements is true regarding job-order costing?

• It is used in situations where many different products, each with unique features, are produced each period.

• It is used for manufacturing companies, but not service companies.

• It relies on a predetermined overhead rate to apply direct material cost to units of product.

• It relies on a predetermined overhead rate to apply direct labor cost to units of product.

ir is used in situations where many different products, each with unique fatures, are produced each period

Which of the following statements is true regarding absorption costing?

It assigns all manufacturing costs, both fixed and variable, to units of product.

It assigns all manufacturing costs, both fixed and variable, to units of product.

• estimated total manufacturing overhead cost in the numerator.

Which of the following statements is true regarding the formula used in normal costing for applying overhead cost to a specific job?

• The predetermined overhead rate is multiplied by the actual amount of the allocation base used by the job.

Which of the following statements is true regarding the formula Y = a + bx?

• Y = The estimated total manufacturing overhead cost.

A job-order costing system that relies on normal costing will:

Assign actual direct materials and direct labor costs to jobs.

A unit product cost includes:

actual direct labor cost used by the job

Which of the following is not one of the three inventory accounts reported on the balance sheet?

COGS

Which of the following statements is false?

• Work in process inventory is included in the balance sheet.

• Work in process inventory includes direct materials used in production.

• Work in process inventory includes direct labor costs.

• Work in process inventory includes actual manufacturing overhead costs assigned to jobs worked on during the period.

• Work in process inventory includes actual manufacturing overhead costs assigned to jobs worked on during the period.

The cost of goods manufactured is:

the amount transferred from Work in Process to Finished Goods.

the amount transferred from Work in Process to Finished Goods.

applied manufacturing overhead, but not actual manufacturing overhead.

The journal entry to record the purchase of raw materials includes:

A debit to raw materials

The journal entry to record the requisition of direct materials for use in production includes:

• a debit to Work in Process.

The journal entry to record indirect labor used in production includes:

• a debit to Manufacturing Overhead.

The journal entry to record manufacturing overhead applied to production includes:

debit to work in process

The journal entry to dispose of underapplied or overapplied overhead will never include which of the following accounts?

raw materials

Raw materials used in production is calculated using which of the following equations?

• Beginning raw materials inventory + Purchases of raw materials − Ending raw materials inventory

The total manufacturing costs to account for within a schedule of cost of goods manufactured is calculated using which of the following equations?

• Beginning work in process inventory + Total manufacturing costs added to production

Overapplied or underapplied overhead is computed:

at the end of the period

If a company has overapplied overhead, then the journal entry to dispose of it could possibly include:

a credit to Cost of Goods Sold

The unadjusted cost of goods sold is calculated using which of the following equations?

• Beginning finished goods inventory + Cost of goods manufactured − Ending finished goods inventory

Which of the following statements is true for a company that maintains beginning and ending work in process and finished goods inventories?

• If the company closes its underapplied overhead entirely to Cost of Goods Sold it will cause net operating income to be lower than the net operating income reported if the company had closed its underapplied overhead proportionally to Work in Process, Finished Goods, and Cost of Goods Sold.

Which of the following statements is false regarding the Manufacturing Overhead T-account?

• Actual overhead expenses are recorded on the debit side of the account.

• Applied overhead is recorded on the credit side of the account.

• At the end of each accounting period, its ending balance is reporting on the asset side of the balance sheet.

• It accumulates actual variable and fixed overhead expenses.

• At the end of each accounting period, its ending balance is reporting on the asset side of the balance sheet.

Which of the following statements is true regarding the accounting for depreciation on office equipment?

• The depreciation charge increases the balance in the Accumulated Depreciation account.

If a company recorded the following transaction—closed underapplied overhead to cost of goods sold—then which of the following statements is true?

• The Retained Earnings account would decrease.

Which of the following is not an underlying assumption of cost-volume-profit analysis?

net operating income is constant

Which of the following is not an underlying assumption of cost-volume-profit analysis?

• Selling price is constant.

• Variable cost per unit varies inversely with changes in the level of activity.

• In multiproduct companies, the mix of products sold remains constant.

• Total fixed costs are constant within the relevant range.

• Variable cost per unit varies inversely with changes in the level of activity.

The contribution margin ratio equals:

• (Sales − variable expenses) ÷ sales

A cost-volume-profit (CVP) graph contains three lines. Which of the following is not explicitly depicted by one of those three lines?

• Total contribution margin

In a cost-volume-profit (CVP) graph, the intersection of the total sales line and the total expense line represents which of the following?

• The break-even point

In a cost-volume-profit (CVP) graph, the vertical distance between the total expense line and the fixed expense line represents which of the following?

• The total variable expenses

Whats the formula for net operating income

• Contribution margin − fixed expenses = net operating income