Chapter 1 & 2

Question 1

Direct materials used is:

A) One of the three components of total manufacturing costs, defined as any labor that can be physically traced to the
manufacturing of a product.

B) One of the three components of total manufacturing costs, defined as the raw materials available for sale less the ending
raw materials inventory.

C) The cost of all work in process inventory of this year, defined as total manufacturing costs plus the beginning work in process
inventory.

D) The total costs associated with work done in this year, defined as direct materials used plus direct labor plus factory
overhead

Answer 1

B) One of the three components of total manufacturing costs, defined as the raw materials available for sale less the ending
raw materials inventory.

Question 2

Below, there will be a cost incurred by an ACB Electrical Appliance Manufacturing. Correctly match the classification
type with the cost provided.
Wages of assembly-line workers.

A) Selling
B) Direct Labor
C) Manufacturing Overhead
D) Direct Materials

Answer 2

B) Direct Labor

Question 3

Which of the following is not a manufacturing cost (product cost consists of three of the following answer choices)?

A) Direct materials
B) Direct Labor
C) Manufacturing overhead
D) Indirect materials used

Answer 3

D) Indirect materials used

Question 4

Which is a variable cost?

A) Changes in proportion to changes in volume or activity (no change per unit)
B) Changes per unit (no changes in proportion to changes in volume or activity)

Answer 4

A) Changes in proportion to changes in volume or activity (no change per unit)

Question 5

Pocket Umbrella is considering producing a new type of umbrella. This new pocket-sized umbrella would fit into a coat or pocket purse. Correctly match the choices to the cost provided. Cost of umbrella canopy material

A) Period Costs
B) Product costs

Answer 5

B) Product costs

Question 6

During the month of December, LAP Corporation used materials costing $360,000. Direct labor cost amounted to $200,000 and factory overhead is estimated at $250,000 based on direct labor hours.
What are the company’s prime
costs?

A) $450,000
B) $610,000
C) $560,000
D) $580,000

Answer 6

C) $560,000

Question 7

What is Manufacturing Overhead?

A) Manufacturing costs that cannot be traced directly to specific units produced.

B) sum of indirect costs of an operation

C) sum of direct costs

D) A & B

Answer 7

D) A & B

Question 8

Below, there will be a cost incurred by an ACB Electrical Appliance Manufacturing. Correctly match the classification
type with the cost provided.

Cost of cleaner used to clean appliances where they are completed.

B) Direct Labor
C) Selling
D) Administrative
E) Manufacturing Overhead

Answer 8

E) Manufacturing Overhead

Question 9

During the month of December, Parry Marine Mechanics, Inc. used direct materials costing $160,000. Direct labor cost amounted to $225,000 and factory overhead is estimated at $100,000 based on direct labor hours. What are the company’s conversion costs?

A) $325,000
B) $385,000
C) $425,000
D) $480,000

Answer 9

A) $325,000

Direct labor + Factory (manufacturing) overhead = Conversion costs

$225,000 + $100,000 = $325,000