exam1 ch 2 multiple choice Flashcards
1
Q
- Which of the following represents the correct order in which inventories are reported on a manufacturer’s balance sheet?
a. Raw materials, work in process, finished goods
b. Work in process, finished goods raw materials
c. Finished goods, work in process, raw materials
d. Work in process, raw materials, finished goods
A
A
2
Q
- In which classification would the wages of a factory payroll clerk be classified?
a. Raw materials
b. Indirect labour
c. Period cost
d. Direct labour
A
b
3
Q
- What criteria must be met in order to consider the work of factory employees to be direct labour?
a. It must be promptly associated with converting materials into products.
b. It must be physically associated with converting materials into products.
c. It must be materially associated with converting materials into products.
d. It must be periodically associated with converting materials into products.
A
b
4
Q
- Which one of the following is not another name for the term, manufacturing overhead?
a. Period costs
b. Factory overhead
c. Indirect manufacturing costs
d. Burden
A
a
5
Q
- Zirk, Inc. incurred cost of goods manufactured totalling $700,000, manufacturing overhead of $320,000, and direct materials totalling $40,000. How much is the amount of direct labour?
a. Cannot be determined from the information provided.
b. $340,000
c. $660,000
d. $700,000
A
a
6
Q
- What must occur for inventoriable costs to become expenses under the matching principle?
a. The product must be completed and ready to sell.
b. The product must be sold.
c. All of the costs associated with manufacturing a product must be incurred.
d. The product must have incurred labour.
A
b
7
Q
- Where would you expect to find depreciation on factory equipment?
a. Included with Depreciation Expense on the income statement
b. In the manufacturing overhead section of the costs of goods manufactured schedule
c. Only on the income statement as part of cost of goods sold
d. As a period cost in the operating expense section of the income statement
A
b
8
Q
- A company loses it opening financial records in a fire. During the following year, it incurred costs of production of $250,000 and sold $300,000 in merchandise. It took an inventory count and found that it had $100,000 in product on hand. What should the company’s opening inventory show before the fire?
a. $50,000
b. $100,000
c. $150,000
d. Cannot be determined from the above information
A
c
9
Q
- Salaries of sales people who only sell one product should best be shown as:
a. Fixed overhead.
b. Variable overhead.
c. Direct selling costs.
d. Indirect selling costs.
A
c
10
Q
- Examples of fixed costs include all but one of the following
a. Cost of factory rent for the 12 month contract term
b. Cost of Janet’s apartment rent during her 3rd year of university
c. Cost of a car rental which includes a fee per km driven
d. A one-week rental of a carpet cleaning machine
A
c
11
Q
- Variable costs
a. vary in total as activity varies.
b. vary on a per unit basis as activity varies.
c. are unpredictable.
d. None of the above.
A
a
12
Q
- Indirect labour is a:
a. Direct, variable, product cost.
b. Direct, variable, period cost.
c. Indirect, variable, product cost.
d. Indirect, fixed or variable, product cost.
A
d
13
Q
- Manufacturing overhead is a
a. Direct, variable, product cost.
b. Direct, variable period costs.
c. Indirect, variable, product cost.
d. Indirect, fixed or variable product cost
A
d
14
Q
- Where there is a linear relationship between two variables
a. The change in the dependent variable yields a predictable, constant change in the independent variable.
b. The change in the independent variable yields a predictable, constant change in the dependent variable.
c. There is seldom a linear relationship between two variables.
d. A change in the “Y” variable yields a predictable, constant change in the “X” variable.
A
b
15
Q
- A curvilinear relationship between variable costs and changes in activity levels suggests what?
a. A strictly linear relationship between fixed costs and activity levels is implausible.
b. A strictly curvilinear relationship between changes in activity levels and variable costs is possible only within the relevant range.
c. Since the relationship between activity levels and variable costs is linear within the relevant range and less linear at lower and higher levels outside the relevant range, the straight-line (linear) relationship takes on a curvature in the real world.
d. None of the above.
A
c
