Manufacturing Part II

Question 1

A normal cost system uses:

A. Actual prime costs but budgeted manufacturing overhead costs
B. Budgeted prime costs but actual manufacturing overhead costs
C. Budgeted prime costs but applied manufacturing overhead costs
D. Actual prime costs but applied manufacturing overhead costs

Answer 1

D. Actual prime costs but applied manufacturing overhead costs

Question 2

Direct materials cost is

A. Included in both prime cost and conversion cost formula
B. Included in prime cost but not in conversion cost formula
C. Included in conversion cost but not in prime cost formula
D. Not included in prime cost nor conversion cost formula

Answer 2

B. Included in prime cost but not in conversion cost formula

Question 3

In relation to changes in activity level, variable costs vary

A. Inversely when expressed in total
B. Directly when expressed in total
C. Inversely when expressed per unit
D. Directly when expressed per unit

Answer 3

B. Directly when expressed in total

Question 4

All other things equal, a higher cost of goods manufactured this period compared to prior periods

A. Means a lower net operating income this period
B. Means a higher net operating income this period
C. Means same level of net operating income this period
D. Is meaningless due to lack of given data

Answer 4

A. Means a lower net operating income this period

Question 5

Finished goods refer to cost of goods

A. Partially-completed and awaiting further instruction from management
B. Partially-completed and awaiting delivery of additional materials from supplier
C. Fully-completed and awaiting delivery of packaging materials from supplier
D. Fully-completed and awaiting sale to customers

Answer 5

D. Fully-completed and awaiting sale to customers

Question 6

The three manufacturing costs are

A. Raw materials, work-in-process, finished goods
B. Raw materials, work-in-process, manufacturing overhead
C. Direct materials, direct labor, manufacturing overhead
D. Direct materials, work-in-process, finished goods

Answer 6

C. Direct materials, direct labor, manufacturing overhead

Question 7

Which of the following is NOT into manufacturing?

A. Furniture maker
B. Pharmacy
C. A company which prints business forms
D. Car manufacturer

Answer 7

B. Pharmacy

Question 8

Which is part of distribution costs?

A. Insurance on store space
B. Insurance on administrative office
C. Insurance on production facility
D. All of the above

Answer 8

A. Insurance on store space

Question 9

The functional-form income statement includes a separate line item for

A. Contribution margin but not gross profit
B. Gross profit but not contribution margin
C. Contribution margin and gross profit
D. Neither contribution margin nor gross profit

Answer 9

B. Gross profit but not contribution margin

Question 10

All other things equal, a higher beginning raw materials inventory balance than the ending balance leads to

A. Higher cost of materials purchased
B. Lower cost of materials purchased
C. Higher total manufacturing costs
D. Lower total manufacturing costs

Answer 10

C. Higher total manufacturing costs