Production Cost

Question 1

Which of the cost flow assumptions is used only in rare circumstances such as when inventories are expensive or unique?

A Specific identification

B First-in, first-out (FIFO)

C Last-in, first-out (LIFO)

D Average-cost

Answer 1

A

Question 2

Which of the following is NOT a primary type of inventory used in production?

A Raw materials

B Cost of goods sold

C Work-in-process

D Finished goods

Answer 2

B

Question 3

Which of the following costs are NOT typically included in work-in-process inventory?

A Direct labor

B Direct materials

C Corporate overhead

D Manufacturing overhead

Answer 3

A

Question 4

What is the definition of costs available for sale?

A Beginning finished goods + cost of goods sold

B Cost of goods completed + ending finished goods

C Beginning finished goods + cost of goods completed

D Cost of goods completed + cost of goods sold

Answer 4

D

Question 5

What is the formula for calculating cost of goods sold?

A Cost of goods available for sale – ending finished goods

B Cost of goods available for sale + ending finished goods

C Beginning finished goods + cost of goods available for sale

D Beginning finished goods – cost of goods available for sale

Answer 5

B