Theory

1. Which of the following item is typically an example of an indirect cost of a cost object?

a) Courter charges for the shipment delivery

b) Manufacturing plant electricity
c) Direct manufacturing labor
d) Wood used for furniture manufacturer

2. If there is a change in the level of the cost driver

a) Total fixed costs and total variable costs will change

b) Total fixed costs and total variable costs will be the same
c) Total fixed costs will be the same and total variable costs will change
d) Total variable costs will be the same and total fixed costs will change

3. If there is a change in the level of the cost driver

a) Fixed and variable unit cost will change

b) Fixed and variable costs per unit will be the same
c) Fixed costs per unit will be the same and variable costs per unit will change
d) Variable costs per unit will be the same and fixed costs per unit will change

4. Which of the following statements would be INCORRECT in a manufacturing plant?

a) Completed goods are included in the finished goods inventory

b) Partially completed goods are part of the work in process
c) Work in process may also be called goods in process
d) Materials put into product are included in the direct materials inventory

5. Product costs are converted to expired costs when

a) Units are completed

b) Materials are purchased and used in production
c) Units are sold
d) Units are moved to the warehouse

6. If the production volume increases from 8000 to 10000 units

a) Total costs will increase by 20%

b) Total costs will increase by 25%
c) Total variable costs will increase by 20%
d) Total variable costs will increase by 25%

7. Goods available for sale that are not in the ending inventory

a) Are included in goods available for sale at the end of the year
b) Are included in the work in process inventory at the end of the year
c) Are not accounted for until the next year
 d) Are incorporated in the cost of goods sold amount

8. All of the following items are debited to the work in process account EXCEPT

a) Allocated manufacturing overhead

b) Completed goods being transferred out of the plant
c) Direct labor consumed
d) Direct materials consumed

9. In normal costing system, which of the following is used?

Actual direct materials Actual direct labor Actual overhead

a. yes No Yes
b. yes Yes Yes
c. yes Yes No
d. no Yes No

10. Total costs may be computed as

a) Fixed costs + (variable costs per unit x unit volume)

b) (fixed costs per unit x unit volume) + variable costs
c) Fixed costs per unit + (variable costs per unit x unit volume)
d) (fixed costs per x unit volume) + variable cost per unit