Question 1

Kid Gloves Manufacturing reports the following information for the year. Determine the cost of finished goods manufactured.
Work in process 1 January $7 000
Work in process 31 December 10 000
Finished goods inventory 1 January 5 000
Finished goods inventory 31 December 6 000
Direct materials used 3 000
Direct labour 2 000
Factory overhead 2 000
Selling expenses 3 000
General and administrative expenses 4 000

Accepted Answer

A)   $4000
B)   $3000
C)   $5000
D)   $6000E) C) and D)
F) B) and C)

Question 2

What type of business would calculate cost of sales in the income statement as stock of finished goods at start + purchases - stock of finished goods at end?

Accepted Answer

A)   A service business
B)   A manufacturer
C)   A retailer
D)   A non-profit organisationE) B) and C)
F) None of the above

Question 3

Before the application of overhead costs Chrome & Steel Ltd has the following costs traced to production:
Direct materials Direct labour
Charged to production $50 000 $40 000
Assuming that overhead is applied at the rate of 80% of direct labour cost what is the amount of inventory finished for the period (assume no work in process) ?

Accepted Answer

A)   $50 000
B)   $90 000
C)   $122 000
D)   $130 000E) None of the above
F) All of the above

Question 4

Any increase in unit product cost must result in a decreased profit margin if the selling price of the product cannot be:

Accepted Answer

A)   measured.
B)   decreased.
C)   increased.
D)   calculated.E) C) and D)
F) B) and C)

Question 5

Which of the following statements is correct?

Accepted Answer

A)   Manufacturing overhead costs are treated as period costs rather than product cost.
B)   Product costs are included in inventory until the product is sold.
C)   For a retailer all costs and expenses are treated as period costs.
D)   Finished goods inventory includes also includes the cost of raw materials.E) All of the above
F) B) and D)

Question 6

If total fixed costs are $250 000 what is the per unit overhead cost for Maxima Ltd if 50 000 units are produced? Assume units of production are used as the basis for applying overhead to product.

Accepted Answer

A)   $50
B)   $5
C)   $0.50
D)   $0.05E) B) and D)
F) A) and B)

Question 7

Which of the following statements concerning product and period costs is incorrect?

Accepted Answer

A)   The basis of the distinction between product and period costs is the timing of the recognition of an expense in the income statement.
B)   Service businesses have both period and product costs.
C)   Product costs are included in the cost of inventories until the products are sold.
D)   Period costs are not directly required to produce the product.E) A) and D)
F) B) and C)

Question 8

Direct labour costs plus factory overhead costs are known as:

Accepted Answer

A)   prime costs.
B)   conversion costs.
C)   direct costs.
D)   variable costs.E) C) and D)
F) B) and C)

Question 9

Which of these is not a product cost:

Accepted Answer

A)   factory power.
B)   wages of factory workers.
C)   material used in production.
D)   advertising of a new product.E) All of the above
F) A) and C)

Question 10

Calculate product cost per unit.
Direct materials per unit $50
Direct labour per unit $30
Factory overhead applied at 50% of direct labour cost

Accepted Answer

A)   $50
B)   $80
C)   $95
D)   $105E) A) and D)
F) B) and C)

Question 11

If expected factory overhead costs are $600 000 and expected direct labour hours are 40 000, what is the overhead application rate per direct labour hour?

Accepted Answer

A)   $15
B)   $150
C)   $0.66
D)   $66E) All of the above
F) A) and B)

Question 12

Accepted Answer

A)   $8000.
B)   $10 000.
C)   $13 000.
D)   $18 000.E) B) and C)
F) None of the above

Question 13

The format for the cost of goods manufactured statement is direct materials + direct labour + factory overhead + ????????__________ - work in process at end.

Accepted Answer

A)   Indirect materials.
B)   Work in process at start
C)   Indirect materials
D)   Indirect labourE) C) and D)
F) B) and C)

Question 14

Which of these is an example of a period cost?

Accepted Answer

A)   Direct materials
B)   Production supervisor's salary
C)   Sales salaries
D)   Factory rentE) A) and D)
F) A) and C)

Question 15

Although the terms cost and expense are often used synonymously there is a difference between them. A cost can be an asset or an expense whereas an expense is:

Accepted Answer

A)   the consumption or loss of resources that will result in a decrease in equity.
B)   where the future economic benefits have not expired.
C)   used to run the business.
D)   paid out in cash.E) A) and C)
F) A) and B)

Question 16

Which of these is a not a limitation of the use of a periodic inventory system by a manufacturer?

Accepted Answer

A)   Costing information is not available before the end of the accounting period.
B)   A physical stocktake is necessary before costing information can be determined.
C)   The costing information contains estimations and approximations.
D)   The method is more costly to implement than the perpetual method.E) A) and C)
F) C) and D)

Question 17

What is the statement prepared by a manufacturer to calculate the cost of the goods manufactured called?

Accepted Answer

A)   Statement of cost of sales
B)   Income statement
C)   Gross profit statement
D)   Cost of goods manufactured statementE) B) and D)
F) A) and B)

Question 18

Raw materials inventory is:

Accepted Answer

A)   stock of materials purchased for conversion into saleable goods.
B)   stock of supplies.
C)   stock of partly finished goods.
D)   materials that have been scrapped.E) All of the above
F) C) and D)

Question 19

Direct material costs do not include small items that it is uneconomical to trace to products. Which of the following would not be included as a direct materials cost for a furniture manufacturer?

Accepted Answer

A)   Wood
B)   Materials
C)   Glue
D)   HandlesE) A) and D)
F) B) and C)

Question 20

In a manufacturing organisation the transfer from the work in process inventory account to the finished goods inventory account represents:

Accepted Answer

A)   work in process at the end of the period.
B)   total manufacturing costs incurred for the period.
C)   cost of goods finished during the period.
D)   cost of sales.E) A) and B)
F) A) and C)

Exam 8: Accounting for Manufacturing

What is the statement prepared by a manufacturer to calculate the cost of the goods manufactured called?

Correct Answer
verified

In a manufacturing organisation the transfer from the work in process inventory account to the finished goods inventory account represents:

Correct Answer
verified

Correct Answer
verified

What type of business would calculate cost of sales in the income statement as stock of finished goods at start + purchases - stock of finished goods at end?

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

The format for the cost of goods manufactured statement is direct materials + direct labour + factory overhead + ????????__________ - work in process at end.

Correct Answer
verified

If total fixed costs are $250 000 what is the per unit overhead cost for Maxima Ltd if 50 000 units are produced? Assume units of production are used as the basis for applying overhead to product.

Correct Answer
verified

Direct labour costs plus factory overhead costs are known as:

Correct Answer
verified

Raw materials inventory is:

Correct Answer
verified

Which of the following statements concerning product and period costs is incorrect?

Correct Answer
verified

Which of these is an example of a period cost?

Correct Answer
verified

Any increase in unit product cost must result in a decreased profit margin if the selling price of the product cannot be:

Correct Answer
verified

Although the terms cost and expense are often used synonymously there is a difference between them. A cost can be an asset or an expense whereas an expense is:

Correct Answer
verified

Correct Answer
verified

Which of these is a not a limitation of the use of a periodic inventory system by a manufacturer?

Correct Answer
verified

Correct Answer
verified

Calculate product cost per unit. Direct materials per unit $50 Direct labour per unit $30 Factory overhead applied at 50% of direct labour cost

Correct Answer
verified

If expected factory overhead costs are $600 000 and expected direct labour hours are 40 000, what is the overhead application rate per direct labour hour?

Correct Answer
verified

Direct material costs do not include small items that it is uneconomical to trace to products. Which of the following would not be included as a direct materials cost for a furniture manufacturer?

Correct Answer
verified

Which of these is not a product cost:

Correct Answer
verified

Exam 8: Accounting for Manufacturing

What is the statement prepared by a manufacturer to calculate the cost of the goods manufactured called?

Correct AnswerverifiedShow Answer

In a manufacturing organisation the transfer from the work in process inventory account to the finished goods inventory account represents:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What type of business would calculate cost of sales in the income statement as stock of finished goods at start + purchases - stock of finished goods at end?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The format for the cost of goods manufactured statement is direct materials + direct labour + factory overhead + ????????__________ - work in process at end.

Correct AnswerverifiedShow Answer

If total fixed costs are $250 000 what is the per unit overhead cost for Maxima Ltd if 50 000 units are produced? Assume units of production are used as the basis for applying overhead to product.

Correct AnswerverifiedShow Answer

Direct labour costs plus factory overhead costs are known as:

Correct AnswerverifiedShow Answer

Raw materials inventory is:

Correct AnswerverifiedShow Answer

Which of the following statements concerning product and period costs is incorrect?

Correct AnswerverifiedShow Answer

Which of these is an example of a period cost?

Correct AnswerverifiedShow Answer

Any increase in unit product cost must result in a decreased profit margin if the selling price of the product cannot be:

Correct AnswerverifiedShow Answer

Although the terms cost and expense are often used synonymously there is a difference between them. A cost can be an asset or an expense whereas an expense is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of these is a not a limitation of the use of a periodic inventory system by a manufacturer?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Calculate product cost per unit. Direct materials per unit $50 Direct labour per unit $30 Factory overhead applied at 50% of direct labour cost

Correct AnswerverifiedShow Answer

If expected factory overhead costs are $600 000 and expected direct labour hours are 40 000, what is the overhead application rate per direct labour hour?

Correct AnswerverifiedShow Answer

Direct material costs do not include small items that it is uneconomical to trace to products. Which of the following would not be included as a direct materials cost for a furniture manufacturer?

Correct AnswerverifiedShow Answer

Which of these is not a product cost:

Correct AnswerverifiedShow Answer

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