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Quiz 1 Solution

This document contains a 10 question quiz on managerial accounting and cost systems concepts. The questions cover topics such as identifying direct vs indirect costs, fixed vs variable costs, sunk costs, product vs period costs, and how total costs are affected within the relevant range when activity levels change.

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85 views2 pages

Quiz 1 Solution

This document contains a 10 question quiz on managerial accounting and cost systems concepts. The questions cover topics such as identifying direct vs indirect costs, fixed vs variable costs, sunk costs, product vs period costs, and how total costs are affected within the relevant range when activity levels change.

Uploaded by

imagineimf
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Name:_________________________________________ 7 April 2018

Managerial Accounting and Control Systems


Quiz 1

1. All of the following costs would be found in a company’s accounting records except:
A) sunk cost.
B) opportunity cost.
C) indirect costs.
D) direct costs.
Answer: B

2. The property taxes on a factory building would be an example of:

Prime Cost Conversion Cost


A
) No Yes
B) Yes No
C) Yes Yes
D
) No No
Answer: A
3. Which of the following would most likely be included as part of manufacturing overhead in the
production of a wooden table?
A) The amount paid to the individual who stains the table.
B) The commission paid to the salesperson who sold the table.
C) The cost of glue used in the table.
D) The cost of the wood used in the table.
Answer: C

4. Indirect labor is a(n):


A) Prime cost.
B) Conversion cost.
C) Period cost.
D) Opportunity cost.
Answer: B

5. All of the following would be classified as product costs except:


A) property taxes on production equipment.
B) insurance on factory machinery.
C) salaries of the marketing staff.
D) wages of machine operators.
Answer: C

6. If the level of activity increases within the relevant range:


A) variable cost per unit and total fixed costs also increase.
B) fixed cost per unit and total variable cost also increase.
C) total cost will increase and fixed cost per unit will decrease.
D) variable cost per unit and total cost also increase.
Answer: C

7. Data for Cost A and Cost B appear below:


Units Cost Per
Produced Unit Total Cost
Cost A
1 ? $10
10 ? $100
100 ? $1,000
1,000 ? $10,000
Cost B
1 $5,000 ?
10 $500 ?
100 $50 ?
1,000 $5 ?

Which of the above best describes the behavior of Costs A and B?


A) Cost A is fixed, Cost B is variable.
B) Cost A is variable, Cost B is fixed.
C) Both Cost A and Cost B are variable.
D) Both Cost A and Cost B are fixed.
Answer: B

8. A sunk cost is:


A) a cost which may be saved by not adopting an alternative.
B) a cost which may be shifted to the future with little or no effect on current operations.
C) a cost which cannot be avoided because it has already been incurred.
D) a cost which does not entail any dollar outlay but which is relevant to the decision-making process.
Answer: C

9. The following data pertains to activity and costs for two months:

June July
Activity level in units........... 10,000 12,000
Direct materials................... $16,000 $   ?   
Fixed factory rent................ 12,000 ?   
Manufacturing overhead.....  10,000     ?    
Total cost............................ $38,000 $42,900

Assuming that these activity levels are within the relevant range, the manufacturing overhead for July
was:
A) $10,000
B) $11,700
C) $19,000
D) $9,300
Answer: B

10. Which of the following costs, if expressed on a per unit basis, would be expected to decrease as the
level of production and sales increases?
A) Sales commissions.
B) Fixed manufacturing overhead.
C) Variable manufacturing overhead.
D) Direct materials.
Answer: B

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