ACC 211 Final Ch 2

The benefit sacrificed when one alternative is chosen over another is known as a(n):
a.fixed cost.
b.opportunity cost.
c.indirect cost.
d.sunk cost.
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The benefit sacrificed when one alternative is chosen over another is known as a(n):
a.fixed cost.
b.opportunity cost.
c.indirect cost.
d.sunk cost.
b.opportunity cost.
Which of the following is an example of a direct cost?
a.Property tax on plant and land
b.Power charges for an office building
c.The salary paid to the labor used to produce the finished goods
d.Depreciation on an office building
c.The salary paid to the labor used to produce the finished goods
Cost allocation is:
a.the process of assigning indirect costs to cost objects.
b.done only for variable costs.
c.is same as cost accumulation.
d.the tracking of direct costs to cost objects.
a.the process of assigning indirect costs to cost objects.
The following costs were incurred by ABC Company in January:
Direct materials $105,000
Direct labor $81,000
Manufacturing overhead $73,000
Selling expense $26,000
Administrative salaries $8,000

Determine ABC's total product cost.
a.$311,000
b.$259,000
c.$277,000
d.$293,000
b.$259,000



Product Cost = Direct Material + Direct Labor + Manufacturing Overhead = $105,000 + $81,000 + $73,000 = $259,000
Which of the following is the formula to calculate prime cost?
a.Prime Cost = Direct Materials + Direct Labor
b.Prime Cost = Direct Materials + Manufacturing Overhead
c.Prime Cost = Conversion Cost + Direct Labor
d.Prime Cost = Direct Labor + Manufacturing Overhead
a.Prime Cost = Direct Materials + Direct Labor
Which of the following costs forms a part of prime cost as well as conversion cost?
a.The cost of direct materials and direct labor
b.The cost of direct materials
c.The cost of direct labor
d.Manufacturing overhead
c.The cost of direct labor
Which of the following items appear on the income statement of a service firm?
a.Manufacturing overhead
b.Cost of goods sold
c.Operating expenses
d.Gross margin
c.Operating expenses
Impact Corporation reported $450,000 of revenue for the year. Selling expenses amounted to $52,000, and administrative expenses were $72,000. Cost of goods sold was 36% of revenue. Impact's gross margin is:
a.$288,000.
b.$326,000.
c.$378,000.
d.$162,000.
a.$288,000.


Gross Margin = Sales Revenue − Cost of Goods Sold = $450,000 - ($450,000 × 36%) = $288,000
The cost of goods sold is:
a.the cost of selling the units that were sold during a time period.
b.the sum of cost of goods manufactured and administrative expenses.
c.the cost of producing the units that were sold during a time period.
d.the total of direct materials, direct labor, and selling overhead.
c.the cost of producing the units that were sold during a time period.
Alpha Company manufactures computers. On July 1, Alpha had $72,000 of materials in inventory. During the month of July, the company purchased $320,000 of materials. On July 31, materials inventory equaled $47,000. Determine the cost of direct materials used in production for the month of July.
a.$273,000
b.$392,000
c.$345,000
d.$295,000
c.$345,000


Cost of Direct Materials Used in Production = Beginning Inventory of Materials + Materials Purchased During the Period - Ending Inventory of Materials = $72,000 + $320,000 - $47,000 = $345,000
The ending inventories of materials, work-in-process, and finished goods appear: a.as operating expenses on the income statement. b.as non-operating expenses on the income statement. c.as current assets on the balance sheet. d.as non-current assets on the balance sheet.c.as current assets on the balance sheet.Gross margin is computed as: a.cost of goods manufactured plus beginning finished goods inventory, minus ending finished goods inventory. b.sales revenue minus cost of goods sold. c.direct materials plus direct labor plus manufacturing overhead. d.operating income minus operating expenses.b.sales revenue minus cost of goods sold.The cost of the wheels purchased for use in the manufacture of cars is an example of a(n): a.administrative cost. b.overhead cost. c.direct cost. d.conversion cost.c.direct cost.The property tax paid for a factory building is an example of a(n): a.opportunity cost. b.fixed cost. c.direct cost. d.variable cost.b.fixed cost.During May, the cost of goods manufactured was $58,000. The beginning finished goods inventory for the month was $25,000, and the ending finished goods inventory was $34,000. What was the cost of goods sold for May? a.$117,000 b.$49,000 c.$62,000 d.$24,000b.$49,000 Cost of Goods Sold = Cost of Goods Manufactured + Beginning Finished Goods Inventory - Ending Finished Goods Inventory = $58,000 + $25,000 - $34,000 = $49,000The cost of delivering a product to a customer is an example of: a.a conversion cost. b.manufacturing overhead. c.a prime cost. d.a period cost.d.a period cost.Direct material cost and direct labor cost are a part of: a.product costs. b.administrative costs. c.nonmanufacturing costs. d.selling costs.a.product costs.Which of the following is true of cost of goods sold? a.It includes all selling and administrative expenses. b.It represents the total conversion cost of the goods manufactured. c.It is an expense that appears on the income statement. d.The balance in this account is transferred to finished goods inventory.c.It is an expense that appears on the income statement.The ending inventories of materials, work-in-process, and finished goods appear: a.as current assets on the balance sheet. b.as non-current assets on the balance sheet. c.as non-operating expenses on the income statement. d.as operating expenses on the income statement.a.as current assets on the balance sheet.Alpha Company manufactures computers. On July 1, Alpha had $72,000 of materials in inventory. During the month of July, the company purchased $320,000 of materials. On July 31, materials inventory equaled $43,000. Determine the cost of direct materials used in production for the month of July. a.$277,000 b.$349,000 c.$392,000 d.$291,000b.$349,000 Cost of Direct Materials Used in Production = Beginning Inventory of Materials + Materials Purchased During the Period - Ending Inventory of Materials = $72,000 + $320,000 - $43,000 = $349,000