I: Multiple choice (3 points each, 34 questions, total 102 points). For each of
ID: 2596482 • Letter: I
Question
I: Multiple choice (3 points each, 34 questions, total 102 points). For each of the following questions, circle the letter of the best answer. 1. Which of the following statements concerning manufacturing costs is incorreet? a. Depreciation on manufacturing equipment is a period cost. b. Direct labor costs are recorded initially in an inventory account The cost of direct materials can be readily traced to products. c. d. All salaries incurred by the sales department are expensed as incurred 2. The following costs are included in a recent summary of data for a company: advertising expense $85,000; depreciation expense- factory building $133,000; direct labor $250,000 direct material used $300,000, factory utilities $105,000; and sales salaries expense $150,0 Determine the dollar amount of manufacturing overhead costs. a. $550,000 b. $488,000 c. $238,000 d. $235,000 3. Period costs for a manufacturing company would flow directly to: The current balance sheet. a. b. Factory overhead. c. The current income statement. d. Inventory until the goods are sold. 4. When the level of activity increases within the relevant range, how does each of the fol change? Average cost per unit Total variable cost Fixed cost per unit A) B) C) D) a. A Increases Increases Decreases Decreases Increases No change No change Increases Increases Increases Decreases Decreases c. C d. DExplanation / Answer
Answer 1-a. Depreciation on manufacturing equipment is a period cost. Depreciation on manufacturing equipment is an indirect product cost. Depreciation on office equipment is a period cost. Answer 2 - c. $238,000 Manufacturing Overhead Costs: Depreciation expense - Factory Building 133,000.00 Factory utilities 105,000.00 Total Manufacturing Overheads 238,000.00 Answer 3 - c. The Current Income Statement. A period cost is a cost that cannot be capitalized into prepaid expenses, inventory of fixed costs. A period cost is charged to expense in the period incurred. Period Cost is not included within the cost of the goods sold on the income statement. Answer 4 - c. Average cost per Unit - Decreases, Total Variable Costs - No Change, Fixed Cost Per Unit - Decreases If level of Activity incereases within the relevant range, the total total fixed cost remain same, but the fixed cost per unit decreases. Variable cost per unit will remain same as with the level of activity increases or decrases. So total cost per unit will decrease due to decrease in fixed cost per unit.