ACCT 241 Week 1 Quiz

.

1. Which of the following approaches to preparing an income statement includes a calculation of the gross margin?

Traditional           Contribution 

Approach        Approach

A) Yes          Yes

B) Yes            No

C) No           Yes

D) No            No

Multiple Choice

o Choice A

o Choice D

o Choice C

o Choice B

2.

Which of the following statements concerning direct and indirect costs is NOT true?

Multiple Choice

o Whether a particular cost is classified as direct or indirect does not depend on the cost object.

o A direct cost is one that can be easily traced to the particular cost object.

o The factory manager’s salary would be classified as an indirect cost of producing one               unit of product.

o A particular cost may be direct or indirect, depending on the cost object.

3.

Product costs that have become expenses can be found in:

o cost of goods sold.

o period costs.

o selling expenses.

o administrative expenses.

4.

The costs of direct materials are classified as:

Conversion cost  Manufacturing cost Prime cost

    A)                       Yes                                 Yes               Yes

    B)                        No                                  No                 No

    C)                            Yes                                 Yes                No

    D)               No                                      Yes                   Yes                                                

Multiple Choice

o Choice B

o Choice C

o Choice D

o Choice A

5. 

Direct costs:

Multiple Choice

o are incurred due to a specific decision.

o can be easily traced to a particular cost object.

o are incurred to benefit a particular accounting period.

o are the variable costs of producing a product.

6.

Within the relevant range, variable costs can be expected to:

Multiple Choice

o increase on a per unit basis as the activity level increases.

o increase on a per unit basis as the activity level decreases.

o remain constant in total as the activity level changes.

o vary in total in direct proportion to changes in the activity level.

7.

Manufacturing overhead includes:

Multiple Choice

all selling and administrative costs.

all direct material, direct labor and administrative costs.

all manufacturing costs except direct labor and direct materials.

all manufacturing costs except direct labor.

8.

Which of the following statements about product costs is true?

Multiple Choice

o Product costs associated with unsold finished goods and work in process appear on the balance sheet as assets.

o Product costs are deducted from revenue as expenditures are made.

o Product costs appear on financial statements only when products are sold.

o Product costs are deducted from revenue when the production process is completed.

9.

Which of the following is NOT a period cost?

Multiple Choice

o Salary of a clerk who handles customer billing.

o Insurance on a company showroom where customers can view new products.

o Depreciation of factory maintenance equipment.

o Cost of a seminar concerning tax law updates that was attended by the company’s controller.

10.

The cost of electricity for running production equipment is classified as:

   Conversion 

     cost      Period cost

A) Yes No

B) Yes Yes

C) No Yes

D) No No

Multiple Choice

o Choice D

o Choice A

o Choice B

o Choice C