managerial accounting exam 1

A direct cost is a cost that can be easily traced to the particular cost object under consideration

• True

• False

Answer explanation

Direct costs can easily be traced indirect costs cannot be easily traced

Selling costs are indirect costs

• True

• False

Answer explanation

Indirect costs are overhead, selling costs are direct costs when it is part of factory. Typical selling costs (S&A) cost are not part of product costs at all but a PERIOD cost

Depreciation is always considered a period cost for external financial reporting purposes in a manufacturing company

• True

• False

Answer explanation

Depreciation on any piece of equipment in the factory is a product cost and gets buried in COGS

Conversion cost = direct labor + manu overhead costs

• True

• False

Answer explanation

Prime cost = direct materials + direct labor

Conversion cost = direct labor + manu overhead

A fixed cost whose cost per unit varies as the activity level rises and falls

• True

• False

Answer explanation

Fixed cost: varies put unit, same in total

Variable cost: same per unit, varies in total

Materials used in a factory that are an integral part of the final product, such as cleaning supplies, should be classified as:

• Direct materials

• A period cost

• Administrative expense

• Manufacturing overhead

Answer explanation

Manu overhead is all indirect costs used to make the final produc, DOES NOT include S&A

The cost of materials is classified as

• A

• B

• C

• D

Answer explanation

Prime cost= direct materials + direct labor

Conversion cost= direct labor + manu overhead

.

• A

• B

• C

• D

• E

Answer explanation

As we make more things, our mixed cost is going to increase in total and decrease per unit.

.

• A

• B

• C

• D

Answer explanation

We are looking at TOTAL costs.

A:8000/100 units= 80, 10560/140=75.43, MIXED because it isn’t same number in total or per unit

B: fixed, same total

C: 6500/100=65, 9100/140=65, VARIABLE because per unit is the same

D: 6700/100=67, 8580/140=61.2, MIXED because per unit changes

In the standard cost formula y=a+bx, what does x represent?

• Total cost

• Total fixed cost

• The level of activity

• Variable cost per unit

Answer explanation

Y= total cost

A= fixed cost

B= variable cost

X= level of activity