The cost of lubricants used to grease a machine used in the production process of a manufacturing company is an example of a
Detailed Answer
Correct answer: (C)
an indirect material cost.
2
The cost of direct materials is
Detailed Answer
Correct answer: (A)
fixed per unit but variable in total.
3
The amount paid by a manufacturing company for a factory building is considered
Detailed Answer
Correct answer: (A)
a sunk cost.
4
The nursing station on the fourth floor of General Hospital is responsible for the care of patients who have undergone orthopedic surgery. The costs of drugs administered by the nursing station to patients would be classified as
Detailed Answer
Correct answer: (A)
direct costs.
5
The controller of ABC Manufacturing would consider the cost of salaries paid to personnel in his/her department to be
Detailed Answer
Correct answer: (C)
indirect and controllable.
6
Fixed costs expressed on a per unit basis
Detailed Answer
Correct answer: (B)
will react inversely with changes in activity.
7
Product costs appear on the balance sheet
Detailed Answer
Correct answer: (C)
only if goods are partially completed, are unsold at the end of a period, or both.
8
Straight-line amortization on a computer used in the marketing department of a manufacturing firm would be classified as
Detailed Answer
Correct answer: (B)
9
Which of the following classifications is correct? Prime Cost/ Conversion Cost
Detailed Answer
Correct answer: (B)
Direct labour and direct materials /Direct labour and manufacturing overhead
10
The following information is taken from the records of Dana Manufacturing for the year ending December 31, 2000: Direct materials, $5,000; Manufacturing overhead, $6,000; Total manufacturing costs, $17,000; Beginning work in process inventory, $1,000; Cost of goods manufactured, $15,000. What are the correct amounts for direct labour and ending work in process inventory? Direct Labour / Ending Work in Process