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31.The three sections of a statement of cost of goods manufactured include: 
 

A. raw material, direct labor, manufacturing overhead.

B. variable expenses, contribution margin, fixed expenses.

C. sales revenue, gross profit, selling and administrative expenses.

D. direct costs, indirect costs, operating profit.

32.Which of the following items would not be reported on the statement of cost of goods manufactured? 
 

A. cost of goods sold.

B. purchases.

C. total manufacturing costs.

D. contribution margin.

33.Total manufacturing costs for the month on the statement of costs of goods manufactured equals: 
 

A. variable costs + fixed costs + mixed costs.

B. work in process inventory - finished goods inventory.

C. cost of goods sold - cost of goods manufactured.

D. cost of raw material used + direct labor cost incurred + manufacturing overhead applied.

34.The primary difference between absorption costing and direct costing is the treatment of: 
 

A. direct material costs.

B. variable manufacturing overhead.

C. fixed manufacturing overhead.

D. direct labor costs.

35.Direct costing may be used for: 
 

A. internal reporting purposes.

B. external financial reporting purposes.

C. income tax reporting purposes.

D. all of these.

36.Which of the following will cause income determined with absorption costing to be higher than income determined with direct costing? 
 

A. units produced equal units sold.

B. units produced are greater than units sold.

C. units produced are less than units sold.

D. income determined with absorption costing will always equal income determined with direct costing.

37.If all units produced during the month of September are sold, and no additional units are sold from the beginning finished goods inventory, then: 
 

A. income determined with absorption costing will equal income determined with direct costing.

B. ending work in process inventory will increase.

C. income determined with absorption costing will be lower than income determined with direct costing.

D. ending finished goods inventory will decrease.

38.In order to achieve higher quality cost information from the assignment of overhead costs to products manufactured, the use of a predetermined overhead rate is being replaced by: 
 

A. absorption costing.

B. job order costing.

C. activity-based costing.

D. process costing.

39.An activity-based costing system involves identifying the activity that causes the incurrence of a cost; this activity is known as a: 
 

A. cost driver.

B. cost applier.

C. direct cost.

D. cost object.

40.The shift in the amount of manufacturing overhead costs applied to the mix of products produced that occurs when using a single cost driver rate as compared to using activity-based costing rates is known as: 
 

A. underapplied overhead.

B. overapplied overhead.

C. cost absorption.

D. cost distortion.

13-1

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