Q: Which of the following equations correctly calculates the cost of goods sold?

$$\text{COGS} = \text{Beginning Finished Goods Inventory} + \text{Cost of Goods Manufactured} - \text{Ending Finished Goods Inventory}$$

Question 1

Which of the following best describes a direct cost?

Accepted Answer

A cost that can be directly traced to a product or service produced or sold.

Question 2

Which of the following is an example of an indirect cost in a manufacturing company?

Accepted Answer

Factory supervisor’s salary

Question 3

Which factor does NOT affect cost classification?

Accepted Answer

The color of the product

Question 4

A company’s direct materials purchased during the year were $$60,000. Beginning inventory was 10$$,000 and ending inventory was $8,000. What is the cost of direct materials used?

Accepted Answer

$$60,000 + 10$$,000 - $$8,000 = 62$$,000

Question 5

Which of the following is a prime cost?

Accepted Answer

Direct materials + Direct labor

Question 6

If total manufacturing costs are $$120,000, beginning work-in-process inventory is 15$$,000, and ending work-in-process inventory is $10,000, what is the cost of goods manufactured?

Accepted Answer

$$120,000 + 15$$,000 - $$10,000 = 125$$,000

Question 7

Which of the following best describes a variable cost?

Accepted Answer

A cost that varies in total in direct proportion to changes in the level of activity.

Question 8

A company’s fixed cost is $30,000 per month. If the company produces 5,000 units, what is the fixed cost per unit?

Accepted Answer

$6

Question 9

Which of the following statements about product costs is correct?

Accepted Answer

Product costs are initially recorded as inventory and expensed as cost of goods sold when the product is sold.

Question 10

A company’s cost of goods sold is $$400,000. Beginning finished goods inventory is 32$$,000 and ending finished goods inventory is $31,000. What is the cost of goods manufactured?

Accepted Answer

$$400,000 + 32$$,000 - $$31,000 = 401$$,000

Question 11

Which of the following is NOT a manufacturing cost?

Accepted Answer

Selling expenses

Question 12

Which of the following best describes a period cost?

Accepted Answer

A cost that is expensed in the period in which it is incurred.

Question 13

If a company’s total variable cost is $20,000 for producing 4,000 units, what is the variable cost per unit?

Accepted Answer

$5

Question 14

Which of the following is an example of a cost that would be classified as both indirect and fixed?

Accepted Answer

Factory rent

Question 15

A company’s manufacturing overhead includes all of the following EXCEPT:

Accepted Answer

Direct labor

Question 16

Which of the following equations correctly calculates the cost of goods sold?

Accepted Answer

$$	ext{COGS} = 	ext{Beginning Finished Goods Inventory} + 	ext{Cost of Goods Manufactured} - 	ext{Ending Finished Goods Inventory}$$

Question 17

Which of the following would cause the total fixed cost to change?

Accepted Answer

A change in the rental agreement for the factory

Question 18

Which of the following is a conversion cost?

Accepted Answer

Direct labor + Manufacturing overhead

Question 19

If the total cost function is $$y = a + bx$$, where $$a is $$fixed cost and $$b is $$variable cost per unit, what happens to the average cost per unit as $$x$$ increases?

Accepted Answer

It decreases

Question 20

Which of the following best describes the difference between product costs and period costs?

Accepted Answer

Product costs are included in inventory, period costs are expensed in the period incurred.

Cost Concepts and Classifications in Managerial Accounting

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