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Exam 1: Managerial Accounting and Cost Concepts

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Question 71

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Advertising costs are considered product costs for external financial reports because they are incurred in order to promote specific products.

A) True
B) False

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Question 72

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Traditional format income statements are prepared primarily for external reporting purposes.

A) True
B) False

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Question 73

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In October,Patnode Inc. ,a merchandising company,had sales of $294,000,selling expenses of $27,000,and administrative expenses of $35,000.The cost of merchandise purchased during the month was $211,000.The beginning balance in the merchandise inventory account was $38,000 and the ending balance was $34,000. Required: Prepare a traditional format income statement for October.

In a traditional format income statement for a merchandising company,the cost of goods sold reports the product costs attached to the merchandise sold during the period.

Aberge Company's manufacturing overhead is 60% of its total conversion costs.If direct labor is $38,000 and if direct materials are $21,000,the manufacturing overhead is:

Which one of the following costs should NOT be considered a direct cost of serving a particular customer who orders a customized personal computer by phone directly from the manufacturer?

Each of the following would be a period cost except:

Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. -The best estimate of the total variable manufacturing cost per unit is:

Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture?

Selling and administrative expenses are product costs under generally accepted accounting principles.

All costs incurred in a merchandising firm are considered to be period costs.

The following costs were incurred in September: $\begin{array}{ll}\text { Direct materials } & \$ 39,000 \\\text { Direct labor } & \$ 23,000 \\\text { Manufacturing overhead } & \$ 17,000 \\\text { Selling expenses } & \$ 14,000 \\\text { Administrative expenses } & \$ 27,000\end{array}$ Prime costs during the month totaled:

Dabney Corporation has provided the following production and total cost data for two levels of monthly production volume.The company produces a single product. The best estimate of the total monthly fixed manufacturing cost is:

Manufacturing overhead consists of:

In describing the cost formula equation Y = a + bX,which of the following statements is correct?

Fiene Sales, Inc., a merchandising company, reported sales of 2,200 units in June at a selling price of $600 per unit. Cost of goods sold, which is a variable cost, was $364 per unit. Variable selling expenses were $23 per unit and variable administrative expenses were $33 per unit. The total fixed selling expenses were $30,500 and the total administrative expenses were $55,300. -The gross margin for June was:

In any decision making situation,sunk costs are irrelevant and should be ignored.

In external financial reports,factory utilities costs may be included in an asset account on the balance sheet at the end of the period.

Gambarini Corporation is a wholesaler that sells a single product.Management has provided the following cost data for two levels of monthly sales volume.The company sells the product for $197.80 per unit. $\begin{array}{lrr}\text { Sales volume (units) .}&6,000 & 7,000 \\\text {Cost of sales }&\$ 486,600 & \$ 567,700 \\\text {Selling and administrative costs. }&\$ 612,600 & \$ 624,400\end{array}$ The best estimate of the total monthly fixed cost is:

A partial listing of costs incurred during December at Gagnier Corporation appears below: -The total of the product costs listed above for December is: