TUTORIAL TEST 1

COST FUNCTION

1. The cost of alternative ‘A’ is $25,000 and the cost of alternative ‘B’ is $20,000. In
managerial accounting, the difference of $5,000 in costs of two alternatives would be
termed as:
A. additional cost
B. extra cost
C. differential cost
D. essential cost

2. A cost that is not easily or conveniently traceable to a cost object is known as:
A. collective cost
B. indirect cost
C. additional cost
D. conversion cost

3. Manufacturing cost data for Osbourne Ltd, which uses a job order cost system, are
partly presented below:
Direct materials used ?
Direct labour $ 70,000
Manufacturing overhead applied 63,000
Total manufacturing costs 240,000
Assume that overhead is applied on the basis of direct labour cost. What is the amount of
direct material used?
A. $107,000
B. $133,000
C. $170,000
D. $177,000
4. Price Manufacturing assigns overhead based on machine hours. Department A logs
600 machine hours and Department B shows 1200 machine hours for the period. If the
overhead rate is $10 per machine hour, the entry to assign overhead will show a:
A. Debit to manufacturing overhead applied for $18,000.
B. Credit to work in process — department b for $12,000.
C. Debit to work in process for $12,000.
D. Credit to manufacturing overhead applied for $18,000.

5. Which of the following costs is not a product cost?

A. Depreciation on the plant installed in the factory.
B. văn phòng của nhà máy thì vẫn
B. The electricity cost of the office of factory foreman.
C. The cost of shipping finished products to customers. tính vào nhà máy
D. The cost of fuel used in the factory. C.shipping thì tính vào chi phí
bán hàng
6. Which of the following costs is not a period cost?
A. Advertising cost
B. Sales commission
C. Interest
D. Direct labor

7. One of Dale Ltd’s activity cost pools is machine set-ups, with estimated overhead of
$300,000. Dale produces flares (400 set-ups) and health packs (600 set-ups). How much
of the machine set-up cost pool should be assigned to flares?
A. $0.
B. $120,000.
C. $150,000.
D. $180,000.
8. 3,000 units in a process that are 70% complete, are referred to as:
A. 3,000 equivalent units of production.
B. 900 equivalent units of production.
C. 2,100 equivalent units of production.
D. 900 unequal units of production.

9. The costs incurred to acquire or manufacture a product is known as:

A. Period costs
B. Product costs
C. Admin. costs
D. Real costs

10. Prime cost is:

A. The sum of direct materials and direct labor cost excluding all other costs
B. The total of all cost items that can be directly charged to product units
C. The total cost incurred in producing a finished unit
D. The sum of the large cost items in a product cost

11. Nasreen Ltd presented some of its manufacturing cost data, which uses a job order
cost system, as follow:
Direct materials used $102,000
Direct labour 130,000
Manufacturing overhead applied ?
Total manufacturing costs ?
Assume that overhead is applied on the basis of direct labour cost and the overhead rate is
90%. What are the amounts of Manufacturing overhead applied and total manufacturing
costs?
A. $91,800 and $323,800 respectively
B. $117,000 and $349,000 respectively
C. $104,400 and $336,400 respectively
D. $104,400 and $232,000 respectively

12. Cherian Ltd had Total manufacturing costs of $240,000, including $60,000
manufacturing overhead and $105,000 direct materials cost. What is the overhead rate in
this case?
A. 44%
B. 75%
C. 80%
D. 69%

13. What cost will be payable even if the company is closed?

A. Cost of shut-down
B. Cost of the historical record
C. Cost of sunk
D. Imputed cost

14. Manufacturing cost =?

A. Direct materials cost + Manufacturing overhead cost
B. Direct materials cost + Direct labor cost + Manufacturing overhead cost
C. Direct materials cost + Direct labor cost + Manufacturing overhead cost + Marketing
and admin cost
D. Prime cost + Conversion cost

15. Odile Ltd presented some of its manufacturing cost data, which uses a job order cost
system, as follow:
Total manufacturing costs $340,000
 Work in process, 1/1/13 60,000
Total cost of work in process ?
Work in process, 31/12/13 105,000
Cost of goods manufactured ?
Assume that overhead is applied on the basis of direct labour cost. What is the amount of
Cost of goods manufactured?
A. $295,000
B. $385,000
C. $400,000
D. $505,000

16. Rent for warehouses is a component of what cost?

A. Production cost
B. Distribution cost 16. B
C. Prime cost direct labor +direct material
D. Cost of factory

17. Which of the following costs is treated as indirect labor?

A. Idle time
B. Overtime premium
C. Fringe benefits
D. All the above

18. The benefit forgone when one alternative is selected rather than another is known as:
A. sunk cost
B. opportunity cost
C. differential cost
D. decision cost

19. The Washington Company incurred $50,000 to ship 22,000 liters and $42,000 to ship
18,000 liters. If the company ships 20,000 liters, its expected shipping expense would be
closest to:
A. $40,000
B. $44,000
C. $46,000
D. $48,000

20. The corporate controller’s salary would be considered a(an)

A. Administrative cost
B. Manufacturing cost
C. Selling expense
D. Product cost

21. Which of the following costs is not a period cost?

A. Advertising cost
B. Sales commission
C. Interest
D. Direct labor

22. Which of the following should be classified as indirect labour?

A. Truck drivers in the stores of an engineering company
B. Assembly workers on a car production line
C. Bricklayers in a house building company
D. Machinists in a factory producing clothes
23. Ollie Ltd presented some of its manufacturing cost data, which uses a job order cost
system, as follow:
Direct materials used $103,000
Direct labour 140,000
Manufacturing overhead applied ?
Total manufacturing costs 369,000
Assume that overhead is applied on the basis of direct labour cost. What is overhead rate?
A. 90%
B. 70%
C. 52%
D. 34%

24. If $30,000 direct materials are requisitioned for a job and $7,000 of indirect materials
are requisitioned for general use, the debit to Work in process inventory should be for
$______________.
A. $7,000
B. $23,000
C. $30,000
D. $37,000

25. Which of the following costs for a manufacturing organization would be classified as
production costs?
A. Inspecting all products.
B. Packing the products before moving them to the warehouse.
C. Commission paid to the salespeople.
D. A and B are correct.

26. What are the examples of period cost?

A. marketing expenses
B. distribution expenses
C. customer support expenses
D. all the expenses above.

27. If a processing department has 18,000 units in process at the beginning of the period,
completes and transfers out 50,000 and has 12,000 units in process at the end of the
period, then the number of units started into production during the period was:
A. 44,000 units
B. 56,000 units
C. 20,000 units
D. 30,000 units

28. The predetermined overhead rate may be computed using all of the following activity
bases except:
A. Direct labour costs.
B. Direct labour hours.
C. Machine hours.
D. Indirect labour costs.

29. Which of the following is false about the conversion cost?

A. All manufacturing costs, other than direct material costs, are conversion costs.
B. All manufacturing costs incurred to convert direct materials into finished goods
represent conversion costs.
C. Conversion costs = Direct manufacturing labor costs + Direct material cost +
Manufacturing overhead costs
D. Conversion costs may be prime costs simultaneously.
30. Manufacturing cost data for Houseton Ltd, which uses a job order cost system, are
presented below:
Total manufacturing costs $ 240,000
Work in process, 1/1/20 ?
Total cost of work in process 300,000
Work in process, 31/12/20 ?
Cost of goods manufactured 205,000
What is the amount of Work in process, 31/12/20?
A. $35,000
B. $155,000
C. $60,000
D. $95,000