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Question 1 of 20
When absorption costing is used and management bonuses are related to operating
income, managers are more likely to:

A.decreaseinventorylevels.

B.increaseinventorylevels.

C.keepinventorylevelsconsistent.

D.stealfromthecompany.

Question 2 of 20
Which of the following is unique to a process costing system?

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A.Workisnotstartedonaproductuntilanorderisreceived.

B.Directmaterials,directlabor,andmanufacturingoverheadareassignedtothefirstdepartmentonly.

C.Costsforeachprocessstaywiththatprocessuntilthegoodsaremovedtofinishedgoods.

D.EachprocesshasitsownWIPaccount.

Question 3 of 20
The contribution margin is equal to:

A.salesminuscostofgoodssold.

B.salesminusoperatingexpenses.

C.salesminusfixedexpenses.

D.salesminusvariableexpenses.

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Question 4 of 20
On a traditional income statement, sales revenue less cost of goods sold equals:

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A.grossprofit.

B.contributionmargin.

C.operatingincome.

D.operatingexpenses.

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Question 5 of 20
Fun Stuff Manufacturing produces Frisbees using a three-step process that includes
molding, coloring, and finishing. Which of the following accounts is debited for conversion
costs?

A.WIPinventoryfinishing

B.Finishedgoodsinventory

C.Rawmaterialsinventory

D.Costofgoodssold

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Question 6 of 20
Total fixed costs for Purple Figs Company are $52,000. Total costs, both fixed and variable,
are $160,000 if 80,000 units are produced. The fixed cost per unit at 80,000 units would
be:

A.$1.35/unit.

B.$0.65/unit.

C.$2.00/unit.

D.$2.65/unit.

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Question 7 of 20
The representation for fixed cost per unit of activity is:

A.vxdividedbyv.

B.vxdividedbyy.

C.ydividedbyx.

D.fdividedbyx.

Question 8 of 20
The following information is provided by Adametz Company.

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WIPinventory,January1

0units

Unitsstarted

7,500

Unitscompletedandtransferredout

3,300

WIPinventory,December31

4,200

Directmaterials

$15,500

Directlabor

$18,400

Manufacturingoverhead

$9,000

The units in ending WIP inventory were 90% complete for materials and 50% complete for
conversion costs. At the end of the year, what are the equivalent units for conversion
costs?

A.3,750

B.3,300

C.5,400

D.2,100

Question 9 of 20
A company manufactures mirrors. Last month's costs were as follows.

Directmaterials

$90,000

Directlabor

144,000

Manufacturingoverhead

158,000

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What were the conversion costs for the month?

A.$302,000

B.$392,000

C.$234,000

D.$90,000

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Question 10 of 20
When units are moved from one processing department to the next, the cost associated
with those units must also be moved from one WIP account to the next. What are these
costs called?

A.Transportedcosts

B.Transmittedcosts

C.Transferredcosts

D.Conveyedcosts
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Question 11 of 20
The Jones Corporation uses a process system. During the current period, 2,500 units were
started and 1,100 units were completed and transferred out. Ending units were 60%
complete for materials and 45% complete for conversion costs. Direct materials costs
added were $35,405 and conversion costs added were $32,870. There was no beginning
WIP inventory and conversion costs are added evenly throughout the process. At the end
of the period, what are the total equivalent units for conversion costs?

A.1,940

B.1,400

C.1,100

D.1,730

Question 12 of 20
The first step of the 5-step process costing procedure is.

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A.computeoutputintermsofequivalentunits.

B.summarizetotalcoststoaccountfor.

C.computethecostperequivalentunit.

D.summarizetheflowofphysicalunits.

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Question 13 of 20
Fixed costs that are the result of previous management decisions that current managers
have no control over in the short run are called ________ fixed costs.

A.discretionary

B.committed

C.standard

D.past
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Question 14 of 20
In process costing, ________ is/are found by taking the number of partially completed
physical units and multiplying it by the percentage of the process completed.

A.costofgoodssold

B.equivalentunits

C.fixedmanufacturingoverheadcosts

D.conversioncosts

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Question 15 of 20
Fun Stuff Manufacturing produces ping pong balls using a three-step sequential process
that includes molding, coloring, and finishing. When the balls and associated costs are
transferred from the coloring process to the finishing process, which account is credited?

A.WIPinventorycoloring

B.WIPinventorymolding

C.Rawmaterialsinventory


D.WIPinventoryfinishing

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Question 16 of 20
Sugartown Corporation has total sales revenues of $930,000. If its total fixed costs are
$182,000 and its total variable costs are $267,000, then the total contribution margin is:

A.totalrevenueminustotalfixedcosts.

B.totalrevenueminustotalvariablecosts.

C.totalvariablecostsminustotalfixedcosts.

D.equaltooperatingincome.
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Question 17 of 20
The use of either absorption or variable costing will make little difference in companies:

A.usingjustintimeinventorymethods.

B.withlargeinventories.

C.withhighfixedcosts.

D.withhighvariablecosts.

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Question 18 of 20
At Hodgson Corporation, direct materials are added at the beginning of the process, and
conversion costs are uniformly applied. Other details include the following.

BeginningWIPdirectmaterials

$32,000

BeginningWIPconversioncosts

$20,250

Costsofmaterialsadded

$384,100

Costsofconversionadded

$271,125

WIPbeginning(50%forconversion)

19,200units

Unitsstarted

119,500units

Unitscompletedandtransferredout

115,700units

WIPending(60%forconversion)
What are the total equivalent units for conversion costs?

23,000units


A.127,200

B.125,300

C.129,500

D.138,700

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Question 19 of 20
When predicting costs at other volumes using a cost equation derived from either the
high-low method or regression analysis, managers should consider:

A.outliers.

B.generalinflation.

C.seasonality.

D.Alloftheabove

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Question 20 of 20
Which of the following does NOT appear on an income statement prepared using variable
costing?

A.Fixedproductioncosts

B.Contributionmargin

C.Grossmargin

D.Variableproductioncosts

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