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Exam 2: An Introduction to Cost Terms and Purposes

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Question 111

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Indirect costs such as rent,telephone,and depreciation are always costs of the period in which they are incurred and are not associated with inventories.

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Question 112

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When 20,000 units are produced,variable costs are $8 per unit.Therefore,when 10,000 units are produced ________.

A) variable costs will remain at $8 per unit
B) variable costs will total $60,000
C) variable unit costs will increase to $12 per unit
D) variable unit costs will decrease to $3 per unit

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Question 113

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For an automobile manufacturer,period costs include the cost of ________.

Which one of the following is a variable cost for an insurance company?

Insurance companies provide services or intangible products to their customers.

Answer the following questions using the information below: Pederson Company reported the following: $\begin{array}{ll}\text { Manufacturing costs } & \$ 150,000 \\\text { Units manufactured } & 5,000 \\\text { Units sold } & 4,700 \text { units sold for } \$ 75 \text { per unit } \\\text { Beginning inventory } & 100 \text { units }\end{array}$ -What is the manufacturing cost for the ending finished goods inventory?

Service-sector companies report ________.

What are the differences between direct costs and indirect costs? Give an example of each.

For external reporting purposes,indirect manufacturing costs must be allocated to individual units.

A cost may be direct for one cost object and indirect for another cost object.

Answer the following questions using the information below: The East Company manufactures several different products. Unit costs associated with Product ORD210 are as follows: $\begin{array} { l r } \text { Direct materials } & \$ 54 \\\text { Direct manufacturing labor } & 8 \\\text { Variable manufacturing overhead } & 11 \\\text { Fixed manufacturing overhead } & 25 \\\text { Sales commissions ( } \% \text { of sales) } & 5 \\\text { Administrative salaries } & 12 \\\quad \text { Total } & \$ 115\end{array}$ -What is the percentage of the total fixed costs per unit associated with Product ORD105 with respect to total cost?

Variable costs ________.

Designing,marketing,customer services,research and development expenses are operating costs.

Overtime premium is normally considered as a component of direct labor.

Within the relevant range,if there is a change in the level of the cost driver,then ________.

Answer the following questions using the information below: Buildz Manufacturing currently produces 1,000 tables per month. The following per unit data for 1,000 tables apply for sales to regular customers: $\begin{array}{lr}\text { Direct materials } & \$ 50 \\\text { Direct manufacturing labor } & 10 \\\text { Variable manufacturing overhead } & 15 \\\text { Fixed manufacturing overhead } & \underline{30} \\{\text { Total manufacturing costs }} & \$ 105\end{array}$ -What is the per unit cost when producing 3,000 tables?

Which of the following companies is part of the manufacturing sector of our economy?

A cost system determines the cost of a cost object by ________.

Butler Hospital wants to estimate the cost for each patient stay.It is a general health care facility offering only basic services and not specialized services such as organ transplants. Required: a.Classify each of the following costs as either direct or indirect with respect to each patient. b.Classify each of the following costs as either fixed or variable with respect to hospital costs per day. $\begin{array} { l }&\text { Direct }& \text {Indirect }& \text { Fixed }& \text { Variable }\\ \text {Electronic monitoring }&\_\_\_&\_\_\_&\_\_\_&\_\_\_ \\ \text {Meals for patients }&\_\_\_&\_\_\_&\_\_\_&\_\_\_ \\ \text {Nurses' salaries }&\_\_\_&\_\_\_&\_\_\_&\_\_\_ \\ \text {Parking maintenance }&\_\_\_&\_\_\_&\_\_\_&\_\_\_ \\ \text {Security }&\_\_\_&\_\_\_&\_\_\_&\_\_\_ \\\end{array}$

Product costs used for external reporting generally include ________.