Professional Documents
Culture Documents
1. a position that is directly related to achieving the basic objectives of an organization is called a _______ position b
a. staff
b. line
c. organization chart
d. controller
e. chief financial adviser
f. decentralization
2. a diagram that shows how responsibility is divided among managers and shows the formal lines of reporting and c
communication is called an ________
a. staff
b. line
c. organization chart
d. controller
e. chief financial adviser
f. decentralization
3. a ______ postion provides service or assistance to other parts of an organization and does not directly achieve the basic a
objectives of the organization
a. staff
b. line
c. organization chart
d. controller
e. chief financial adviser
f. decentralization
4. the delegation of decision-making authority throughout an organization by allowing manager at various operating levels to f
make key decisions relating to their area of responsibility is called _______
a. staff
b. line
c. organization chart
d. controller
e. chief financial adviser
f. decentralization
5. the manager in charge of the accounting department is generally known as the ______ d
a. staff
b. line
c. organization chart
d. controller
e. chief financial adviser
f. decentralization
6. the _______is the member of the top management team who is responsible for providing timely and relevant data to support e
planning and control activities and for preparing financial statements for external users
a. staff
b. line
c. organization chart
d. controller
e. chief financial adviser
f. decentralization
7. A(n) _______is a game plan that enables a company to attract customers by distinguishing itself from competitors c
a. Six Sigma
b. enterprise risk management
c. strategy
d. customer value proposition
e. value chain
f. The Sarbanes-Oxley Act of 2002
8. ______ is a a methor that relies on customer feedback and objective data gathering and analysis techniques to drive process a
improvements
a. Six Sigma
b. The Sarbanes-Oxley Act of 2002
c. stakeholders
d. enterprise risk management
e. customer value proposition
f. value chain
9. A(n) __________is a series of steps that are followed to carry out some task in a business c
a.manufacturing cell
b. lean thinking model
c. business process
d. theory of constraints
e. corporate governance
f. corporate social responsibility
10. the system by which a company is direct and controlled is called _______ c
a. business process
b. stakeholders
c. corporate governance
d. Six Sigma
e. manufacturing cell
f. strategy
11. the process used by a company to help identify the risks that is faces and to develop responses to those risks so that the a
company is reasonably assures of meeting its goals is known as _________
a. enterprise risk management
b. manufacturing cell
c. lean thinking model
d. customer value proposition
e. business process
f. corporate governance
12. a ___________ is a work space that takes employees and equipment from departments that were previously separated from one d
another and places them side-by-side
a. non-value-value activity
b. enterprise risk management
c. The Sarbanes-Oxley Act of 2002
d. manufacturing cell
e. chain management
f. corporate governance
13. the various groups of people such as employees, customers, and suppliers whose interests are tied to a company's a
performance are called ______________
a. stakeholders
b. corporate governance
c. manufacturing cell
d. lean thinking model
e. pulls
f. constraint
14. a(n) ________is anything that prevents and organization or individual from getting more of what it wants d
a. customer value proposition
b. stakeholders
c. non-value-added activity
d. constraint
e. supply chain management
f. non constraint
15. increasing the rate of output of a(n) _________ as a result of an improvement effort is unlikely to have much effect on profits c
a. constraint
b. customer value proposition
c. nonconstraint
d. lean thinking model
e. theory of constraints
f. manufacturing cell
16. a(n) _______ consists of business functions that add value to a company's products and services such as research and e
development, product design, manufacturing, marketing, distribution, and customer service
a. nonconstraint
b. theory of constraint
c. enterprise risk management
d. customer value proposition
e. value chain
f. pulls
17. ________ is a concept whereby organizations consider the needs of all stakeholders when making decisions a
a. Corporate social responsibility
b. theory of constraints
c. lean thinking model
d. Supply Chain Management
e. manufacturing chain
f. customer value proposition
18. a management approach that coordinates business processes across companies to better serve end consumers is known as a
_______
a.supply chain management
b. lean thinking model
c. value chain
d. enterprise risk management
e. corporate social responsibility
f. customer value proposition
19. the ________is a five-step management approach that organizes resources around the flow of business processes and that ______ d
units through those processes in response to customer orders h
a. customer value proposition
b. supply chain management
c. pulls
d. lean thinking model
e. corporate governance
f. theory of constraints
Required:
What would be the practical consequences on the fast-food industry and on consumers if cashiers generally shortchanged
customers at every opportunity? (Select all that apply.)
a. if cashiers routinely short-changed customers whenever the opportunity presented itself most of use would not count our
change before leaving the counter
b. dishonesty on the part of cashiers can have impact on other employees of the restaurant
c. customers do not mind being short-changed by cashiers because everyone does it
d. the net result of widespread dishonestly would be a shrunken economy with a lower growth
25. [The following information applies to the questions displayed below.] b
Richmond, Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a
large-scale remodeling of its stores to attract a more upscale clientele.
Before finalizing these plans, two stores were remodeled as a test. Linda Perlman, assistant controller, was asked to oversee
the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the
sales growth and profitability of these stores. While completing the financial reports, Perlman discovered a sizable inventory
of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the situation
with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it
would diminish the financial results and their bonuses.
according to the IMA's Statement of Ethical Professional Practice would it be ethical for Perlman not to report the inventory as
obsolete
a. yes
b. no
26. [The following information applies to the questions displayed below.] b
Richmond, Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a
large-scale remodeling of its stores to attract a more upscale clientele.
Before finalizing these plans, two stores were remodeled as a test. Linda Perlman, assistant controller, was asked to oversee
the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the
sales growth and profitability of these stores. While completing the financial reports, Perlman discovered a sizable inventory
of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the situation
with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it
would diminish the financial results and their bonuses.
would it be easy for Perlman to take the ethical action in this situation
a.yes
b. no
27. Consumers and attorney generals in more than 40 states accused a prominent nationwide chain of auto repair shops of a
misleading customers and selling them unnecessary parts and services, from brake jobs to front-end alignments. Lynn Sharpe c
Paine reported the situation as follows in "Managing for Organizational Integrity," Harvard Business Review, Volume 72 Issue 3:
In the face of declining revenues, shrinking market share, and an increasingly competitive market . . . management attempted
to spur performance of its auto centers. . . . The automotive service advisers were given product-specific sales quotas—sell so
many springs, shock absorbers, alignments, or brake jobs per shift—and paid a commission based on sales. . . . Failure to meet
quotas could lead to a transfer or a reduction in work hours. Some employees spoke of the "pressure, pressure, pressure" to
bring in sales.
This pressure-cooker atmosphere created conditions under which employees felt that the only way to satisfy top management
was by selling products and services to customers that they didn't really need.
Suppose all automotive repair businesses routinely followed the practice of attempting to sell customers unnecessary parts
and services.
In the face of declining revenues, shrinking market share, and an increasingly competitive market . . . management
attempted to spur performance of its auto centers. . . . The automotive service advisers were given product-specific
sales quotas—sell so many springs, shock absorbers, alignments, or brake jobs per shift—and paid a commission based
on sales. . . . Failure to meet quotas could lead to a transfer or a reduction in work hours. Some employees spoke of the
"pressure, pressure, pressure" to bring in sales.
This pressure-cooker atmosphere created conditions under which employees felt that the only way to satisfy top
management was by selling products and services to customers that they didn't really need.
Suppose all automotive repair businesses routinely followed the practice of attempting to sell customers unnecessary
parts and services.
will this behavior probably affect profits and employment in the automotive service industry
a. yes
b. no
29. Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures period
sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately
owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before
approving such a loan. You have been asked to help prepare the financial statements and were given the following list
of costs:
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
soap and paper towels used by factory workers at the end of a shift
34. Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures product
sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately
owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before
approving such a loan. You have been asked to help prepare the financial statements and were given the following list
of costs:
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
materials used for boxing products for shipments oversees (units are not normally boxed)
37. Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures period
sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately
owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before
approving such a loan. You have been asked to help prepare the financial statements and were given the following list
of costs:
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
advertising costs
38. Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures product
sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately
owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before
approving such a loan. You have been asked to help prepare the financial statements and were given the following list
of costs:
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
the cost of renting rooms at a florida resort for the annual sales conference
43. Suppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures product
sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately
owned, has approached a bank for a loan to help it finance its growth. The bank requires financial statements before
approving such a loan. You have been asked to help prepare the financial statements and were given the following list
of costs:
Required:
Classify the below costs as either product costs or period costs for the purpose of preparing the financial statements
for the bank.
a product cost
b. selling and administrative cost
53. advertising by a dental office b
a. variable b
b. fixed
a. product cost
b. selling and administrative cost
54. apples processed and canned by Del Monte a
a. variable a
b. fixed
a. product cost
b. selling and administrative cost
55. shipping canned apples from a Del Monte plant to customers a
b
a. variable
b. fixed
a. product cost
b. selling and administrative cost
56. insurance on a Bausch and Lomb factory producing contact lenses b
a. variable a
b. fixed
a. product cost
b. selling and administrative cost
57. insurance on IBM's corporate headquarters b
a. variable b
b. fixed
a. product cost
b. selling and administrative cost
58. Salary of a supervisor overseeing production of printers at Hewlett-Packard b
a. variable a
b. fixed
a. product cost
b. selling and administrative cost
59. commissions paid to Encyclopedia Britannica salespersons a
a. variable b
b. fixed
a. product cost
b. selling and administrative cost
60. Depreciation of factory lunchroom facilities at a General Electric plant b
a. variable a
b. fixed
a. product cost
b. selling and administrative cost
61. Steering wheels installed in BMW's a
a. variable a
b. fixed
a. product cost
b. selling and administrative cost
62. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the c
company has rented out a small annex attached to the rear of the building. The company has received a rental income of d
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has b
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
cost behavior
a. fixed cost
b. variable cost
c. none
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
63. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the b
company has rented out a small annex attached to the rear of the building. The company has received a rental income of a
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has d
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
64. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the a
company has rented out a small annex attached to the rear of the building. The company has received a rental income of d
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has a
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
cost behavior
a. fixed cost
b. variable cost
c. none
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
65. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the a
company has rented out a small annex attached to the rear of the building. The company has received a rental income of b
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has d
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
cost behavior
a. fixed cost
b. variable cost
c. none
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
66. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the b
company has rented out a small annex attached to the rear of the building. The company has received a rental income of c
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has d
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
cost behavior
a. fixed cost
b. variable cost
c. none
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
67. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the a
company has rented out a small annex attached to the rear of the building. The company has received a rental income of b
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has c
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
cost behavior
a. fixed cost
b. variable cost
c. none
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
68. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the a
company has rented out a small annex attached to the rear of the building. The company has received a rental income of d
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has a
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
cost behavior
a. fixed cost
b. variable cost
c. none
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
69. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the b
company has rented out a small annex attached to the rear of the building. The company has received a rental income of b
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has d
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
cost behavior
a. fixed cost
b. variable cost
c. none
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
70. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the a
company has rented out a small annex attached to the rear of the building. The company has received a rental income of b
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has d
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
cost behavior
a. fixed cost
b. variable cost
c. none
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
71. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the b
company has rented out a small annex attached to the rear of the building. The company has received a rental income of d
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has a
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
cost behavior
a. fixed cost
b. variable cost
c. none
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
72. Wollogong Group Ltd. of New South Wales, Australia, acquired its factory building about 10 years ago. For several years, the c
company has rented out a small annex attached to the rear of the building. The company has received a rental income of d
$30,000 per year on this space. The renter's lease will expire soon, and rather than renewing the lease, the company has b
decided to use the space itself to manufacture a new product.
Direct materials cost for the new product will total $80 per unit. To have a place to store finished units of product, the
company will rent a small warehouse nearby. The rental cost will be $500 per month. In addition, the company must rent
equipment for use in producing the new product; the rental cost will be $4,000 per month. Workers will be hired to
manufacture the new product, with direct labor cost amounting to $60 per unit. The space in the annex will continue to be
depreciated on a straight-line basis, as in prior years. This depreciation is $8,000 per year.
Advertising costs for the new product will total $50,000 per year. A supervisor will be hired to oversee production; her salary
will be $1,500 per month. Electricity for operating machines will be $1.20 per unit. Costs of shipping the new product to
customers will be $9 per unit.
To provide funds to purchase materials, meet payrolls, and so forth, the company will have to liquidate some temporary
investments. These investments are presently yielding a return of about $3,000 per year.
Required:
For each of the costs associated with the new product decision, indicate whether it would be variable or fixed. If it is a product
cost, indicate whether it would be direct materials, direct labor or a manufacturing overhead cost. If it is not a product cost,
indicate whether it is a period, opportunity or a sunk cost. Select "None" if none of the categories apply for a particular item.
NOTE: Opportunity cost is a special category, and to avoid confusion, do not attempt to classify the cost in any other way
except as an opportunity cost.
cost behavior
a. fixed cost
b. variable cost
c. none
non-product classification
a. period cost
b. opportunity cost
c. sunk cost
d. none
73. electricity to run production equipment a
b
variable b
a. yes a
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
74. rent on a factory building b
a
variable b
a. yes a
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
75. cloth used to make drapes a
b
variable a
a. yes b
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
76. production superintendent's salary b
a
variable b
a. yes a
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
77. wages of laborers assembling a product a
b
variable a
a. yes b
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
78. depreciation of air purification equipment used to make furniture b
a
variable b
a. yes a
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
79. janitorial salaries b
a
variable b
a. yes a
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
80. peaches used in canning fruit a
b
variable a
a. yes b
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
81. lubricants for production equipment a
b
b
variable a
a. yes
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
82. sugar used in soft-drink production a
b
variable a
a. yes b
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
83. property taxes on the factory b
a
variable b
a. yes a
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
84. wages of workers painting a product a
b
variable a
a. yes b
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
85. depreciation on cafeteria equipment b
a
variable b
a. yes a
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
86. insurance on a building used in producing helicopters b
a
variable b
a. yes a
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
87. cost of rotor blades used in producing helicopters a
b
variable a
a. yes b
b. no
fixed
a. yes
b. no
direct
a. yes
b. no
indirect
a. yes
b. no
88. an elmer's glue factory a
a. process costing
b. job-order costing
c. either/or
89. a textbook published such as McGraw-Hill b
a. process costing
b. job-order costing
c. either/or
90. an Exxon oil refinery a
a. process costing
b. job-order costing
c. either/or
91. a facility that makes Minute Maid frozen orange juice a
a. process costing
b. job-order costing
c. either/or
92. a Scott paper mill a
a. process costing
b. job-order costing
c. either/or
93. a custom home builder b
a. process costing
b. job-order costing
c. either/or
94. a shop that customizes vans b
a. process costing
b. job-order costing
c. either/or
95. a manufacturer of specialty chemicals a
a. process costing
b. job-order costing
c. either/or
96. an auto repair shop b
a. process costing
b. job-order costing
c. either/or
97. a firestone tire manufacturing plant a
a. process costing
b. job-order costing
c. either/or
98. an advertising agency b
a. process costing
b. job-order costing
c. either/or
99. a law office b
a. process costing
b. job-order costing
c. either/or