STUDENT NAME:

MANCHESTER COMMUNITY COLLEGE

Cost Accounting 1

Assessment Exam
Instructions: Answer each of the questions to the best of your ability. Enter a box around the
letter you believe best represents the correct answer.
EXAMPLE QUESTION:
Where is Grant buried?
A. Smith's tomb
B. Jone's tomb
C. McDonald's tomb
D. Grant's tomb
E. Grant never died

REV #3: January 2011

1) All of the following are examples of product costs except:
a. depreciation on the company's administrative offices.
b. salary of the plant manager.
c. insurance on the factory equipment.
d. rental costs of the factory facility.
2) Period costs:

a.are treated as expenses in the period they are incurred

b. are directly traceable to products
c.include direct labor
d. are also referred to as manufacturing overhead costs

3) Axle and Wheel Manufacturing currently produces 1,000 axles per month. The

following per unit data apply for sales to regular customers:

Direct materials
Direct manufacturing labor
Variable manufacturing overhead
Fixed manufacturing overhead
Total manufacturing costs

$30
5
10
40
$85

The plant has capacity for 2,000 axles and is considering expanding production to
1,500 axles. What is the total cost of producing 1,500 axles?
a.
$85,000
b.
$170,000
c.
$107,500
d.
$102,500

4) In the preparation of the schedule of Cost of Goods Manufactured, the accountant

incorrectly included as part of manufacturing overhead the rental expense on the

firm's retail facilities. This inclusion would:
overstate period expenses on the income statement.
overstate the cost of goods sold on the income statement.
understate the cost of goods manufactured.
have no effect on the cost of goods manufactured.

a.
b.
c.
d.

5) In CVP analysis, focusing on target net income rather than operating income:

a.
b.
c.
d.

will increase the breakeven point

will decrease the breakeven point
will not change the breakeven point
does not allow calculation of breakeven point

6) A variable cost is constant if expressed on a per unit basis but the total dollar amount

changes as the number of units increases or decreases.

a. True
b. False

7) As activity increases within the relevant range, fixed costs remain constant on a per

unit basis.
a. True
b. False

8) Which of the following statements is correct with regard to a CVP graph?

a. A CVP graph shows the maximum possible profit.

b. A CVP graph shows the break-even point as the intersection of the total sales
revenue line and the total expense line.
c. A CVP graph assumes that total expense varies in direct proportion to unit sales.
d. A CVP graph shows the operating leverage as the gap between total sales revenue
and total expense at the actual level of sales.

9) How would the following costs be classified (product or period) under variable costing

at a retail clothing store?

a.
b.
c.
d.

Cost of purchasing clothing

Product
Product
Period
Period

Sales commissions
Product
Period
Product
Period

10) The principal difference between variable costing and absorption costing centers on:
a. whether variable manufacturing costs should be included as product costs.
b. whether fixed manufacturing costs should be included as product costs.
c. whether fixed manufacturing costs and fixed selling and administrative
costs should be included as product costs.
d. none of these.
11) Joe has a hot dog cart that he parks on the NY sidewalk and sells hotdogs during the
day. The variable cost of a hot dog is $.90. The selling price of the hot dog is
$2.00. The fixed cost is $3,000 per month which covers the loan for the cart and
the salary Joe needs to make to live. How many hotdogs must Joe sell in one
month in order to break even?
a. 3,300 hot dogs
b. 3,000 hot dogs
c. 2,727.27 hot dogs
d. 2,728 hot dogs

12) Shun Corporation manufactures and sells a hand held calculator. The following
information relates to Shun's operations for last year:
Unit product cost under variable costing.........................
Fixed manufacturing overhead cost for the year.............
Fixed selling and administrative cost for the year...........
Units (calculators) produced and sold.............................

$5.20 per unit

$260,000
$180,000
400,000

What is Shun's unit product cost under absorption costing for last year?
a. $4.10
b. $4.55
c. $5.85
d. $6.30.
Use the following information to answer questions 13 to 15:
Barnett Company uses the weighted-average method in its process costing
system. The company adds materials at the beginning of the process in
Department M. Conversion costs were 75% complete with respect to the 4,000
units in work in process at May 1 and 50% complete with respect to the 6,000
units in work in process at May 31. During May, 14,000 units were started,
12,000 units were completed and transferred to the next department.

13) Calculate the number of equivalent units for materials.

a. 10,000 units
b. 12,000 units
c.
d. 14,000 units
e. 15,000 units
f. 18,000 units
14) Calculate the number of equivalent units for conversion?
a. 10,000 units
b. 12,000 units
c. 14,000 units
d. 15,000 units
e. 18,000 units

15) An analysis of the costs relating to work in process at May 1 and to production
activity for May follows:
Work in process 5/1........................
Costs added during May................
a)
b)
c)
d)

Materials Conversion
$13,800
$3,740
$42,000
$26,260

The total cost per equivalent unit for May was:

$5.02
$5.10
$5.12
$5.25