MBA 621 - CHAPTER 2 HANDOUT EXAM QUESTIONS ANSWERED CCORRECTLY LATEST UPDATE 2026
What is a service company? - Answers generates income by providing services instead of physical
products
What is a merchandising company? - Answers sells products it does not manufacture
What is a manufacturing company? - Answers make product and generate them in a large-scale
production of goods that convert raw materials
What are direct materials? - Answers raw materials that become an integral part of the finished
product and whose costs can be conveniently traced to it
What is direct labor? - Answers consists of that portion of labor cost that can be easily traced to a
product
What is overhead? - Answers all manufacturing costs except direct materials and direct labor
Product or Period: the cost of the memory chips used in a radar set - Answers product
Product or Period: factor heating costs - Answers product
Product or Period: factory equipment maintenance costs - Answers product
Product or Period: training costs for new administrating employees - Answers period
Product or Period: the cost of the tools used in assembly - Answers product
Product or Period: the travel costs of the company's salespersons - Answers period
Product or Period: wages and salaries of factory security personnel - Answers product costs
Product or Period: the cost of air-conditioning executive offices - Answers period
Product or Period: wages in the department that bills customers - Answers period
Product or Period: depreciation on fitness equipment used by factory workers - Answers product
Product or Period: telephone expenses incurred by factory management - Answers product
Product or Period: the costs of shipping completed radar sets to customers - Answers period
Product or Period: the wages of the workers who assemble the radar sets - Answers product
Product or Period: the president's salary - Answers period
Product or Period: health insurance premiums for factory personnel - Answers product
DM, DL, OH, Period: depreciation on factory buildings - Answers overhead
DM, DL, OH, Period: leather used to make footballs - Answers direct materials
DM, DL, OH, Period: advertising expense - Answers period costs
DM, DL, OH, Period: a showroom used to display finished products - Answers period
DM, DL, OH, Period: trucks used to deliver merchandise to customers - Answers period cost
DM, DL, OH, Period: salary of the plan supervisor - Answers overhead
DM, DL, OH, Period: salary of the company accountant - Answers period
DM, DL, OH, Period: fabric used to make a sofa - Answers direct materials
DM, DL, OH, Period: depreciation on elevators in administrative building - Answers period
DM, DL, OH, Period: wages of assembly line workers - Answers direct labor
DM, DL, OH, Period: supplies used for factory machinery - Answers overhead
DM, DL, OH, Period: supplies used by sales department - Answers period
DM, DL, OH, Period: forklift truck used in warehouse - Answers period cost
DM, DL, OH, Period: forklift truck used in factory - Answers overhead
DM, DL, OH, Period: cost of workers building the products for customers - Answers direct materials
What costs do prime costs include? - Answers direct materials and direct labors
What costs do conversion costs include? - Answers direct labor and manufacturing overhead
Prime cost or conversion cost: wages of employees that operate painting equipment - Answers both
Prime cost or conversion cost: wages of the plant manager - Answers conversion
Prime cost or conversion cost: steel used in automobile - Answers prime
Prime cost or conversion cost: oil used for assembly line machiner - Answers conversion
Prime cost or conversion cost: paper used for a magazine - Answers prime
Prime cost or conversion cost: wages for printing machine employees - Answers both
Prime cost or conversion cost: glue used to bind magazine - Answers both
Prime cost or conversion cost: maintenance on printing machines - Answers conversion
Variable or Fixed: small glass plates used for lab tests in a hospital - Answers variable
Variable or Fixed: straight-line depreciation of a building - Answers fixed
Variable or Fixed: top management sales - Answers Variable or Fixed:
Variable or Fixed: electrical costs of running machines - Answers variable
What is a service company? - Answers generates income by providing services instead of physical
products
What is a merchandising company? - Answers sells products it does not manufacture
What is a manufacturing company? - Answers make product and generate them in a large-scale
production of goods that convert raw materials
What are direct materials? - Answers raw materials that become an integral part of the finished
product and whose costs can be conveniently traced to it
What is direct labor? - Answers consists of that portion of labor cost that can be easily traced to a
product
What is overhead? - Answers all manufacturing costs except direct materials and direct labor
Product or Period: the cost of the memory chips used in a radar set - Answers product
Product or Period: factor heating costs - Answers product
Product or Period: factory equipment maintenance costs - Answers product
Product or Period: training costs for new administrating employees - Answers period
Product or Period: the cost of the tools used in assembly - Answers product
Product or Period: the travel costs of the company's salespersons - Answers period
Product or Period: wages and salaries of factory security personnel - Answers product costs
Product or Period: the cost of air-conditioning executive offices - Answers period
Product or Period: wages in the department that bills customers - Answers period
Product or Period: depreciation on fitness equipment used by factory workers - Answers product
Product or Period: telephone expenses incurred by factory management - Answers product
Product or Period: the costs of shipping completed radar sets to customers - Answers period
Product or Period: the wages of the workers who assemble the radar sets - Answers product
Product or Period: the president's salary - Answers period
Product or Period: health insurance premiums for factory personnel - Answers product
DM, DL, OH, Period: depreciation on factory buildings - Answers overhead
DM, DL, OH, Period: leather used to make footballs - Answers direct materials
DM, DL, OH, Period: advertising expense - Answers period costs
DM, DL, OH, Period: a showroom used to display finished products - Answers period
DM, DL, OH, Period: trucks used to deliver merchandise to customers - Answers period cost
DM, DL, OH, Period: salary of the plan supervisor - Answers overhead
DM, DL, OH, Period: salary of the company accountant - Answers period
DM, DL, OH, Period: fabric used to make a sofa - Answers direct materials
DM, DL, OH, Period: depreciation on elevators in administrative building - Answers period
DM, DL, OH, Period: wages of assembly line workers - Answers direct labor
DM, DL, OH, Period: supplies used for factory machinery - Answers overhead
DM, DL, OH, Period: supplies used by sales department - Answers period
DM, DL, OH, Period: forklift truck used in warehouse - Answers period cost
DM, DL, OH, Period: forklift truck used in factory - Answers overhead
DM, DL, OH, Period: cost of workers building the products for customers - Answers direct materials
What costs do prime costs include? - Answers direct materials and direct labors
What costs do conversion costs include? - Answers direct labor and manufacturing overhead
Prime cost or conversion cost: wages of employees that operate painting equipment - Answers both
Prime cost or conversion cost: wages of the plant manager - Answers conversion
Prime cost or conversion cost: steel used in automobile - Answers prime
Prime cost or conversion cost: oil used for assembly line machiner - Answers conversion
Prime cost or conversion cost: paper used for a magazine - Answers prime
Prime cost or conversion cost: wages for printing machine employees - Answers both
Prime cost or conversion cost: glue used to bind magazine - Answers both
Prime cost or conversion cost: maintenance on printing machines - Answers conversion
Variable or Fixed: small glass plates used for lab tests in a hospital - Answers variable
Variable or Fixed: straight-line depreciation of a building - Answers fixed
Variable or Fixed: top management sales - Answers Variable or Fixed:
Variable or Fixed: electrical costs of running machines - Answers variable
