Acct 2521 Final Exam Updated Questions And Correct Answers

ACCT 2521 FINAL EXAM UPDATED QUESTIONS AND
CORRECT ANSWERS
Question:
1. materials used in a factory that are not an integral part of the final product, such as cleaning
supplies, should be classified as:
Answer:
indirect materials, manu-facturing overhead

Question:
2. indirect materials, indirect labor, maintenance and re-pairs on production equipment, depreciation,
and in-surance on manufacturing facilities
Answer:
manufacturing overhead costs

Question:
3. All product costs
Answer:
direct materials, direct la-bor, and moh, inventories

Question:
4. product costs that have become expenses can be found in
Answer:
cost of goods sold

Question:
5. Period costs include
Answer:
selling and administrative expenses

Question:
6. which is an example of a period cost in a company that makes clothing?
Answer:
advertising cost for a new line of clothing

Question:
7. Within the relevant range, variable costs per unit will:
Answer:
remain constant

Question:
8. Within the relevant range, variable costs in total will:
Answer:
increase and decrease with production levels

Question:
9. An example of a committed fixed cost

, Answer:
taxes on real estate, rent, depreciation, long term equipment leases, salaries of upper management

Question:
10. A company prepays insurance for a 3 year period. The premium for the 3 years is $2,100 and is
paid at the be-ginning of the 1st year. 60% of the premium applies to manufacturing operations and
40% applies to selling & administrative activities. What amounts should be considered product and
pe-riod costs for the first year of coverage?
Answer:
Step 1: annual insurance exp = 2100/3 = 700 product costs = .60 x 700 = 420 period costs = .40 x 700
= 280 *Product costs of $420, period costs of $280.*

Question:
11. Direct Materials .......... $113k Utilities, factory ........... $5k Administrative salaries ......... $81k
Indirect labor .............. $25k Sales commissions ........ $48k Depr. of production equipment ........
$20k Depr. of admin. equipment ......... $30k Direct labor ............ $129k Advertising ............ $135k
The total product costs listed above is:
Answer:
Step 1: Product costs in-clude: dm, utilities, indirect labor, depr. of production equipment, and dl:
-->Plug in: 113k + 5k + 25k + 20k +129k = *$292,000*

Question:
12. Direct Materials .......... $113k Utilities, factory ........... $5k Administrative salaries ......... $81k
Indirect labor .............. $25k Sales commissions ........ $48k Depr. of production equipment ........
$20k Depr. of admin. equipment ......... $30k Direct labor ............ $129k Advertising ............ $135k
The total period costs listed above is:
Answer:
Step 1: period costs in-clude: admin. salaries, sales commissions, depr. of admin. equipment, and
advertising: -->Plug in: 81k + 48k + 30k + 135k = *$294,000*

Question:
13. Company reported sales of $1,555,500 and cogs of $1,025,100 for December. The company's
total variable selling exp. was $96,900; total fixed selling exp. was $34,300; total variable admin.
exp. was $71,400; and total fixed admin. exp. was $100,100. The cogs in this company is a variable
cost. The contribution margin for December is:
Answer:
Step 1: CM = sales - vari-able expenses (cogs, var selling & admin exp., var admin. exp.) -->Plug in:
1555500 -(1025100+96900+71400) = *$362,100 CM*

Question:
14. Company reported sales of $1,555,500 and cogs of $1,025,100 for December. The company's
total variable selling exp. was $96,900; total fixed selling exp. was $34,300; total variable admin.
exp. was $71,400; and total fixed admin. exp. was $100,100. The cogs in this company is a variable
cost. The gross margin for December is:
Answer:
Step 1: GM = sales - cogs -->Plug in: 1555500 -1025100 = *$530,400 GM*