1. Continuous improvement
a. Is used to reduce inventory levels.
b. Is applicable only in service businesses.
c. Rejects the notion of “good enough.”
d. Is used to reduce ordering costs.
e. Is applicable only in manufacturing businesses.
2. A direct cost is one that is
a. Variable with respect to the cost object.
b. Traceable to the cost object.
c. Fixed with respect to the cost object.
d. Allocated to the cost object.
e. A period cost.
3. Costs that are incurred as part of the manufacturing process, but are not clearly traceable to the specific unit of product or batches of product, are called
a. Period costs.
b. Factory overhead.
c. Sunk costs.
d. Opportunity costs.
e. Fixed costs.
4. The three major cost components of manufacturing a product are
a. Direct materials, direct labor, and factory overhead.
b. Period costs, product costs, and sunk costs.
c. Indirect labor, indirect materials, and fixed expenses.
d. Variable costs, fixed costs, and period costs.
e. Opportunity costs, sunk costs, and direct costs.
5. A company reports the following for the current year.
|
Finished goods inventory, beginning year |
$6,000 |
|
Finished goods inventory, ending year |
3,200 |
|
Cost of goods sold |
7,500 |
Its cost of goods manufactured for the current year is
a. $1,500.
b. $1,700.
c. $7,500.
d. $2,800.
e. $4,700.