-
web.groovymark@gmail.com
- December 8, 2024
Question 21
Which of the following costs would be included in manufacturing overhead?
A. Direct materials
B. Factory utilities
C. Sales commissions
D. Direct labor
Answer: B
Explanation: Factory utilities are classified as manufacturing overhead because they are indirect costs associated with the production process.
Question 22
Which financial statement reports a company’s financial position at a specific point in time?
A. Income statement
B. Statement of cash flows
C. Statement of retained earnings
D. Balance sheet
Answer: D
Explanation: The balance sheet shows a company’s assets, liabilities, and equity at a specific date.
Question 23
Which costing system is best suited for companies that produce unique or custom products?
A. Process costing
B. Job order costing
C. Activity-based costing
D. Standard costing
Answer: B
Explanation: Job order costing is used for unique or custom products where costs can be traced to individual jobs or batches.
Question 24
What is an example of a mixed cost?
A. Direct materials
B. Factory rent
C. Utilities
D. Property taxes
Answer: C
Explanation: Utilities are a mixed cost because they have both fixed and variable components, depending on the level of production.
Question 25
Which financial statement reports revenues and expenses for a specific period?
A. Balance sheet
B. Income statement
C. Statement of cash flows
D. Statement of retained earnings
Answer: B
Explanation: The income statement shows revenues and expenses over a specific period, resulting in net income or loss.
Question 26
What is the journal entry to record the purchase of raw materials on credit?
A. Debit raw materials; credit cash
B. Debit raw materials; credit accounts payable
C. Debit accounts payable; credit raw materials
D. Debit cash; credit accounts payable
Answer: B
Explanation: When raw materials are purchased on credit, raw materials inventory is debited, and accounts payable is credited.
Question 27
Which account is classified as a current liability?
A. Mortgage payable
B. Equipment
C. Accounts payable
D. Retained earnings
Answer: C
Explanation: Accounts payable is a current liability because it is expected to be settled within one year.
Question 28
What is the contribution margin ratio if the sales price per unit is $40 and the variable cost per unit is $25?
A. 0.25
B. 0.375
C. 0.625
D. 0.75
Answer: C
Explanation: Contribution margin ratio is calculated by dividing the contribution margin per unit by the sales price per unit. (15 / 40 = 0.625).
Question 29
Which of the following is considered a direct cost?
A. Factory supervisor’s salary
B. Sales commissions
C. Office supplies
D. Raw materials
Answer: D
Explanation: Direct costs, such as raw materials, can be traced directly to the production of a product.
Question 30
Which budget includes the expected sales revenue for the period?
A. Sales budget
B. Manufacturing overhead budget
C. Direct materials budget
D. Production budget
Answer: A
Explanation: The sales budget forecasts expected sales revenue and is the starting point for budgeting in most companies.
Question 31
What is the journal entry to record the depreciation of factory equipment?
A. Debit depreciation expense; credit cash
B. Debit accumulated depreciation; credit cash
C. Debit depreciation expense; credit accumulated depreciation
D. Debit cash; credit accumulated depreciation
Answer: C
Explanation: Depreciation expense is debited, and accumulated depreciation is credited to record the depreciation of factory equipment.
Question 32
What is the formula for break-even in units?
A. Fixed costs / Variable costs per unit
B. Sales price per unit / Fixed costs
C. Fixed costs / Contribution margin per unit
D. Variable costs / Sales price
Answer: C
Explanation: Break-even in units is calculated by dividing fixed costs by the contribution margin per unit.
Question 33
Which financial statement shows changes in retained earnings?
A. Balance sheet
B. Statement of cash flows
C. Statement of retained earnings
D. Income statement
Answer: C
Explanation: The statement of retained earnings shows how retained earnings have changed during the period.
Question 34
What is the predetermined overhead rate if estimated overhead is $300,000 and estimated labor hours are 20,000 hours?
A. $10 per labor hour
B. $12 per labor hour
C. $15 per labor hour
D. $20 per labor hour
Answer: C
Explanation: The predetermined overhead rate is calculated by dividing estimated overhead by estimated labor hours. ($300,000 / 20,000 = $15 per labor hour).
Question 35
Which of the following is classified as an investing activity on the statement of cash flows?
A. Purchasing equipment
B. Paying dividends
C. Selling products
D. Borrowing money
Answer: A
Explanation: Purchasing equipment is classified as an investing activity because it involves acquiring long-term assets.
Question 36
Which of the following is classified as a variable cost?
A. Factory rent
B. Direct materials
C. Factory utilities
D. Property taxes
Answer: B
Explanation: Direct materials are a variable cost because they vary in total with the level of production.
Question 37
Which of the following is included in manufacturing overhead?
A. Sales commissions
B. Factory rent
C. Direct labor
D. Office supplies
Answer: B
Explanation: Manufacturing overhead includes indirect costs, such as factory rent, related to the production process.
Question 38
Which financial statement provides information about a company’s liquidity?
A. Income statement
B. Balance sheet
C. Statement of retained earnings
D. Statement of cash flows
Answer: B
Explanation: The balance sheet provides information about a company's liquidity by showing current assets and liabilities.
Question 39
What is the contribution margin per unit if the sales price is $30 and the variable cost is $10?
A. $10
B. $15
C. $20
D. $25
C
Explanation: Contribution margin is calculated by subtracting variable costs from the sales price. ($30 - $10 = $20).
Question 40
Which account is classified as a long-term asset?
A. Inventory
B. Accounts receivable
C. Land
D. Wages payable
Answer: C
Explanation: Land is a long-term asset because it is expected to provide benefits for more than one year.
