Question 11 - IMA 08-P2-104 - Classifications of Costs
The marketing manager of Ames Company has learned the following about a new product that is being introduced by Ames. Sales of this product are planned at $100,000 for the first year. Sales commission expense is budgeted at 8% of sales plus the marketing manager's incentive budgeted at an additional 1/2%. The preparation of a product brochure will require 20 hours of marketing salaried staff time at an average rate of $100 per hour, and 10 hours, at $150 per hour, for an outside illustrator's effort. The variable marketing cost for this new product will be
A.$8,500
B. $10,500
C. $8,000
D. $10,000
Question 12 - CMA 693 3-4 - Classifications of Costs
A fixed cost that would be considered a direct cost is
A.A cost accountant's salary when the cost object is a unit of product.
B. A production supervisor's salary when the cost object is the Production Department.
C. Board of directors' fees when the cost object is the Marketing Department.
D. The rental cost of a warehouse to store inventory when the cost object is the Purchasing Department.
Question 13 - CMA 696 3-29 - Classifications of Costs
Lucy Sportswear manufactures a specialty line of T-shirts using a job-order cost system. During March, the following costs were incurred in completing Job ICU2: direct materials, $13,700; direct labor, $4,800; administrative, $1,400; and selling, $5,600. Factory overhead was applied at the rate of $25 per machine hour, and Job ICU2 required 800 machine hours. If Job ICU2 resulted in 7,000 good shirts, the cost of goods sold per unit would be
A.$6.50
B. $6.30
C. $5.70
D. $5.50
Question 14 - CMA 689 4-13 - Classifications of Costs
Hitchcock Industries has developed two new products but has only enough plant capacity to introduce one of these products this year. The company controller has gathered the following data to assist management in deciding which product should be selected for production.
Hitchcock's fixed overhead includes proportional rent and utilities, machinery depreciation, and supervisory salaries. Selling and administrative expenses are not allocated to products.
| Cost per unit: | Power Drill Power Saw | |
| Raw materials | $22.00 | $18.00 |
| Machining at $12/hr. | 9.00 | 7.50 |
| Assembly at $10/hr. | 15.00 | 5.00 |
| Variable O/H at $8/hr. | 18.00 | 9.00 |
| Fixed O/H at $4/hr. | 9.00 | 4.50 |
| Total unit cost: | $73.00 | $44.00 |
| Suggested selling price | $88.98 | $49.95 |
| Actual research and development costs | $180,000 | $95,000 |
| Proposed advertising and promotion costs | $300,000 | $250,000 |
The costs included in Hitchcock's fixed overhead are
A.Prime costs.
B. Discretionary costs.
C. Committed costs.
D. Sunk costs.
Question 15 - CMA 678 4-11 - Classifications of Costs
Discretionary costs are
A. Likely to respond to the amount of attention devoted to them by a specified manager.
B. Those management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers.
C. Unaffected by current managerial decisions.
D. Governed mainly by past decisions that established the current levels of operating and organizational capacity and that only change slowly in response to small changes in capacity.
Question 16 - CMA 691 3-3 - Classifications of Costs
Adams Manufacturing, Inc. produces farm tractors. The details of its budgeted cost of goods manufactured schedule should come from which of the following schedules?
A.Direct materials used, direct labor, manufacturing overhead, and the change in work-in-process.
B. Purchases, raw material, work-in-process, and finished goods.
C. Cost of goods sold plus or minus the change planned in finished goods.
D. Purchases, direct labor, manufacturing overhead, finished goods, and work-in-process.
Question 17 - CMA 1295 3-19 - Classifications of Costs
Madtack Company's beginning and ending inventories for the month of November are:
| | November 1 | November 30 |
| Direct materials | $67,000 | $62,000 |
| Work-in-process | 145,000 | 171,000 |
| Finished goods | 85,000 | 78,000 |
| | |
| Direct labor | $200,000 |
| Actual factory overhead | 132,000 |
| Direct materials purchased | 163,000 |
| Transportation in | 4,000 |
| Purchase returns and allowances | 2,000 |
Madtack uses one factory overhead control account and charges factory overhead to production at 70% of direct labor cost. The company does not formally recognize over/underapplied overhead until year-end.
Madtack Company's prime cost for November is
A.$170,000
B. $363,000
C. $370,000
D. $168,000
Question 18 - CMA 1282 4-101 - Classifications of Costs
Which of the following is the best example of a variable cost?
A.Interest charges.
B. The corporate president's salary.
C. Property taxes.
D. Cost of raw materials.
Question 19 - CMA 1277 5-5 - Classifications of Costs
An imputed cost is
A.The difference in total costs which results from selecting one alternative instead of another.
B. A cost that does not entail any dollar outlay but is relevant to the decision-making process.
C. A cost that continues to be incurred even though there is no activity.
D. A cost that cannot be avoided because it has already been incurred.
