Multiple Choice Questions

1.Indirect labor is a part of:

A) Prime cost.
B) Conversion cost.
C) Period cost.
D) Nonmanufacturing cost.
2.The salary paid to the president of King Company would be classified on the income statement
as a(n):
A) administrative expense.
B) direct labor cost.
C) manufacturing overhead cost.
D) selling expense.
3.Direct labor cost is a part of:
A)
B)
C)
D)

Conversion cost Prime cost

No
No
No
Yes
Yes
Yes
Yes
No

4.Direct material cost is a:

A)
B)
C)
D)

Conversion cost Prime cost

No
No
No
Yes
Yes
Yes
Yes
No

5.Prime cost and conversion cost share what common element of total cost?
A) Direct materials.
B) Direct labor.
C) Variable overhead.
D) Fixed overhead.
6. The following costs were incurred in January:
Direct materials..............................
Direct labor....................................
Manufacturing overhead................
Selling expenses.............................

$33,00
0
$28,00
0
$69,00
0
$16,00

Administrative expenses................

0
$21,00
0

Conversion costs during the month totaled:

A) $97,000
B) $167,000
C) $102,000
D) $61,000
7.Abair Company's manufacturing overhead is 20% of its total conversion costs. If direct labor is
$38,000 and if direct materials are $35,000, the manufacturing overhead is:
A) $18,250
B) $9,500
C) $8,750
D) $152,000
8.Using the following data for March, calculate the cost of goods manufactured:
Direct materials......................................................
Direct labor............................................................
Manufacturing overhead........................................
Beginning work in process inventory....................
Ending work in process inventory.........................

$29,00
0
$19,00
0
$27,00
0
$11,00
0
$12,00
0

The cost of goods manufactured was:

A) $74,000
B) $86,000
C) $76,000
D) $75,000

9.Last month a manufacturing company had the following operating results:

Beginning finished goods inventory................
Ending finished goods inventory.....................
Sales.................................................................

$72,000
$66,000
$465,00
0

Gross margin....................................................

$88,000

What was the cost of goods manufactured for the month?

A) $371,000
B) $459,000
C) $383,000
D) $377,000

10.The following information is taken from the records of CL Company for last year:
Direct materials......................................................
Manufacturing overhead........................................
Total manufacturing costs......................................
Beginning work in process inventory....................
Cost of goods manufactured..................................

$5,000
$6,000
$17,00
0
$1,000
$15,00
0

What are the correct amounts for direct labor and ending work in process inventory?

A)
B)
C)
D)

Direct
Ending Work
Labor
in Process
$12,000
$2,000
$11,000
$2,000
$6,000
$1,000
$6,000
$3,000

11.The following information is taken from the records of DW Company for last year:
Direct materials.............................................
Direct labor...................................................
Manufacturing overhead...............................
Ending work in process inventory................
Cost of goods manufactured.........................

$8,000
$3,000
$11,00
0
$5,000
$19,00
0

The amount of beginning work in process inventory is:

A) $24,000
B) $2,000
C) $22,000
D) $3,000

12. Use the following to answer questions 12-1: 12-4:

The following data (in thousands of dollars) have been taken from the accounting records of
Karsen Corporation for the just completed year.
Sales.......................................................................
Raw materials inventory, beginning......................
Raw materials inventory, ending...........................
Purchases of raw materials.....................................
Direct labor............................................................
Manufacturing overhead........................................
Administrative expenses........................................
Selling expenses.....................................................
Work in process inventory, beginning...................
Work in process inventory, ending........................
Finished goods inventory, beginning.....................
Finished goods inventory, ending..........................

$93
0
$70
$40
$19
0
$15
0
$21
0
$90
$12
0
$80
$70
$90
$14
0

Use these data to answer the following series of questions.

12-1. The cost of the raw materials used in production during the year (in thousands of dollars)
was:
A) $230
B) $220
C) $160
D) $260
12-2.The cost of goods manufactured (finished) for the year (in thousands of dollars) was:
A) $590
B) $650
C) $660
D) $570
12-3. The cost of goods sold for the year (in thousands of dollars) was:
A) $680
B) $540
C) $640
D) $730

12-4. The net operating income for the year (in thousands of dollars) was:
A) $180
B) $170
C) $390
D) $190

13. Supply the missing data in the following cases. Each case is independent:
Case 1

Case 2

Case 3

Case 4

Beg. raw materials inventory

2,000

1,500

1,000

Purchases of raw materials

6,000

7,500

4,000

3,000

1,000

1,500

4,500

5,000

3,000

3,000

7,000

4,000

Manufacturing overhead

5,000

4,000

9,000

Total manufacturing cost

18,500

20,000

Beg. work-in-process inventory

2,500

3,000

End. work-in-process inventory

1,000

4,000

3,000

Cost of goods manufactured

18,000

14,000

Sales

30,000

21,000

36,000

40,000

Beg. finished goods inventory

1,000

2,500

2,000

Cost of goods manufactured

17,500

End. finished goods inventory

1,500

4,000

3,500

Cost of goods sold

17,000

18,500

Gross margin

13,000

17,500

3,500

4,000

5,000

9,000

End. Raw materials inventory

Direct materials used in production
Direct labor

Selling expenses
Net operating income