MIDTERM REVIEW
How to use:
▪ Do these questions blindly which means don’t look at the answers until you come up with an answer yourself - you
want to simulate a test.
▪ This review is by all means is not comprehensive. It just to help you get started. You will not see the questions again
and if you do it is by accident.
▪ You should study the concepts and not memorize questions. In fact, these questions will be very different than the
midterm questions.
MULTIPLE CHOICE QUESTIONS
Figure 2-5.
In July, Econo Company purchased materials costing $21,000 and incurred direct labor cost of $18,000. Overhead totaled
$32,000 for the month. Information on inventories was as follows:
July 1 July 31
Materials $6,200 $7,100
Work in process 700 1,200
Finished goods 3,300 2,700
1. Refer to Figure 2-5. What was the cost of direct materials used in July?
a. $21,000
b. $20,100
c. $21,900
d. $20,500
2. Refer to Figure 2-5. What were the total manufacturing costs in July?
a. $71,000
b. $50,000
c. $69,600
d. $70,100
3. Refer to Figure 2-5. What was the cost of goods manufactured for July?
a. $70,500
b. $70,700
c. $69,600
d. $69,100
4. Refer to Figure 2-5. What was the cost of goods sold for July?
a. $70,200
b. $69,600
c. $71,300
d. $71,100
,5. Refer to Figure 2-5. If Econo Company sold 10,000 units during July and gross margin totaled $29,800, what was the
sales price per unit?
a. $9.94
b. $10.00
c. $10.09
d. $10.11
Select the appropriate classification for each of the following costs.
a. Period
b. Product
6. Advertising costs
7. Cost accountant's salary
8. Factory supervisor's salary
9. Research and development costs
10. Marketing costs
11. Cost of shipping products to customers
12. Supplies for factory washroom
13. Assembly line worker's wages
Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles.
a. direct materials
b. direct labor
c. overhead
d. selling expense
e. administrative expense
14. cost of tires
15. factory supplies
16. factory security costs
17. factory janitorial costs
18. salary of chief executive officer
19. depreciation of vehicles used by sales personnel
20. cost of windshields used in the production process
Select the appropriate classification for each of the items listed below.
a. Product cost
b. Period cost
21. Cost of nails used by a home builder
22. Fees paid to an advertising firm
23. Sugar used in soft drink production
24. Rental cost of executive Lear jet
25. Cost of conference for sales team
26. Factory supervisor's salary
27. Fees paid to outside auditing firm
28. Factory security costs
, Select the appropriate definition for each of the items listed below.
a. period cost
b. direct cost
c. opportunity cost
d. variable cost
e. indirect cost
f. fixed cost
g. product cost
29. A benefit given up when one alternative is chosen over another
30. A cost that stays the same in total regardless of changes in output
31. A cost that is difficult to trace to a cost object
32. A manufacturing cost
33. A cost that is not inventoried
34. A cost that can be easily traced to a cost object
35. A cost that increases in total as output increases
Select the appropriate classification of the items listed below.
a. selling expense
b. administrative expense
c. direct materials
d. direct labor
e. overhead
36. Chief of surgery's salary at a hospital
37. Wages of assembly line workers in an automobile plant
38. Cost of lubricating factory machinery
39. Cost of shipping goods to customers
40. Glue used in the manufacture of furniture
41. Cost of engines in the manufacture of airplanes
42. Salary of chief executive officer
43. A professor's salary at a university
Select the appropriate definition for each of the items listed below.
a. Work in process inventory
b. Finished goods inventory
c. Cost of goods sold
d. Cost of goods manufactured
e. Total manufacturing costs
44. The cost of units finished but not sold at the end of the current period
45. Direct materials + direct labor + overhead
46. The cost of units unfinished at the end of the current period
47. Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory
48. (direct materials + direct labor + overhead) +/− the change in work in process inventory from the beginning to the end
of the current period
49. The range of output over which the assumed cost relationship is valid for normal operations of a firm is called the
a. mixed range.
b. relevant range.
c. linear range.
d. dependent range.
How to use:
▪ Do these questions blindly which means don’t look at the answers until you come up with an answer yourself - you
want to simulate a test.
▪ This review is by all means is not comprehensive. It just to help you get started. You will not see the questions again
and if you do it is by accident.
▪ You should study the concepts and not memorize questions. In fact, these questions will be very different than the
midterm questions.
MULTIPLE CHOICE QUESTIONS
Figure 2-5.
In July, Econo Company purchased materials costing $21,000 and incurred direct labor cost of $18,000. Overhead totaled
$32,000 for the month. Information on inventories was as follows:
July 1 July 31
Materials $6,200 $7,100
Work in process 700 1,200
Finished goods 3,300 2,700
1. Refer to Figure 2-5. What was the cost of direct materials used in July?
a. $21,000
b. $20,100
c. $21,900
d. $20,500
2. Refer to Figure 2-5. What were the total manufacturing costs in July?
a. $71,000
b. $50,000
c. $69,600
d. $70,100
3. Refer to Figure 2-5. What was the cost of goods manufactured for July?
a. $70,500
b. $70,700
c. $69,600
d. $69,100
4. Refer to Figure 2-5. What was the cost of goods sold for July?
a. $70,200
b. $69,600
c. $71,300
d. $71,100
,5. Refer to Figure 2-5. If Econo Company sold 10,000 units during July and gross margin totaled $29,800, what was the
sales price per unit?
a. $9.94
b. $10.00
c. $10.09
d. $10.11
Select the appropriate classification for each of the following costs.
a. Period
b. Product
6. Advertising costs
7. Cost accountant's salary
8. Factory supervisor's salary
9. Research and development costs
10. Marketing costs
11. Cost of shipping products to customers
12. Supplies for factory washroom
13. Assembly line worker's wages
Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles.
a. direct materials
b. direct labor
c. overhead
d. selling expense
e. administrative expense
14. cost of tires
15. factory supplies
16. factory security costs
17. factory janitorial costs
18. salary of chief executive officer
19. depreciation of vehicles used by sales personnel
20. cost of windshields used in the production process
Select the appropriate classification for each of the items listed below.
a. Product cost
b. Period cost
21. Cost of nails used by a home builder
22. Fees paid to an advertising firm
23. Sugar used in soft drink production
24. Rental cost of executive Lear jet
25. Cost of conference for sales team
26. Factory supervisor's salary
27. Fees paid to outside auditing firm
28. Factory security costs
, Select the appropriate definition for each of the items listed below.
a. period cost
b. direct cost
c. opportunity cost
d. variable cost
e. indirect cost
f. fixed cost
g. product cost
29. A benefit given up when one alternative is chosen over another
30. A cost that stays the same in total regardless of changes in output
31. A cost that is difficult to trace to a cost object
32. A manufacturing cost
33. A cost that is not inventoried
34. A cost that can be easily traced to a cost object
35. A cost that increases in total as output increases
Select the appropriate classification of the items listed below.
a. selling expense
b. administrative expense
c. direct materials
d. direct labor
e. overhead
36. Chief of surgery's salary at a hospital
37. Wages of assembly line workers in an automobile plant
38. Cost of lubricating factory machinery
39. Cost of shipping goods to customers
40. Glue used in the manufacture of furniture
41. Cost of engines in the manufacture of airplanes
42. Salary of chief executive officer
43. A professor's salary at a university
Select the appropriate definition for each of the items listed below.
a. Work in process inventory
b. Finished goods inventory
c. Cost of goods sold
d. Cost of goods manufactured
e. Total manufacturing costs
44. The cost of units finished but not sold at the end of the current period
45. Direct materials + direct labor + overhead
46. The cost of units unfinished at the end of the current period
47. Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory
48. (direct materials + direct labor + overhead) +/− the change in work in process inventory from the beginning to the end
of the current period
49. The range of output over which the assumed cost relationship is valid for normal operations of a firm is called the
a. mixed range.
b. relevant range.
c. linear range.
d. dependent range.
