ACT 305 DB Mastery
1/1
Question 2
Dorra Corporation manufactures lawnmowers in five work stations. Dorra's weekly demand is 5,000
mowers, but Dorra can only produce 4,200. According to the theory of constraints, to increase
production output Dorra would benefit the most by concentrating improvement efforts on the:
a. first work station.
b. last work station.
c. largest work station.
Selected:d. slowest work station.This answer is correct.
Correct! The constrained resource is the one that appears to be holding up production, so that would
be the slowest work station.
0/1
Question 3
The cost of worker’s compensation insurance for employees within a manufacturing plant is classified
as a:
a. product cost.
Selected:b. period cost.This answer is incorrect.
c. variable cost.
d. all of these.
Check again! Refer to Chapters 1 and 2 for more information.
0/1
Question 7
Management accountants emphasize past results in the planning phase of duties, specifically in the
forecasting process.
TrueThis answer is incorrect.
False
Check again! Refer to Chapters 1 and 2 for more information.
1/1
Question 8
The value of inventories that have been started but have not yet been completed resides in the
_______________ account.
a. finished goods
b. raw materials
Selected:c. work in processThis answer is correct.
d. none of these
Correct! Inventories that have not been completed are called work-in-process, as additional
production world is required to bring these goods to completion.
1/1
Question 9
Manufacturing overhead:
Selected:a. can be either a variable cost or a fixed cost.This answer is correct.
b. includes the costs of shipping finished goods to customers.
c. includes all factory labor costs.
d. includes all fixed costs.
Correct! Manufacturing overhead has fixed costs such as rent in it as well as variable costs such as
indirect materials in it.
1/1
,Question 1
An opportunity cost is:
a. the difference in total costs which results from selecting one alternative instead of
another.
Selected:b. the benefit forgone by selecting one alternative instead of another.This
answer is correct.
c. a cost which may be saved by not adopting an alternative.
d. a cost which may be shifted to the future with little or no effect on current
operations.
Correct! By definition, an opportunity cost is the benefit we give up by choosing one alternative over
another.
1/1
Question 2
Decentralization refers to:
a. reporting for the company as a whole.
b. focusing reporting on parts of the company.
Selected:c. the delegation of decision-making authority throughout an
organization.This answer is correct.
d. differences in organizations.
Correct! Within a decentralized company, decision making occurs in each division or segment, not by
executives at the corporate administration of the company. This is important in diversified or
multinational firms as managers of various divisions are considered to be most knowledgeable about
operations.
1/1
Question 4
Direct labor is a part of both prime cost and conversion cost.
Selected:TrueThis answer is correct.
False
Correct! Prime costs include direct materials and direct labor; conversion costs include direct labor
and overhead.
1/1
Question 6
The Sarbanes-Oxley Act of 2002 contains all of the following provisions EXCEPT:
Selected:a. A CFO must be a CPA or CMA.This answer is correct.
b. The audit committee of the board of directors of a company must hire,
compensate, and terminate the public accounting firm that audits the company's
financial reports.
c. Severe penalties are established for altering or destroying documents that may
eventually be used in an official proceeding.
d. Both the CEO and CFO must certify in writing that their company's financial
statements and accompanying disclosures fairly represent the results of operations.
Correct! There is no requirement in the Act regarding the background of a CFO.
1/1
Question 7
Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding
computer hardware produced by the company. The cost of this toll-free line would be classified as
which of the following?
a. Product cost
b. Manufacturing overhead
, c. Direct labor
Selected:d. Period costThis answer is correct.
Correct! Cost incurred after the product is ready for sale are considered period costs.
1/1
Question 8
Future operating plans of management are quantitatively expressed in formalized financial statements
as part of a budget.
Selected:TrueThis answer is correct.
False
Correct! Management’s strategic plans are quantified in a budget, which serves as a formal
expression for intended actions or performance for the upcoming period.
1/1
Question 9
An example of a period cost is:
a. fire insurance on a factory building.
b. salary of a factory supervisor.
c. direct materials.
Selected:d. rent on a headquarters building.This answer is correct.
Correct! Any costs related to the corporate office are period costs.
1/1
Question 10
Within the relevant range, the difference between variable costs and fixed costs is:
a. variable costs per unit fluctuate and fixed costs per unit remain constant.
Selected:b. variable costs per unit are constant and fixed costs per unit
fluctuate.This answer is correct.
c. both total variable costs and total fixed costs are constant.
d. both total variable costs and total fixed costs fluctuate.
Correct! On a per unit basis, variable costs are constant and fixed costs fluctuate.
1/1
Question 2
Buford Company rents out a small unused portion of its factory to another company for $1,000 per
month. The rental agreement will expire next month, and rather than renew the agreement, Buford
Company is thinking about using the space itself to store materials. The term to describe the $1,000
per month is:
a. sunk cost.
b. period cost.
Selected:c. opportunity cost.This answer is correct.
d. variable cost.
Correct! By renting out this space, we have a benefit we are giving up because we cannot use it for
storage.
1/1
Question 3
Direct labor is a part of both prime cost and conversion cost.
Selected:TrueThis answer is correct.
False
Correct! Prime costs include direct materials and direct labor; conversion costs include direct labor
and overhead.
1/1
, Question 4
Each of the following would be classified as variable in terms of cost behavior except:
a. cost of shipping goods to customers via express mail.
b. sales commissions.
Selected:c. plant manager's salary.This answer is correct.
d. direct materials.
Correct! A salary is a fixed rate paid to an employee or manager.
1/1
Question 5
The value chain is the official name of the process which “strings together” the physical parts required
to manufacture a product.
True
Selected:FalseThis answer is correct.
Correct! The value chain consists of all processes required to design and produce a product, which
include research and development, design, production, marketing, distribution, and customer
service.
1/1
Question 6
The Institute of Management Accountants' Statement of Ethical Professional Practice stipulates that
management accountants must keep information confidential unless legally required to disclose or
information is already public.
Selected:TrueThis answer is correct.
False
Correct! The Institute of Management Accountants’ Statement of Ethical Professional practice
indicates that management accountants must keep information confidential unless disclosure is
prompted by legal means or has been previously disseminated.
1/1
Question 7
Freight out costs paid by a manufacturing company to deliver its product to its clients would be
classified as which of the following?
a. Product cost
b. Manufacturing overhead
Selected:c. Period costThis answer is correct.
d. Administrative cost
Correct! The cost of distributing product, which includes delivery, is a selling cost, and thus expensed
immediately when incurred and classified as a period cost.
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1/1
Question 2
The following data have been recorded for recently completed Job 501 on its job cost sheet. Direct
materials cost was $3,067. A total of 30 direct labor-hours and 104 machine-hours were worked on the
job. The direct labor wage rate is $12 per labor-hour. The company applies manufacturing overhead on
the basis of machine-hours. The predetermined overhead rate is $11 per machine-hour. The total cost
for the job on its job cost sheet would be:
Selected:a. $4,571This answer is correct.
b. $3,757
1/1
Question 2
Dorra Corporation manufactures lawnmowers in five work stations. Dorra's weekly demand is 5,000
mowers, but Dorra can only produce 4,200. According to the theory of constraints, to increase
production output Dorra would benefit the most by concentrating improvement efforts on the:
a. first work station.
b. last work station.
c. largest work station.
Selected:d. slowest work station.This answer is correct.
Correct! The constrained resource is the one that appears to be holding up production, so that would
be the slowest work station.
0/1
Question 3
The cost of worker’s compensation insurance for employees within a manufacturing plant is classified
as a:
a. product cost.
Selected:b. period cost.This answer is incorrect.
c. variable cost.
d. all of these.
Check again! Refer to Chapters 1 and 2 for more information.
0/1
Question 7
Management accountants emphasize past results in the planning phase of duties, specifically in the
forecasting process.
TrueThis answer is incorrect.
False
Check again! Refer to Chapters 1 and 2 for more information.
1/1
Question 8
The value of inventories that have been started but have not yet been completed resides in the
_______________ account.
a. finished goods
b. raw materials
Selected:c. work in processThis answer is correct.
d. none of these
Correct! Inventories that have not been completed are called work-in-process, as additional
production world is required to bring these goods to completion.
1/1
Question 9
Manufacturing overhead:
Selected:a. can be either a variable cost or a fixed cost.This answer is correct.
b. includes the costs of shipping finished goods to customers.
c. includes all factory labor costs.
d. includes all fixed costs.
Correct! Manufacturing overhead has fixed costs such as rent in it as well as variable costs such as
indirect materials in it.
1/1
,Question 1
An opportunity cost is:
a. the difference in total costs which results from selecting one alternative instead of
another.
Selected:b. the benefit forgone by selecting one alternative instead of another.This
answer is correct.
c. a cost which may be saved by not adopting an alternative.
d. a cost which may be shifted to the future with little or no effect on current
operations.
Correct! By definition, an opportunity cost is the benefit we give up by choosing one alternative over
another.
1/1
Question 2
Decentralization refers to:
a. reporting for the company as a whole.
b. focusing reporting on parts of the company.
Selected:c. the delegation of decision-making authority throughout an
organization.This answer is correct.
d. differences in organizations.
Correct! Within a decentralized company, decision making occurs in each division or segment, not by
executives at the corporate administration of the company. This is important in diversified or
multinational firms as managers of various divisions are considered to be most knowledgeable about
operations.
1/1
Question 4
Direct labor is a part of both prime cost and conversion cost.
Selected:TrueThis answer is correct.
False
Correct! Prime costs include direct materials and direct labor; conversion costs include direct labor
and overhead.
1/1
Question 6
The Sarbanes-Oxley Act of 2002 contains all of the following provisions EXCEPT:
Selected:a. A CFO must be a CPA or CMA.This answer is correct.
b. The audit committee of the board of directors of a company must hire,
compensate, and terminate the public accounting firm that audits the company's
financial reports.
c. Severe penalties are established for altering or destroying documents that may
eventually be used in an official proceeding.
d. Both the CEO and CFO must certify in writing that their company's financial
statements and accompanying disclosures fairly represent the results of operations.
Correct! There is no requirement in the Act regarding the background of a CFO.
1/1
Question 7
Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding
computer hardware produced by the company. The cost of this toll-free line would be classified as
which of the following?
a. Product cost
b. Manufacturing overhead
, c. Direct labor
Selected:d. Period costThis answer is correct.
Correct! Cost incurred after the product is ready for sale are considered period costs.
1/1
Question 8
Future operating plans of management are quantitatively expressed in formalized financial statements
as part of a budget.
Selected:TrueThis answer is correct.
False
Correct! Management’s strategic plans are quantified in a budget, which serves as a formal
expression for intended actions or performance for the upcoming period.
1/1
Question 9
An example of a period cost is:
a. fire insurance on a factory building.
b. salary of a factory supervisor.
c. direct materials.
Selected:d. rent on a headquarters building.This answer is correct.
Correct! Any costs related to the corporate office are period costs.
1/1
Question 10
Within the relevant range, the difference between variable costs and fixed costs is:
a. variable costs per unit fluctuate and fixed costs per unit remain constant.
Selected:b. variable costs per unit are constant and fixed costs per unit
fluctuate.This answer is correct.
c. both total variable costs and total fixed costs are constant.
d. both total variable costs and total fixed costs fluctuate.
Correct! On a per unit basis, variable costs are constant and fixed costs fluctuate.
1/1
Question 2
Buford Company rents out a small unused portion of its factory to another company for $1,000 per
month. The rental agreement will expire next month, and rather than renew the agreement, Buford
Company is thinking about using the space itself to store materials. The term to describe the $1,000
per month is:
a. sunk cost.
b. period cost.
Selected:c. opportunity cost.This answer is correct.
d. variable cost.
Correct! By renting out this space, we have a benefit we are giving up because we cannot use it for
storage.
1/1
Question 3
Direct labor is a part of both prime cost and conversion cost.
Selected:TrueThis answer is correct.
False
Correct! Prime costs include direct materials and direct labor; conversion costs include direct labor
and overhead.
1/1
, Question 4
Each of the following would be classified as variable in terms of cost behavior except:
a. cost of shipping goods to customers via express mail.
b. sales commissions.
Selected:c. plant manager's salary.This answer is correct.
d. direct materials.
Correct! A salary is a fixed rate paid to an employee or manager.
1/1
Question 5
The value chain is the official name of the process which “strings together” the physical parts required
to manufacture a product.
True
Selected:FalseThis answer is correct.
Correct! The value chain consists of all processes required to design and produce a product, which
include research and development, design, production, marketing, distribution, and customer
service.
1/1
Question 6
The Institute of Management Accountants' Statement of Ethical Professional Practice stipulates that
management accountants must keep information confidential unless legally required to disclose or
information is already public.
Selected:TrueThis answer is correct.
False
Correct! The Institute of Management Accountants’ Statement of Ethical Professional practice
indicates that management accountants must keep information confidential unless disclosure is
prompted by legal means or has been previously disseminated.
1/1
Question 7
Freight out costs paid by a manufacturing company to deliver its product to its clients would be
classified as which of the following?
a. Product cost
b. Manufacturing overhead
Selected:c. Period costThis answer is correct.
d. Administrative cost
Correct! The cost of distributing product, which includes delivery, is a selling cost, and thus expensed
immediately when incurred and classified as a period cost.
-----------------------------------------------------------------------------------------------------------------------------------------
1/1
Question 2
The following data have been recorded for recently completed Job 501 on its job cost sheet. Direct
materials cost was $3,067. A total of 30 direct labor-hours and 104 machine-hours were worked on the
job. The direct labor wage rate is $12 per labor-hour. The company applies manufacturing overhead on
the basis of machine-hours. The predetermined overhead rate is $11 per machine-hour. The total cost
for the job on its job cost sheet would be:
Selected:a. $4,571This answer is correct.
b. $3,757
