FAC2602 Assignment 2 Quiz Semester 1
Answers 2024 || Verified Accounting Quiz
Solutions with Step-by-Step Explanations
Description: Comprehensive FAC2602 Assignment 2 Quiz (Semester 1, 2024) with verified and
accurate answers. Includes detailed accounting calculations, cost analysis, and theory
applications. Ideal for UNISA accounting students.
Keywords: FAC2602 assignment 2 quiz 2024 accounting quiz answers unisa accounting
semester 1 verified accounting solutions cost accounting exam prep
Part 1: Conceptual and Theoretical Foundations
1. What is the primary purpose of a manufacturing statement?
a) To calculate the net profit for the period.
b) To determine the selling price of finished goods.
c) To summarize the costs of producing finished goods during a period.
d) To record the purchase of raw materials.
Explanation: The manufacturing statement (or cost of goods manufactured schedule) specifically
details the direct materials, direct labour, and manufacturing overhead costs incurred to
produce finished goods during an accounting period.
2. Direct costs are those that are:
a) Variable costs.
b) Fixed costs.
c) Easily traceable to a specific cost object.
d) Period costs.
Explanation: The key characteristic of a direct cost (like direct materials or direct labour) is that it
can be conveniently and physically traced to a specific cost object, such as a product,
department, or project.
,3. In a manufacturing company, the cost of goods sold is calculated as:
a) Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods
Inventory.
b) Beginning Work-in-Process Inventory + Total Manufacturing Costs - Ending Work-in-Process
Inventory.
c) Sales - Gross Profit.
d) Total Manufacturing Costs + Ending Work-in-Process Inventory.
Explanation: This formula starts with what was already finished, adds what was made during
the period, and subtracts what remains unsold to arrive at the cost of what was actually sold.
4. Depreciation on a factory building is classified as a:
a) Period cost.
b) Direct material cost.
c) Manufacturing overhead cost.
d) Administrative expense.
Explanation: Depreciation on assets used in the production process (like a factory building or
machinery) is an indirect manufacturing cost and is therefore part of manufacturing overhead.
5. Which of the following is a product cost for a manufacturing company?
a) Salary of the company's CEO.
b) Advertising expenses.
c) Rent on the corporate office.
d) Wages of assembly line workers.
Explanation: Wages of workers directly involved in making the product are a direct labour cost,
which is a prime component of product costs.
6. Prime cost consists of:
a) Direct materials and manufacturing overhead.
b) Direct labour and manufacturing overhead.
c) Direct materials and direct labour.
d) Direct materials, direct labour, and manufacturing overhead.
Explanation: Prime cost is the sum of all direct manufacturing costs (Direct Materials + Direct
Labour).
7. Conversion cost is the sum of:
a) Direct materials and direct labour.
b) Direct materials and manufacturing overhead.
, c) Direct labour and manufacturing overhead.
d) Direct materials, direct labour, and manufacturing overhead.
Explanation: Conversion cost is the cost to convert raw materials into finished goods (Direct
Labour + Manufacturing Overhead).
8. Costs that are expensed in the period they are incurred are called:
a) Product costs.
b) Inventoriable costs.
c) Period costs.
d) Conversion costs.
Explanation: Period costs (like selling and administrative expenses) are not tied to production
and are expensed on the income statement in the period they are incurred.
9. A cost that remains constant in total, regardless of activity level, is a:
a) Variable cost.
b) Fixed cost.
c) Mixed cost.
d) Step cost.
Explanation: By definition, a fixed cost (like factory rent) does not change in total within a
relevant range of activity.
10. The relevant range is the range of activity:
a) Where the company makes a profit.
b) Where cost behavior patterns are valid.
c) Where production equals sales.
d) Where fixed costs become variable.
Explanation: The relevant range is the band of normal activity level where the assumptions
about fixed and variable cost behavior hold true.
Part 2: Cost Classification and Behavior
11. The salary of a factory supervisor who oversees the production of multiple product lines is
a:
a) Direct labour cost.
b) Period cost.
c) Direct material cost.
d) Indirect manufacturing cost.
Answers 2024 || Verified Accounting Quiz
Solutions with Step-by-Step Explanations
Description: Comprehensive FAC2602 Assignment 2 Quiz (Semester 1, 2024) with verified and
accurate answers. Includes detailed accounting calculations, cost analysis, and theory
applications. Ideal for UNISA accounting students.
Keywords: FAC2602 assignment 2 quiz 2024 accounting quiz answers unisa accounting
semester 1 verified accounting solutions cost accounting exam prep
Part 1: Conceptual and Theoretical Foundations
1. What is the primary purpose of a manufacturing statement?
a) To calculate the net profit for the period.
b) To determine the selling price of finished goods.
c) To summarize the costs of producing finished goods during a period.
d) To record the purchase of raw materials.
Explanation: The manufacturing statement (or cost of goods manufactured schedule) specifically
details the direct materials, direct labour, and manufacturing overhead costs incurred to
produce finished goods during an accounting period.
2. Direct costs are those that are:
a) Variable costs.
b) Fixed costs.
c) Easily traceable to a specific cost object.
d) Period costs.
Explanation: The key characteristic of a direct cost (like direct materials or direct labour) is that it
can be conveniently and physically traced to a specific cost object, such as a product,
department, or project.
,3. In a manufacturing company, the cost of goods sold is calculated as:
a) Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods
Inventory.
b) Beginning Work-in-Process Inventory + Total Manufacturing Costs - Ending Work-in-Process
Inventory.
c) Sales - Gross Profit.
d) Total Manufacturing Costs + Ending Work-in-Process Inventory.
Explanation: This formula starts with what was already finished, adds what was made during
the period, and subtracts what remains unsold to arrive at the cost of what was actually sold.
4. Depreciation on a factory building is classified as a:
a) Period cost.
b) Direct material cost.
c) Manufacturing overhead cost.
d) Administrative expense.
Explanation: Depreciation on assets used in the production process (like a factory building or
machinery) is an indirect manufacturing cost and is therefore part of manufacturing overhead.
5. Which of the following is a product cost for a manufacturing company?
a) Salary of the company's CEO.
b) Advertising expenses.
c) Rent on the corporate office.
d) Wages of assembly line workers.
Explanation: Wages of workers directly involved in making the product are a direct labour cost,
which is a prime component of product costs.
6. Prime cost consists of:
a) Direct materials and manufacturing overhead.
b) Direct labour and manufacturing overhead.
c) Direct materials and direct labour.
d) Direct materials, direct labour, and manufacturing overhead.
Explanation: Prime cost is the sum of all direct manufacturing costs (Direct Materials + Direct
Labour).
7. Conversion cost is the sum of:
a) Direct materials and direct labour.
b) Direct materials and manufacturing overhead.
, c) Direct labour and manufacturing overhead.
d) Direct materials, direct labour, and manufacturing overhead.
Explanation: Conversion cost is the cost to convert raw materials into finished goods (Direct
Labour + Manufacturing Overhead).
8. Costs that are expensed in the period they are incurred are called:
a) Product costs.
b) Inventoriable costs.
c) Period costs.
d) Conversion costs.
Explanation: Period costs (like selling and administrative expenses) are not tied to production
and are expensed on the income statement in the period they are incurred.
9. A cost that remains constant in total, regardless of activity level, is a:
a) Variable cost.
b) Fixed cost.
c) Mixed cost.
d) Step cost.
Explanation: By definition, a fixed cost (like factory rent) does not change in total within a
relevant range of activity.
10. The relevant range is the range of activity:
a) Where the company makes a profit.
b) Where cost behavior patterns are valid.
c) Where production equals sales.
d) Where fixed costs become variable.
Explanation: The relevant range is the band of normal activity level where the assumptions
about fixed and variable cost behavior hold true.
Part 2: Cost Classification and Behavior
11. The salary of a factory supervisor who oversees the production of multiple product lines is
a:
a) Direct labour cost.
b) Period cost.
c) Direct material cost.
d) Indirect manufacturing cost.
