Q1. Corcetti Company manufactures and sells prewashed denim jeans. Large rolls of denim cloth are purchased and are first washed in a giant washing machine. After the cloth is dried, it is cut up into jean pattern shapes and then sewn together. The completed jeans are sold to various retail chains.
Which of the following terms could be used to correctly describe the cost of the soap used to wash the denim cloth?
| Direct Cost |
Product Cost |
| A) |
Yes |
Yes |
| B) |
Yes |
No |
| C) |
No |
Yes |
| D) |
No |
No |
Q2. The following cost data pertain to the operations of Rademaker Department Stores, Inc., for the month of March.
Corporate headquarters building lease $80,000
Cosmetics Department sales commissions-Northridge Store $7,000
Corporate legal office salaries $75,000
Store manager's salary-Northridge Store $11,000
Heating-Northridge Store $11,000
Cosmetics Department cost of sales-Northridge Store $83,000
Central warehouse lease cost $17,000
Store security-Northridge Store $11,000
Cosmetics Department manager's salary-Northridge Store $4,000
The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores.
What is the total amount of the costs listed above that are direct costs of the Cosmetics Department? A. $83,000 B. $94,000 C. $90,000 D. $127,000
Q3. In April direct labor was 70% of conversion cost. If the manufacturing overhead for the month was $42,000 and the direct materials cost was $28,000, the direct labor cost was: A. $98,000 B. $65,333 C. $18,000 D. $12,000
Q4. Nieman Inc., a local retailer, has provided the following data for the month of March:
| Merchandise inventory, beginning balance |
$ 47,700 |
| Merchandise inventory, ending balance |
$ 44,200 |
| Sales |
$264,500 |
| Purchases of merchandise inventory |
$136,900 |
| Selling expense |
$ 24,100 |
| Administrative expense |
$ 58,700
|
The net operating income for March was: A. $128,600B. $127,600C. $41,300D. $44,000
Q5. Nieman Inc., a local retailer, has provided the following data for the month of March:
| Merchandise inventory, beginning balance |
$50,800 |
| Merchandise inventory, ending balance |
$49,800 |
| Sales |
$262,400 |
| Purchases of merchandise inventory |
$138,500 |
| Selling expense |
$18,500 |
| Administrative expense |
$52,200 |
The cost of goods sold for March was:
$139,500$138,500$137,500$209,200
Q5. The following costs were incurred in April:
| Direct materials |
$40,500 |
| Direct labor |
$36,700 |
| Manufacturing overhead |
$28,800 |
| Selling expenses |
$21,400 |
| Administrative expenses |
$38,800 |
Conversion costs during the month totaled:
A. $65,500B. $166,200 C. $69,300D. $77,200
Q6. The following costs were incurred in April:
| Direct materials |
$39,300 |
| Direct labor |
$23,600 |
| Manufacturing overhead |
$22,200 |
| Selling expenses |
$14,000 |
| Administrative expenses |
$30,800 |
Prime costs during the month totaled:
A. $85,100B. $45,800C. $62,900D. $129,900
Q7. Haab Inc. is a merchandising company. Last month the company's cost of goods sold was $61,700. The company's beginning merchandise inventory was $17,700 and its ending merchandise inventory was $23,100. What was the total amount of the company's merchandise purchases for the month?
A. $61,700B. $67,100C. $56,300D. $102,500
4. At a sales volume of 36,000 units, Carne Company's sales commissions (a cost that is variable with respect to sales volume) total $748,800.
To the nearest whole dollar, what should be the total sales commissions at a sales volume of 32,300 units? (Assume that this sales volume is within the relevant range.) (Do not round intermediate calculations.)
A. $683,360B. $671,840C. $834,576D. $748,800
Q8. Calip Corporation, a merchandising company, reported the following results for October:
| Sales |
$410,000 |
| Cost of goods sold (all variable) |
$173,900 |
| Total variable selling expense |
$21,200 |
| Total fixed selling expense |
$20,500 |
| Total variable administrative expense |
$8,900 |
| Total fixed administrative expense |
$31,000 |
The contribution margin for October is:
A. $358,500B. $206,000C. $236,100D. $154,500