Module 1 Mastery Test

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Colorado State University, Global Campus *

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460

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Accounting

Date

Feb 20, 2024

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docx

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Question 1 0 / 1 pts All else being equal, as a company incorporates new automation and the fixed costs of the business increase, the per unit fixed costs will ________. decrease increase stay the same Try again! Please reference Chapter 3 in the section entitled "Volume-Based Cost Drivers" in the Blocher et al. (2022) textbook. Question 2 1 / 1 pts Green Manufacturing Company manufactures plant fertilizer. The materials data is given in the following table: Cost in millions Direct materials inventory, 2/1/18 $ 150 Direct materials purchased $ 320 Direct materials used $ 360 Direct materials inventory, 2/28/18 $ ??? What is the ending direct materials inventory at 2/28/18? $470 $110 $830 $190

Correct! Note calculation as shown: Question 3 1 / 1 pts Tasty Donuts Company’s total revenue is $500,000. Variable costs of manufacturing are $120,000 and fixed costs of manufacturing are $235,000. Variable costs of marketing are $10,000 and fixed costs of marketing are $55,000. What is Tasty Donuts’ operating income? $1,45,000 $3,70,000 $80,000 $2,10,000 Correct! Revenue - variable costs - fixed costs = operating income. $500,000 - $120,000 -$10,000 - $235,000 - $55,000 = $80,000. Question 4 1 / 1 pts What two items related to labor costs often require special consideration to determine if it is a direct or indirect cost? Overtime and fringe benefits

Idle time and office security Overtime and idle time Idle time and administrative salaries Correct! Both idle time and overtime should usually be in indirect costs, but there are some times that it is included in direct costs. Because of how the cost categories are treated, this classification can have a big impact on the product cost. Question 5 1 / 1 pts Kelly’s Dry Cleaners is evaluating three options for its electricity billing plan for the upcoming year. If Kelly’s expects to utilize 1,350 kilowatt hours of power a month, which plan makes the most sense for the company? Fixed Rate Plan: $60 monthly service fee plus $.75 per kilowatt hour per month Variable Plan: $.90 per kilowatt hour per month Hybrid plan: $40 monthly service fee plus $.75 per kilowatt hour up to 1,000; then $.95 per kilowatt hour after 1,000 Fixed Variable Hybrid Correct! The math on the fixed rate plan is $60 + (.75 * 1,350) = 1,072.50. The variable plan is $.90 * 1,350 = 1,215. The hybrid plan is $40 + (.75 *1,000) + (.95 *350) = 1,122.50. Therefore, fixed rate plan makes most sense with a usage estimate of 1,350 per month. Question 6 1 / 1 pts _________ accounting is a type of accounting that the main focus and emphasis of the information needed for it is past-oriented as opposed to forward looking.

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Financial Managerial Correct! Financial accounting information prepared under GAAP is primarily past-oriented as opposed to management accounting, which is generally future-oriented. Question 7 1 / 1 pts All of the following are examples of period costs except ________. research and development costs machine maintenance costs marketing costs customer service costs Correct! Machine maintenance costs are product costs. The remaining costs are all period costs that get expensed in the period in which they are incurred. Question 8 1 / 1 pts For a manufacturing company, which of these costs flow through work-in- process and finished goods accounts and are eventually expensed as cost of goods sold? There is only one entirely correct answer. Period costs Product costs

Variable costs Overhead costs Correct! Product costs are all of the costs of a product that are assets in a company's balance sheet when costs are incurred and are only expensed when the product is sold. Period costs are expensed immediately, regardless of when the product is sold. Variable and overhead costs can be either period or product related, thus are not the correct answer here. Question 9 1 / 1 pts Tangy Tropical Gum Company manufactures fruit punch flavored gum in individually wrapped pieces that are then packaged into 8 oz. plastic bags for sale. Direct materials cost is $100,000 for 400,000 bags. What is the direct materials cost per unit and in total if the production becomes 600,000 bags? $.25, $100,000 $.25, $150,000 $.50, $150,000 $.50, $100,000 Correct! The direct materials are a variable cost in total, but they are fixed on a per unit basis. In the information given, the per unit cost is $.25. By increasing the units to 600,000, it would not increase the per unit cost, but it would increase the total cost. Therefore, 600,000 bags x $.25 per bag = $150,000 direct materials total cost. Question 10 1 / 1 pts In the required reading article “Adapting for Digital Survival” and the Module 1 content discussion about the characteristics of a good cost/managerial

accountant, which of the following is the most likely cause for an accountant being downsized in today’s environment? Need for higher-level decision-making skills Lacking technical ability Insufficient leadership skills Technology automation Correct! As technology brings more automation and artificial intelligence to the business community, repetitive tasks like report generation that accountants perform can be automated and thus are likely to require fewer humans for the department to operate sufficiently. It is recommended (Blocher et al., 2019) that accountants gain technology skills almost as much as accounting technical skills in order to keep themselves as value-added resources. Question 1 0 / 1 pts The title of the person within the finance organization who generally has direct responsibility for the financial accounting and managerial accounting is the ________. Chief Executive Officer Chief Finance Officer Controller Treasurer

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Try again! Please review in the Blocher et al. (2022) textbook Chapter 1, in the section entitled "Management Accounting and the Role of Cost Management." Question 2 1 / 1 pts _________ accounting is a type of accounting that the main focus and emphasis of the information needed for it is past-oriented as opposed to forward looking. Financial Managerial Correct! Financial accounting information prepared under GAAP is primarily past-oriented as opposed to management accounting, which is generally future-oriented. Incorrect Question 3 0 / 1 pts Which of the following costs would not be associated as part of the value chain? Cost of a toll-free telephone line for customer inquiries on product use and care Cost of property insurance on the plant Cost of steel for an automobile manufacturing company Advertising expenses related to the rollout of a new product line Try again! Please review Chapter 2 in the section entitled "Value-Chain Analysis in Computer Manufacturing" in the Blocher et al. (2022) textbook for further guidance.

Question 4 1 / 1 pts Green Manufacturing Company manufactures plant fertilizer. The materials data is given in the following table: Cost in millions Direct materials inventory, 2/1/18 $ 150 Direct materials purchased $ 320 Direct materials used $ 360 Direct materials inventory, 2/28/18 $ ??? What is the ending direct materials inventory at 2/28/18? $470 $110 $830 $190 Correct! Note calculation as shown: Question 5 1 / 1 pts For a manufacturing company, which of these costs flow through work-in- process and finished goods accounts and are eventually expensed as cost of goods sold? There is only one entirely correct answer.

Period costs Product costs Variable costs Overhead costs Correct! Product costs are all of the costs of a product that are assets in a company's balance sheet when costs are incurred and are only expensed when the product is sold. Period costs are expensed immediately, regardless of when the product is sold. Variable and overhead costs can be either period or product related, thus are not the correct answer here. Question 6 1 / 1 pts In the required reading article “Adapting for Digital Survival” and the Module 1 content discussion about the characteristics of a good cost/managerial accountant, which of the following is the most likely cause for an accountant being downsized in today’s environment? Need for higher-level decision-making skills Lacking technical ability Insufficient leadership skills Technology automation Correct! As technology brings more automation and artificial intelligence to the business community, repetitive tasks like report generation that accountants perform can be automated and thus are likely to require fewer humans for the department to operate sufficiently. It is recommended (Blocher et al., 2019) that accountants gain technology skills almost as much

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as accounting technical skills in order to keep themselves as value-added resources. Question 7 1 / 1 pts The number of bills received from vendors is an example of a cost driver for which company function? Accounts Payable Purchasing Production Billing Correct! A cost driver is a variable that causally affects costs over a given time span. The Accounts Payable department handles the processing and payment of bills received from vendors, so the number of bills received would be a cost driver for the department. Question 8 1 / 1 pts All else being equal, as a company incorporates new automation and the fixed costs of the business increase, the per unit fixed costs will ________. decrease increase stay the same Correct! Assuming the number of units produced remains the same, the per unit fixed costs will increase because there are more costs to spread among the same number of units.

Question 9 1 / 1 pts All of the following are examples of period costs except ________. research and development costs machine maintenance costs marketing costs customer service costs Correct! Machine maintenance costs are product costs. The remaining costs are all period costs that get expensed in the period in which they are incurred. Question 10 1 / 1 pts SVC Corporation completes the manufacturing of their product in the same period in which it sells the product, leaving no in-process inventories. Their total revenue is $5,400,000. Direct materials are $730,000, and direct manufacturing labor is $1,200,000. Variable manufacturing overhead is $400,000, and fixed manufacturing overhead is $580,000. Selling and administrative expenses are $365,000. What is the cost of goods sold for this company? $32,75,000 $29,10,000 $21,25,000 $86,75,000

Correct! Cost of goods sold includes only the materials, labor, and manufacturing overhead. Revenue has no impact on cost of goods sold and selling and administrative expenses are not subtracted out until after cost of goods sold has been calculated. As such, cost of goods sold equals $730,000 + 400,000 + 580,000 + 365,000. This equals $2,910,000. Quiz Score: 8 out of 10

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