Multiple Choice Questions
1. Costs that are capitalized as inventory because they produce benefits expected to have value in the future are called:
a. Period cost
b. Product cost
c. General cost
d. Administrative cost
e. None of the above
2. Costs that are charged to expense because their benefits appear to expire as the costs are incurred are called:
a. Period cost
b. Product cost
c. General cost
d. Administrative cost
e. None of the above
3. A unique product or service that is produced to meet the demands of a particular customer is known as a:
a. Production unit
b. Job process
c. Job
d. Special order
e. All of the above
4. The rate established prior to the beginning of a period that relates estimated overhead to another variable such as estimated direct labor, and that is used to assign overhead cost to jobs, is the :
a. Predetermined overhead application rate
b. Overhead variance rate
c. Estimated labor cost rate
d. Chargeable overhead rate
e. Miscellaneous overhead rate

5. A measure of productivity of a process with respect to its use of direct materials, direct labor, or overhead, and an expression of the activity of a process as the number of units that would have been processed during a period if all effort had been applied to units that were started and finished during the period, is called:
a. Manufacturing overhead
b. Units in process
c. A job cost sheet
d. Equivalent units of production
e. A job lot
6. During a period, Department A finished and transferred 50,000 units to Department B. Of the 50,000 units, 20,000 were 1/5 complete at the beginning of the period, and 30,000 were started and completed during the period. During the period, 10,000 units were started but brought only to a stage of being 3/5 completed. The number of equivalent finished units produced by Department A during the period was:
a. 46,000
b. 50,000
c. 52,000
d. 54,000
e. 56,000
7. A department that incurs cost (or expenses) without directly generating revenue is a:
a. Service center
b. Production center
c. Profit center
d. Cost center
e. Subsidiary center
8. The China Department of the Coulsen Department Store has sales of $282,000, cost of good sold of $198,750, indirect expenses of $19,875, and direct expenses of $41,250. What is the China Department’s overhead contribution as a percentage of sales?
a. 1.75%
b. 1.36%
c. 7.0%
d. 14.9%
e. 29.5 %
9. The amount that the sale of one unit contributes toward recovering fixed costs and profit is the:
a. Gross profit from sales
b. Gross margin per unit
c. Net working capital
d. Margin of safety per unit
e. Contribution margin per unit
10. A company manufactures and sells a product for $80 per unit. The annual fixed costs of manufacturing and selling the product are $45,840, and the variable costs are $60 per unit. The company’s break-even point in units is:
a. 2,292
b. 764
c. 611
d. 573
e. Some other number