The income statements for both a merchandiser and manufacturer would include which of the following?

145) Winner's Sporting Equipment manufactures sporting goods. Selected costs from the past year include:

Plastics used to make products     $ 151,000
Heating and lighting costs for factory     $   65,000
Factory janitor wages     $   67,000
Costs of shipping to customers     $   11,000
Lubricants used in factory equipment     $     2,000
Lighting costs for sales office     $   20,000
Depreciation on factory equipment     $   23,000
Office supplies for sales office     $     6,000
Insurance costs for factory     $   13,000
Maintenance worker wages     $   99,000
Freight-in (on plastics)     $     7,500
Aluminum used to make products     $ 175,000
Assembly-line worker wages     $ 142,000
Salaries of salespeople     $   74,000

Product costs for Winner's Sporting Equipment totaled
A) $724,000.
B) $744,500.
C) $612,000.
D) $806,500.
Answer:  B
Explanation:  B) Calculations: $ 23,000 + 67,000 + 2,000 + 13,000 + 99,000 + 151,000 + 7,500 + 142,000 + 175,000 + 65,000 = $ 744,500
Diff: 3
LO:  2-4
EOC:  E2-21A
AACSB:  Analytical Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

146) Winner's Sporting Equipment manufactures sporting goods. Selected costs from the past year include:

Plastics used to make products     $ 151,000
Heating and lighting costs for factory     $   65,000
Factory janitor wages     $   67,000
Costs of shipping to customers     $   11,000
Lubricants used in factory equipment     $     2,000
Lighting costs for sales office     $   20,000
Depreciation on factory equipment     $   23,000
Office supplies for sales office     $     6,000
Insurance costs for factory     $   13,000
Maintenance worker wages     $   99,000
Freight-in (on plastics)     $     7,500
Aluminum used to make products     $ 175,000
Assembly-line worker wages     $ 142,000
Salaries of salespeople     $   74,000

Period costs for Winner's Sporting Equipment totaled
A) $91,000.
B) $37,000.
C) $188,000.
D) $111,000.
Answer:  D
Explanation:  D) Calculations: $ 11,000 + 20,000 + 6,000 + 74,000 = $ 111,000
Diff: 23
LO:  2-4
EOC:  E2-21A
AACSB:  Reflective Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

147) ABC Company makes wooden furniture. Identify each of the following as either an inventoriable product cost or a period cost. If it is an inventoriable product cost, classify it as direct materials, direct labor, or manufacturing overhead.

A.    ________    Insurance on the plant building
B.    ________    Cost of shipping the furniture to the customers
C.    ________    Assembly line workers' wages
D.    ________    Depreciation on plant equipment
E.    ________    Salesmen's salaries
F.    ________    Cost of various types of wood
G.    ________    Insurance on delivery trucks
H.    ________    Plant forklift operator's salary
Answer: 
A.    Inventoriable product cost, manufacturing overhead
B.    Period cost
C.    Inventoriable product cost, direct labor
D.    Inventoriable product cost, manufacturing overhead
E.    Period cost
F.    Inventoriable product cost, direct materials
G.    Period cost
H.    Inventoriable product cost, manufacturing overhead
Diff: 3
LO:  2-4
EOC:  S2-7
AACSB:  Reflective Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

148) Indicate whether each of the following costs is a product cost or a period cost. Assume a manufacturer.

A)    ________    direct materials used in factory
B)    ________    factory utilities
C)    ________    salespersons' commissions
D)    ________    salary of plant manager
E)    ________    indirect materials used in factory
F)    ________    depreciation expense on store equipment
G)    ________    indirect labor incurred in factory
H)    ________    advertising expense
I)    ________    direct labor incurred in factory
J)    ________    factory machinery repairs and maintenance
K)    ________    depreciation expense on factory machinery
L)    ________    supplies used in store
M)    ________    plant insurance expired
Answer: 
A)    product
B)    product
C)    period
D)    product
E)    product
F)    period
G)    product
H)    period
I)    product
J)    product
K)    product
L)    period
M)    product
Diff: 2
LO:  2-4
EOC:  S2-6
AACSB:  Analytical Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

149) Product costs and period costs receive similar treatment when presented in the financial statements.
Answer:  FALSE
Diff: 2
LO:  2-5
EOC:  S2-12
AACSB:  Reflective Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

150) The income statements of manufacturing companies are more complex than those of service or merchandising companies.
Answer:  TRUE
Diff: 2
LO:  2-5
EOC:  S2-12
AACSB:  Reflective Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

151) The financial statements of a merchandiser are more complex than those of a manufacturer.
Answer:  FALSE
Diff: 2
LO:  2-5
EOC:  E2-22A
AACSB:  Reflective Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

152) Service companies have the most complex accounting with regard to the income statement.
Answer:  FALSE
Diff: 2
LO:  2-5
EOC:  S2-2
AACSB:  Reflective Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

153) Cost of goods sold is a major expense of service companies.
Answer:  FALSE
Diff: 1
LO:  2-5
EOC:  S2-2
AACSB:  Reflective Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

154) The schedule of cost of goods manufactured is prepared before the income statement for a manufacturing company.
Answer:  TRUE
Diff: 2
LO:  2-5
EOC:  E2-25A
AACSB:  Reflective Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

155) Which of the following items is not used when calculating the cost of goods manufactured?
A) Direct materials used
B) Direct labor
C) Salesperson salaries
D) Manufacturing overhead
Answer:  C
Diff: 2
LO:  2-5
EOC:  E2-24A
AACSB:  Analytical Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

156) Before operating income can be determined for a manufacturer, which of the following is calculated?
A) Cost of goods available for sale
B) Cost of goods sold
C) Cost of goods manufactured
D) All of the above
Answer:  D
Diff: 2
LO:  2-5
EOC:  E2-24A
AACSB:  Analytical Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

157) The only difference in the balance sheets of various types of businesses (for example, manufacturing vs. service) is
A) current liabilities.
B) current assets.
C) investments.
D) equity.
Answer:  B
Diff: 2
LO:  2-5
EOC:  E2-25A
AACSB:  Analytical Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

158) The balance sheet of a service company would include which of the following?
A) Factory equipment depreciation
B) Cost of goods manufactured
C) Accounts receivable
D) Cost of goods sold
Answer:  C
Diff: 1
LO:  2-5
EOC:  S2-1
AACSB:  Analytical Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

159) The income statement of a retailer would include which of the following?
A) Cost of goods sold
B) Value of inventory
C) Accounts payable
D) Accounts receivable
Answer:  A
Diff: 1
LO:  2-5
EOC:  E2-22A
AACSB:  Analytical Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits

160) The income statements for both a merchandiser and manufacturer would include which of the following?
A) Operating expenses
B) Direct labor incurred
C) Direct materials used
D) Cost of goods manufactured
Answer:  A
Diff: 2
LO:  2-5
EOC:  E2-24A
AACSB:  Analytical Thinking
Learning Outcome:  Define and use cost-volume-profit analysis to analyze the effects of changes
in costs and volume on a company's profits