JWMI 530 knowlege check 6

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School

Sacramento City College *

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Course

530

Subject

Industrial Engineering

Date

Feb 20, 2024

Type

pdf

Pages

7

Uploaded by daniellexk91

Question 1 0.4 / 0.4 pts Match each cost to its cost driver. Correct! Baking pizzas Cost of wood for wood-burning pizza oven Correct! Running machine Cost of machine lubricants Correct! Producing Screws Cost of round steel bars Correct! Flying the airliner Cost of jet fuel for an airliner Explanation: A cost driver is the activity that gives rise to (or causes to exist) the cost. You can recognize the cost driver because it's always a verb. For example, in this case there would be no need for wood to fuel the oven unless you were “baking” p izzas in the oven. The cost driver is the word "baking." Likewise, in this case, there would be no reason for lubricating the machine unless you were "running" the machine. Even though the cost of lubricants is an indirect cost, in this case, it's still a cost of production. Again, in this case this cost would be allocated to the product using machine hours. Finally, there would be no reason to purchase round steel bars unless we were "producing" screws. Question 2 0 / 0.4 pts All costs are fixed in the short-term, and all costs are variable in the long-term. Correct Answer You Answered TRUE Source: Finance for Nonfinancial Managers – p. 126 Explanation: Costs are expired expenditures. For example, raw material inventory is an expenditure classified on the balance sheet as an asset. It becomes a cost once used and enters into product. The reason this statement is true is that, even in the long-term, a lease on a production facility will expire. That expiration transforms what was a fixed cost into a variable cost again. Even direct costs, such as raw material, can be fixed in the short
term. This is true because we may have entered into a purchasing contract specifying the price of a raw material for a period of time. Question 3 Correct! Direct materials Metal sheets for stamping truck fenders Correct! Manufacturing Overhead Salary of Stamping Department Supervisor Correct! Direct Labor Stamping machine operator producing truck fenders Source: Finance for Nonfinancial Managers – Chapter 8 Explanation: Direct materials enter into the production of the product. In this case, the metal sheets for producing the truck fenders are direct materials. Manufacturing overhead represents a "pool" of shared costs related to a manufacturing process or department. In this case, the salary of the stamping department supervisor is such a pooled cost. Direct labor it represents wages and benefits paid to an individual directly related to producing a product. In this case, the stamping machine operator producing the truck fenders is direct labor. Correct! Question 4 0.2 / 0.4 pts Match each term to its correct definition. Correct! Job costing Collecting costs for a manufacturing process that's geared to producing products in individual lots and assigning cost to those jobs. You Answered Process costing A list of all the parts and components that go into manufacturing a product, including any raw material. Correct Answer
Collecting all costs incurred in a continuous process, then averaging the costs over all units produced. You Answered Bill of materials Collecting all costs incurred in a continuous process, then averaging the costs over all units produced. Correct Answer A list of all the parts and components that go into manufacturing a product, including any raw material. Correct! Standard costing A management tool that estimates the overall cost of production, assuming normal operations. Question 5 0.2 / 0.4 pts Match each term to its corresponding definition. You Answered Conversion costs Costs that increase in relation to sales but at a slower pace and have a combination of types of costs. Correct Answer The sum of all the direct labor and manufacturing overhead costs that belong to a department and process. Correct! Variable costs Costs that increase in direct relation to sales volume. Correct! Fixed costs Costs that essentially remain unchanged even when sales increase.
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