Question 1

Products, services, departments, and customers may be cost objects.

Answer

true

Question 2

Costs are accounted for in two basic stages:  assignment followed by accumulation.

Answer

true

Question 3

Actual costs and budgeted costs are two different terms referring to the same thing.

Answer

true

Question 4

The same cost may be direct for one cost object and indirect for another cost object.

Answer

true

Question 5

Assigning direct costs poses more problems than assigning indirect costs.

Answer

true

Question 6

Improvements in information-gathering technologies are making it possible to trace more costs as direct.

Answer

true

Question 7

Misallocated indirect costs may lead to promoting products that are not profitable.

Answer

true

Question 8

The materiality of the cost is a factor in classifying the cost as a direct or indirect cost.

Answer

true

Question 9

The cost of a customized machine only used in the production of a single product would be classified as a direct cost.

Answer

true

Question 10

Some fixed costs may be classified as direct manufacturing costs.

Answer

true

Question 11

Fixed costs have no cost driver in the short run, but may have a cost driver in the long run.

Answer

true

Question 12

Costs that are difficult to change over the short run are always variable over the long run.

Answer

true

Question 13

Knowing whether a cost is a period or a product cost helps to estimate total costs at a new level of activity.

Answer

true

Question 14

A decision maker cannot adjust capacity over the short run.

Answer

true

Question 15

Fixed costs vary with the level of production or sales volume.

Answer

true

Question 16

Currently, most administrative personnel costs would be classified as fixed costs.

Answer

true

Question 17

Fixed costs depend on the resources used, not the resources acquired.

Answer

true

Question 18

When making decisions using fixed costs, the focus should be on total costs and not unit costs.

Answer

true

Question 19

When 50,000 units are produced the fixed cost is $10 per unit. Therefore, when 100,000 units are produced fixed costs will remain at $10 per unit.

Answer

true

Question 20

Service-sector companies provide services or intangible products to their customers.

Answer

true

Question 21

Inventoriable costs are reported as an asset when incurred and expensed on the income statement when the product is sold.

Answer

true

Question 22

Cost of goods sold refers to the products brought to completion, whether they were started before or during the current accounting period.

Answer

true

Question 23

Operating income is sales revenue minus cost of goods manufactured.

Answer

true

Question 24

All manufacturing costs are inventoriable costs.

Answer

true

Question 25

All costs reported on the income statement of a service-sector company are period costs.

Answer

true

Question 26

Period costs are never included as part of inventory.

Answer

true

Question 27

Conversion costs include all direct manufacturing costs.

Answer

true

Question 28

Inventory of a manufacturing firm includes goods partially worked on but not yet fully completed.

Answer

true

Question 29

The classification of product and period costs is particularly valuable in management accounting.

Answer

true

Question 30

The wages of a plant supervisor would be classified as a period cost.

Answer

true

Question 31

For external reporting, GAAP requires that costs be classified as either variable or fixed.

Answer

true

Question 32

Overtime premium consists of the wages paid to all workers (for both direct labor and indirect labor) in excess of their straight-time wage rates.

Answer

true

Question 33

A product cost that is useful for one decision may not be useful information for another decision.

Answer

true

Question 34

For external reporting purposes, indirect manufacturing costs must be allocated to individual units.

Answer

true

Question 35

The role of the cost accountant is to tailor the cost calculation to fit the current decision situation.

Answer

true

Question 36

Cost accounting and cost management include calculating various costs, obtaining financial and nonfinancial information, and analyzing relevant information for decision-making.

Answer

true

Question 37

Cost objects include

Accepted Answer

all of the above.

Answer

products.

Answer

customers.

Answer

departments.

Question 38

Actual costs are

Accepted Answer

the costs incurred.

Answer

budgeted costs.

Answer

estimated costs.

Answer

forecasted costs.

Question 39

The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is

Accepted Answer

cost assignment.

Answer

cost accumulation.

Answer

cost tracing.

Answer

conversion costing.

Question 40

The collection of accounting data in some organized way is

Accepted Answer

cost accumulation.

Answer

cost assignment.

Answer

cost tracing.

Answer

conversion costing.

Question 41

Cost tracing is

Accepted Answer

the assignment of direct costs to the chosen cost object.

Answer

a function of cost allocation.

Answer

the process of tracking both direct and indirect costs associated with a cost object.

Answer

the process of determining the actual cost of the cost object.

Question 42

Cost allocation is

Accepted Answer

the assignment of indirect costs to the chosen cost object.

Answer

the process of tracking both direct and indirect costs associated with a cost object.

Answer

the process of determining the actual cost of the cost object.

Answer

a function of cost tracing.

Question 43

The determination of a cost as being either direct or indirect depends upon

Accepted Answer

the cost object chosen.

Answer

the accounting system.

Answer

the allocation system.

Answer

the cost tracing system.

Question 44

Classifying a cost as either direct or indirect depends upon

Accepted Answer

whether the cost can be easily identified with the cost object.

Answer

the behavior of the cost in response to volume changes.

Answer

whether the cost is expensed in the period in which it is incurred.

Answer

whether an expenditure is avoidable or not in the future.

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