ACC Final

Which of the following statements concerning direct and indirect costs is false? A.)A particular cost may be direct or indirect, depending on the cost object. B.)A direct cost is one that can be easily traced to the particular cost object. C.)The factory manager's salary would be classified as an indirect cost of producing one unit of product. D.)Whether a particular cost is classified as direct or indirect does not depend on the cost object

D

When a company implements activity-based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a higher unit cost resulting for the high-volume products. T/F

F

When net income is positive, the degree of operating leverage in a company is smallest near the break-even point and increases as sales volumes rise. T/F

F

When using segmented income statements, the dollar sales for a company to break even equals the traceable fixed expenses divided by the overall CM ratio. T/F

F

Within the relevant range, a change in activity results in a change in variable cost per unit and total fixed cost T/F

F

On a manufacturing company's income statement, direct labor is separately listed as an expense T/F

F

The entire difference between the actual manufacturing overhead cost for a period and the applied manufacturing overhead cost is typically closed to the Work In Process account. T/F

F

The potential benefit that is given up when one alternative is selected over another is called a sunk cost. T/F

F

Under variable costing, fixed manufacturing overhead is treated as a product cost.

F

Using a predetermined overhead rate based on the estimated level of activity for the current period provides more accurate costs for decision-making than if the predetermined overhead rate was based on the level of activity at capacity T/F

F

If manufacturing overhead is underapplied, then: A.)the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred. B.) the Manufacturing Overhead account will have a credit balance at the end of the year. C.)the predetermined overhead rate is too high. D.)actual manufacturing overhead cost is less than estimated manufacturing overhead cost.

A

When closing overapplied manufacturing overhead to Cost of Goods Sold, which of the following would be true? A.)Gross margin will increase. B.)Work in Process will decrease. C.)Net income will decrease. D.)Cost of Goods Sold will increase.

A

Which of the following is an assumption underlying standard CVP analysis? a.)In multiproduct companies, the sales mix is constant. b.)The price of a product or service is expected to change as volume changes. c.)Fixed expenses will change as volume increases. d.)In manufacturing companies, inventories always change.

A

Which of the following statements is false? a.)Manufacturing overhead is incurred only to support some jobs. b.)Manufacturing overhead is an indirect cost that is difficult to trace to a particular job. c.)Manufacturing overhead consists of both variable and fixed costs. d.)Manufacturing overhead is applied to Work in Process using a predetermined overhead rate

A

Job cost sheets contain entries for actual direct material, actual direct labor, and actual manufacturing overhead cost incurred in completing a job. T/F

F

Which of the following statements concerning multiple overhead rate systems is false? A.)In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours. B.)A company may choose to create a separate overhead rate for each of its production departments. C.) A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate. D.)A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate.

A.)

Which of the following statements about using a plantwide overhead rate based on direct labor is correct? A.) Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs are correctly traced to jobs. B.)The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning all overhead costs to jobs. C.) It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver. D.)Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs.

C.)

A company will improve job cost accuracy by using multiple overhead rates even if it cannot identify more than one overhead cost driver. T/F

F

A duration driver provides a simple count of the number of times that an activity occurs. T/F

F

A shift in the sales mix from low-margin items to high-margin items will decrease total profits even though total sales increase. T/F

F

Departmental overhead rates will correctly assign overhead costs in situations where a company has a range of products that differ in volume, lot size, or complexity of production. T/F

F

Generally speaking, when going through the process of computing a predetermined overhead rate, the estimated total manufacturing overhead cost is determined before estimating the amount of the allocation base. T/F

F

If a company closes any underapplied or overapplied manufacturing overhead to the Cost of Goods Sold account, then Cost of Goods Sold will be debited if manufacturing overhead is overapplied for the period. T/F

F

If the overhead rate is computed annually based on the actual costs and activity for the year, the manufacturing overhead assigned to any particular job can be computed as soon as the job is completed. T/F

F

In a contribution format income statement for a manufacturing company, the cost of goods sold is deducted from sales to arrive at the contribution margin. T/F

F

In the Schedule of Cost of Goods Sold, Cost of goods available for sale = Ending finished goods inventory + Cost of goods manufactured. T/F

F

n a job-order costing system, indirect labor cost is usually recorded as a debit to: Manufacturing Overhead. Cost of Goods Sold. Finished Goods. Work in Process.

Manufacturing overhead

A credit balance in the Manufacturing Overhead account at the end of the year means that manufacturing overhead was overapplied. T/F

T

A factory supervisor's salary would be classified as an indirect cost with respect to a unit of product. T/F

T

Advertising is not considered a product cost even if it promotes a specific product. T/F

T

If the predetermined overhead rate is based on the estimated level of activity for the current period, the overhead charged to each product includes the cost of unused capacity. T/F

T

In the Schedule of Cost of Goods Manufactured, Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory − Ending work in process inventory. T/F

T

The sum of all manufacturing costs except for direct materials and direct labor is called manufacturing overhead. T/F

T

When the fixed costs of capacity are spread over the estimated activity of the period rather than the level of activity at capacity, the units that are produced must shoulder the costs of unused capacity. T/F

T

f the predetermined overhead rate is based on the level of activity at capacity, the overhead charged to each product is normally lower than if the predetermined overhead rate had been based on the estimated level of activity for the current period. T/F

T

Materials used in a factory that are not an integral part of the final product, such as cleaning supplies, should be classified as: a.)manufacturing overhead. b.)administrative expense. c.)a period cost. d.)direct materials.

a