Accounting 2 Multiple Choice

indirect materials

are a part of factory overhead

standard cost

in a standard cost system the Goods-in-Process Inventory account is kept at: a. actual cost b. standard cost c. average cost d. either a or b

product mix decision

is a decision on how many units of each product to produce and sell

predetermined overhead rate

is determined by dividing the year's estimated factory overhead cost by the estimated total volume of manufacturing activity for the year

labor price standard

is the current wage rate that a company should incur per hour for a specific type of direct labor employed in production

false

true or false: -manufacturing costs become an expense when the company completes the production of the goods.

quantity standard

is the number of units of an input that a company should us to produce one unit of product output in a manufacturing process

opportunity costs

profits that a company foregoes by taking a particular course of action

incremental cost

the increase in total cost that would result from production of an additional unit of output is called:

false

true or false: -in the product mix decision, giving advertising costs to allocate to products, the company will choose the alternative that produces the largest increase in customers

true

true or false: -a manufacturer includes the cost of direct material, direct labor and factory overhead as a cost of goods in process inventory

true

true or false: -no cost incurred prior to making a decision is relevant

true

true or false: -the key to evaluating the profit effects of a company's decision to drop a product is to determine the avoidable costs and the revenue that it would not earn if it discontinued production and sale of the product.

direct materials

which of the following is not a conversion cost? a. direct labor b. direct materials c. indirect labor d. all of the above are conversion costs

a cement producer

which of the following would probably use a process cost accounting system? a. a custom furniture builder b. a cement producer c. a restaurant d. a public accounting firm