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
