Accounting Ch. 1-3
manufacturing overhead combined with direct materials is known as conversion cost. (true/false)
false
If a company increases the number of units produced, within the relevant range, the total per unit cost would a. increase b. decrease c. stay the same
b. Decrease
Conversion cost consist of which of the following? a. manufacturing overhead cost b. direct materials and direct labor cost c. direct labor cost d. direct labor cost and manufacturing overhead cost
d. direct labor cost and manufacturing overhead cost
Enterprise risk management involves a. proactively identifying & managing risks b. accepting the risk c. avoiding the risk d. reducing the risk e. all of the above f. A & C only
e. all of the above
All costs incurred in a merchandising firm are considered to be period costs (true/false)
false
Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm. (true/false)
false
The high low method is the best method to analyze mixed costs since it uses all of the data points (true/false)
false
Property taxes and insurance premiums paid on a factory building are examples of manufacturing overhead (true/false)
true
Direct material cost are generally variable costs? (true/false)
True
advertising costs are considered product costs for external financial reports because they are incurred in order to promote specific products (true/false)
false
Which of the following accounts is debited when direct labor is recorded? a. work in processes b. salaries and wages expense c. salaries and wages payable d. manufacturing overhead
a. work in process
Which terms will make the following statements true? When manufacturing overhead is over applied, the Manufacturing Overhead account has a ___________ balance and applied manufacturing overhead is greater than ___________ manufacturing overhead. a. debit, actual b. credit, actual c. debit, estimated d. credit, estimated
b. credit, actual
The advertising cost that Pepsi incurred to air its commercials during the Super Bowl can best be described as as: a. variable cost b. fixed cost c. product cost d. prime cost
b. fixed cost
In a job-order system, indirect materials that have been previously purchased and that are used in production are recorded as a debit to: a. work in process inventory b. manufacturing overhead c. finished goods inventory d. raw materials inventory
b. manufacturing overhead
Commissions paid to salespersons are a a. product cost b. variable selling expense c. committed cost d. fixed administrative expense
b. variable selling expense
Which of the following cost is an example of a period rather than a product cost? a. depreciation on production equipment b. wages of salespersons c. wages of production machine operators d. insurance on production equipment
b. wages of salespersons
The cost of factory machinery purchased last year is: a. an opportunity cost b. a differential cost c. a direct materials cost d. a sunk cost
d. a sunk cost
in external financial reports, factory utilities costs may be included in an asset account on the balance sheet at the end of the period (true/false)
true
Which of the following costs would not be included as part of manufacturing overhead? a. insurance on sales vehicles b. depreciation of production equipment c. lubricants for production equipment d. direct labor overtime premium
a. insurance on sales vehicles
Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture? a. sheet steel in a file cabinet made by the company b. manufacturing equipment depreciation c. idle time for direct labor d. taxes on a factory building
a. sheet steel in a file cabinet made by the company
Martinez Aerospace Company uses a job-order costing system. The direct materials for Job #045391 were purchased in July and put into production in August. The job was not completed by the end of August. At the end of August, in what account would the direct materials cost assigned to Job #045391 be located? a. raw materials inventory b. work in process inventory c. finished goods inventory d. cost of goods manufactured
b. work in process inventory
A sunk cost is: a. a cost which may be saved by not adopting an alternative b. a cost which may be shifted to the future with little or no effect on current operations. c. a cost which cannot be avoided because it has already been incurred d. a cost which does not entail any dollar outlay but which is relevant to the decision-making process
c. a cost which cannot be avoided because it has already been incurred
Manufacturing overhead consists of: a. all manufacturing cost b. indirect materials but not indirect labor c. all manufacturing costs, except direct materials and direct labor d. indirect labor but not indirect materials
c. all manufacturing costs, except direct materials and direct labor
Each of the following would be a period cost except: a. the salary of the company president's secretary b. the cost of a general accounting office c. deprecation of a machine used in manufacturing d. sales commissions.
c. depreciation of a machine used in manufacturing
The key to success in the Theory of Constrains is to a. eliminate all constraints b. avoid constraints c. manage constraints d. reduce the capacity at the constraint
c. manage constraints
The balance in the work in process account equals: a. the balance in the finished goods inventory account b. the balance in the cost of goods sold account c. the balances on the job cost sheets of uncompleted jobs. d. the balance in the manufacturing overhead account
c. the balances on the job cost sheets of uncompleted jobs
Which of the following companies would most likely use a Job-Order-Costing system? a. a clothing factory likee levi strauss b. a commercial construction Co. c. a greeting card company like Hallmark d. a orange juice company like minute maid e. all of the above f. B & D only
e. all of the above
The potential benefit that is given up when one alternative is selected over another is called sunk cost (true/false)
false
