ACIS 2116

Which of the following statements is false? (a) Manufacturing costs include direct materials, direct labor, and manufacturing overhead. (b) Indirect labor is included in manufacturing overhead. (c) Raw materials include direct materials and exclude indirect materials. (d) Direct labor can be easily traced to individual units of product.

C

Which of the following statements is true with respect to the cost of goods sold equation?

Cost of goods sold = beginning merchandise inventory + purchases − ending merchandise inventory

Which of the following statements is true with respect to a contribution format income statement?

It subtracts variable expenses from sales to derive a contribution margin.

Cost classifications used for decision making include:

Relevant and irrelevant cost

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

True

Which of the following statements is false regarding job-order costing? (a) It is used in situations where many different products, each with unique features, are produced each period. (b) It is used for manufacturing companies, but not service companies. (c) It accumulates each job's costs on a job cost sheet. (d) It can be used to calculate a job's unit product cost.

b

A predetermined overhead rate includes: (a) estimated total manufacturing overhead cost in the numerator. (b) only the fixed portion of the estimated manufacturing overhead cost in the numerator. (c) only the variable portion of the estimated manufacturing overhead cost in the numerator. (d) estimated total manufacturing overhead cost in the denominator.

A

Which of the following statements is true regarding the formula used in normal costing for applying overhead cost to a specific job? Multiple Choice (a) The predetermined overhead rate is multiplied by the estimated amount of the allocation base used by the job. (b) The actual overhead rate is multiplied by the actual amount of the allocation base used by the job. (c) The predetermined overhead rate is multiplied by the actual amount of the allocation base used by the job. (d) The actual overhead rate is multiplied by the estimated amount of the allocation base used by the job.

C

Which of the following statements is true? (a) Product costs and variable costs are synonyms. (b) Product costs are excluded from the calculation of gross margin. (c) Product costs are included in inventory as reported on the balance sheet. (d) Product costs include sales commissions and advertising.

C

Which of the following statements is false? (a) Conversion costs include manufacturing overhead. (b) Prime costs include direct labor. (c) Conversion costs include direct labor. (d) Prime costs include manufacturing overhead.

D

Assume that a company purchased a piece of equipment five years ago for $250,000. Now the company is deciding whether to replace this piece of equipment with a newer model. In this "keep or replace" decision, the purchase price of the old piece of equipment is an example of a:

Sunk cost

Which of the following statements is true regarding absorption costing? (a) It assigns all manufacturing costs, both fixed and variable, to units of product. (b) It treats some nonmanufacturing costs as product costs and some as period costs. (c) It assigns all nonmanufacturing costs, both fixed and variable, to units of product. (d) It relies on a predetermined overhead rate to apply direct material cost to units of product.

a

Which of the following statements is true regarding job-order costing? (a) It is used in situations where many different products, each with unique features, are produced each period. (b) It is used for manufacturing companies, but not service companies. (c) It relies on a predetermined overhead rate to apply direct material cost to units of product. (d) It relies on a predetermined overhead rate to apply direct labor cost to units of product.

a

Cost classifications used for preparing financial statements include:

product and period cost

A direct cost is a cost that can be easily traced to the particular cost object under consideration. T/F?

true

A variable cost varies, in total, in direct proportion to changes in the level of activity. A variable cost, when expressed on a per unit basis, remains constant. A fixed cost is a cost that remains constant, in total, regardless of changes in the level of activity. Because total fixed costs remain constant for large variations in the level of activity, the average fixed cost per unit becomes progressively smaller as the level of activity increases.

true