raffyrl Midterm 2
A company may use either a job order cost system or a process cost system, but not both.
F
A cost driver does not generally have a direct cause-effect relationship with the resources consumed.
F
ABC eliminates all arbitrary cost allocations.
F
ABC is particularly useful when overhead costs are an insignificant portion of total costs.
F
ABC usually results in less appropriate management decisions.
F
Any activity that increases the cost of producing a product is a value-added activity.
F
Determining the unit cost of manufacturing a product is an output of financial accounting.
F
Direct materials and direct labor are the only product costs.
F
Direct materials costs and indirect materials costs are manufacturing overhead.
F
In calculating gross profit for a manufacturing company, the cost of goods manufactured is deducted from net sales.
F
Plant management is a batch-level activity.
F
Raw materials are equal to direct materials minus indirect materials.
F
The Purchases account is credited for all raw materials purchase returns and allowances.
F
The Sarbanes-Oxley Act replaces generally accepted accounting principles in a manufacturing company.
F
The sum of the direct materials costs, direct labor costs, and beginning work in process is the total manufacturing costs for the year.
F
Traditional costing systems use multiple predetermined overhead rates.
F
What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.
F
When overhead is properly assigned in ABC, it will usually decrease the unit cost of high-volume products.
F
When raw materials are purchased, the Work in Process Inventory account is debited.
F
A job order cost system and a process cost system are two alternative methods for valuing inventories.
T
A process cost accounting system is appropriate for similar products that are continuously mass produced.
T
Both direct labor cost and indirect labor cost are product costs.
T
Cost accounting is primarily concerned with accumulating information about product
T
Current trends in manufacturing include less direct labor and more overhead.
T
Direct materials requisitioned from the storeroom should be charged to the Work In Process Inventory account and the job cost sheets for the individual jobs on which the materials were used.
T
Finished Goods Inventory is charged for the cost of jobs completed during a period.
T
Finished goods inventory for a manufacturing company is equivalent to merchandise inventory for a merchandising company.
T
Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.
T
If monthly financial statements are prepared, underapplied overhead is shown as a prepaid expense on the balance sheet.
T
Inventory storage costs are reduced in just-in-time processing.
T
Just-in-time strives to eliminate inventories by using a pull approach.
T
Non-value-added activities increase the cost of a product but not its market value.
T
Not all activities labeled non-value-added are totally wasteful, nor can they be totally eliminated.
T
Period costs are not inventoriable costs.
T
Recording the acquisition of raw materials is a part of accumulating manufacturing costs.
T
Reports prepared in financial accounting are general-purpose reports, whereas reports prepared in managerial accounting are usually special-purpose reports.
T
Requisitions for direct materials are posted daily to the individual job cost sheets.
T
The focus of a TQM system is to reduce defects in finished products.
T
The formula for the predetermined overhead rate is estimated annual overhead costs divided by an estimated activity base.
T
There should be a separate job cost sheet for each job.
T
To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool.
T
To balance the Cost of Goods Manufactured columns of a worksheet for a manufacturing company, an entry must be made in the income statement debit column.
T
Total manufacturing costs for a period consists of the costs of direct materials used, the cost of direct labor incurred, and the manufacturing overhead applied during the period.
T
When the physical association of raw materials with the finished product is too small to trace in terms of cost, they are usually classified as indirect materials.
T
