Managerial ACCT Chapter 1

T or F applied overhead will be equal to actual overhead at the end of the period

False. applied is based off estimates

Product costs that have become expenses can be found in: a) administrative expenses. b) cost of goods sold. c) period costs. d) selling expenses.

b) cost of goods sold.

T or F: In a job-order cost system, indirect labor is assigned to a job using information from the employee time ticket.

false

T or F: if the allocation base in the pohr does not drive overhead costs, it will nevertheless provide reasonably accurate unit product costs.

false

T or F: in a absorption costing non manufacturing costs are assigned to units of product

false

T or F: a cost driver causes direct costs. (beds occupied, machine hours)

false. it drives overhead NOT direct costs.

the cost of direct materials are classified as:

manufacturing cost & prime cost

which formula is correct for job order costing

pohr= estimated mo/estimated hours

T or F: Actual overhead costs are not assigned to jobs in a job costing system.

true

T or F: in a contribution format income statement, cogs is a variable cost included in "variable expenses"

true

T or F: opportunity cost at a manufacturing company are not part of manufacturing overhead.

true (not on financial records)

Cost of clay used in production$70,000 Wages paid to the workers who paint the figurines$96,000 Wages paid to the sales manager's secretary$28,000 Cost of junk mail advertising$45,000 What is the total of the product costs above?

$166,000

Calculate conversion costs from these monthly numbers: direct materials $47,700 direct labor $32,800 manu. overhead $26,400 selling expenses $17,900 admin expenses $35,000

$59,200

classify the following for Rental Revenue forgone, $30,000 per yr. -cost behavior (variable/fixed) -manufacturers (DM, DL,MO) -financials (period/product) -decisions (opportunity/sunk)

-none -none -none -opportunity cost

Fixed or Variable? Product or Period? 1) Insurance on a Baush & Lomb factory producing contact lenses. 2) Insurance on IBM's corporate hq.

1) fixed. product. 2) fixed. period.

classify each as differential, sunk, or opportunity cost: 1.Cost of the old x-ray machine. 2.Cost of the new color laser printer. 3.Benefits from a new DNA analyzer.

1. sunk cost 2. differential cost 3. opportunity cost

The job cost sheet for work-in-progress and finished goods are found on... A)balance sheet B) income statement

A)Balance sheet

Jobs that have been sold provide the underlying support for A) ending inventory on balance sheet B) COGS on income statement

B) COGS on income statement

Contribution margin is... A) sales - cogs B) sales - variable production/selling/admin expenses C) sales - variable production expense D) sales - all variable & fixed expenses

B) sales - variable production/selling/admin expenses

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory? A) the cost of glue in a chair B) the amount paid to an individual who stains a chair. C) workman's comp insurance of the supervisor who oversees production. D) the factory utilities of the department where production takes place.

B) the amount paid to an individual who stains a chair.

Which of the following costs would be considered a period rather than a product cost in a manufacturing company? A. Manufacturing equipment depreciation. B. Property taxes on corporate headquarters. C. Direct materials costs. D. Electrical costs to light the production facility. E. Sales commissions.

B. Property taxes on corporate headquarters. E. Sales commissions.

COGS calculation

BGN Inventory + Purchases - Ending inventory = COGS

direct costs: A) are incurred to benefit a particular acct period. B) are incurred due to a specific decision. C) can be easily traced to a particular cost object. D) are the variable costs of a product.

C) can be easily traced to a particular cost object.

Which of the following costs would be variable with respect to the number of ice cream cones sold at a Baskin & Robbins? (There may be more than one correct answer.) A. The cost of lighting the store. B. The wages of the store manager. C. The cost of ice cream. D. The cost of napkins for customers.

C. The cost of ice cream. D. The cost of napkins for customers.

T or F: In a job-order cost system, indirect labor is assigned to a job using information from the employee time ticket.

False

T or F: Underapplied overhead increases Net Operating Income

False

T or F: sales salaries is part of manufacturing overhead

False

T or F: period costs show up straight on the income statement as an expense

True

T orF: when a company applies less overhead than is actually incurred, it's underupplied

True

T or F: actual overhead costs aren't assigned to jobs in a job costing system.

True. we use estimated not actual.

Which of the following statements is true when referring to fixed costs? •As volume increases, unit fixed cost and total fixed cost will change. •Fixed costs increase in total throughout the relevant range .•Committed fixed costs arise from the annual decisions by management. •Discretionary fixed costs can often be reduced to zero for short periods of time without seriously impairing the long-run goals of the company.

•Discretionary fixed costs can often be reduced to zero for short periods of time without seriously impairing the long-run goals of the company.