accounting exam 2

The costs of activities that are classified as unit-level should be fixed respect to the number of units produced.

false

The most common accounting treatment of underapplied manufacturing overhead is to transfer it to the Manufacturing Overhead Incurred account.

false

The salary of the company's president should be charged to the Manufacturing Overhead Incurred account.

false

Activity rates are computed in the second-stage allocation in activity-based costing.

false

Activity rates in activity-based costing are computed by dividing costs from the second-stage allocations by the activity measure for each activity cost pool.

false

Assuming the LIFO inventory flow assumption, if production is less than sales for the period, absorption costing net operating income will generally be greater than variable costing net operating income.

false

Batch-level activities are performed each time a unit is produced.

false

Because absorption costing emphasizes costs by behavior, it works well with cost-volume-profit analysis.

false

Common fixed expenses should be allocated to business segments when performing break-even calculations and making decisions.

false

Direct materials is considered to be a product cost under variable costing but not absorption costing.

false

If a company closes any underapplied or overapplied overhead to the Cost of Goods Sold account, then Cost of Goods Sold will be increased if manufacturing overhead is overapplied for the period.

false

Product-level activities relate to how many batches are run or units of product are made.

false

The cost categories that appear on a job cost sheet include selling expense, manufacturing expense, and administrative expense.

false

Two of the reasons why manufacturing overhead may be underapplied are: (1) the estimated total manufacturing overhead cost may have been too high; and (2) the estimated total amount of the allocation base may have been too low.

false

When the number of units in work in process and finished goods inventories decrease, absorption costing net operating income will typically be greater than variable costing net operating income.

false

When the predetermined overhead rate is based on direct labor-hours, the amount of overhead applied to a job is proportional to the estimated amount of direct labor-hours for the job.

false

Assuming the LIFO inventory flow assumption, if production equals sales for the period, absorption costing and variable costing will produce the same net operating income.

true

Even though a job is not completed at year end, manufacturing overhead cost may be applied to that job when a predetermined overhead rate is used.

true

If a company uses predetermined overhead rates, actual manufacturing overhead costs of a period will be recorded in the Manufacturing Overhead Incurred account, but they will not be recorded on the job cost sheets for the period.

true

In activity-based costing, some manufacturing costs can be excluded from product costs.

true

In general, duration drivers are more accurate measures of the consumption of resources than transaction drivers.

true

Net operating income is affected by the number of units produced when absorption costing is used.

true

Predetermined overhead rates are based on estimated cost and activity data.

true

Segment margin is a better measure of the long-run profitability of a segment than contribution margin.

true

The costs assigned to units in inventory are typically lower under variable costing than under absorption costing.

true

The first-stage allocation in activity-based costing is the process by which overhead costs are assigned to activity cost pools.

true

The labor time ticket contains a detailed summary of the direct and the indirect labor hours of an employee.

true

Under absorption costing, the profit for a period is affected by a change in the number of units of finished goods in inventory.

true

When variable costing is used, and if selling prices exceed variable expenses and if the unit contribution margins, the sales mix, and fixed costs remain the same, profits move in the same direction as sales.

true