Chapter 18

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Costs that are indirect materials cost and indirect labor cost incurred in the manufacturing process are classified as:

Factory overhead costs

Controlling deals with choosing goals and deciding how to achieve them

False

Conversion costs are the combination of direct labor, direct material, and factory overhead costs

False

Planning is the process of monitoring operating results and comparing actual results with the expected results

False

Prime costs are the combination of direct labor costs and factory overhead costs

False

Materials must have which two qualities in order to be classified as direct materials?

They must be an integral part of the finished product and a significant portion of the total product cost.

A cost object indicates how costs are related or identified

True

A staff department has no direct authority over a line department.

True

If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of factory overhead costs

True

In most business organizations, the chief management accountant is called the controller.

True

Only the value of the inventory that is sold will appear on the income statement.

True

The cost of a manufactured product generally consists of which of the following costs?

direct labor cost, direct materials cost, and factory overhead cost

Which of the following are basic phases of the management process?

planning and controlling

Goods that are partially completed by a manufacturer are

work in progress

The controller's staff consists of management accountants responsible for systems and procedures, general accounting, budgets, taxes, and cost accounting

True

report analyzing the dollar savings of purchasing new equipment to speed up the production process is a managerial accounting report.

True

finished goods inventory is reported on the

balance sheet as a current asset

Cost of goods manufactured is equal to

total manufacturing costs plus beginning work in process inventory less ending work in process inventory

The following are all product costs except 1) factory overhead 2) direct labor 3) sales and administrative expenses 4) direct materials

3

T/F= Factory overhead cost is sometimes referred to as factory burden.

False

T/F=. Managerial accounting reports must be prepared according to generally accepted accounting principles.

False


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