Managerial Accounting exam 1

A company purchased a 12 month insurance policy on October 1 at a cost of $1,200. On the December 31 annual financial statements ___.

$300 is reported as a expense and $900 is reported as an asset

Other names for manufacturing overhead include

- factory overhead - factory burden - indirect manufacturing costs

Which of the following statements are true? Multiple select question. Period costs do not flow through the inventory accounts. Inventoriable costs are expensed in the period in which they are incurred. Period costs are expensed when incurred. All costs in a merchandising company are period costs.

1 and 3

Which of the following statements are true? Multiple select question. A direct cost is sometimes referred to as a common cost. Reason: An indirect cost is sometimes referred to as a common cost. A regional sales manager's salary would be a direct cost of the regional office in which the sales manager works. A direct cost can be easily and conveniently traced to a specific cost object. An individual cost is either direct or indirect, regardless of the cost object. Reason: An individual cost may be indirect to one cost object and direct to another.

A regional sales manager's salary would be a direct cost of the regional office in which the sales manager works. A direct cost can be easily and conveniently traced to a specific cost object.

how individual costs react to changes in activity level is referred to as cost

Behavior

A type of indirect cost incurred to benefit more than one cost object is a(n) _____ cost.

Common

Costs that are shared by multiple cost objects in a company are known as ______ costs.

Common

Direct labor and overhead costs incurred to change raw materials into finished products are known as ______ costs.

Conversion

Any item for which cost data is desired is called a(n)

Cost Object

The relative proportion of each type of cost in an organization is known as the company's

Cost Structure

The relative proportion of each type of cost in an organization is known as the company's

Cost structure

Costs that can be easily and conveniently traced to a specific product are called ______ costs.

Direct

Labor costs that can be easily and conveniently traced to specific products are Blank______ costs.

Direct

A laptop computer manufacturer would consider the computer's processor chip to be a(n) ______ cost.

Direct Material

Selling and administrative costs are Blank______ costs.

Direct or indirect

A cost that can be easily and conveniently traced to a specific cost object is a(n) ,whereas costs that cannot be easily and conveniently traced to that specific cost object are

Direct, Indirect cost

All of a company's depreciation, property taxes and insurance premiums are considered manufacturing overhead.

False

True or false: Labor costs that can be specifically traced to a product are indirect labor costs.

False

Prior to being recorded on the income statement, manufacturers' product costs flow through:

Finished Goods Raw Materials Work in Process

Factory materials, such as cleaning supplies, that are not components of finished products are classified as:

Manufacturing overhead

The accrual concept that costs incurred to generate revenue are expensed in the same period the revenue is recognized is known as the

Matching principle

Direct materials, direct labor, and manufacturing overhead are all ______ costs.

Product

Inventoriable costs is another term for

Product cost

True or false: A cost may be direct or indirect, depending on the cost object.

True

True or false: The finished product of one company can become raw materials for another company.

True

Prior to being recorded on the income statement, manufacturers' product costs flow through:

Work in Process Raw Materials Finished Goods

Indirect labor costs include:

assembly-line supervisor salary factory security guard wages

Cost behavior:

categorizes costs as fixed, mixed and variable refers to how a cost will change as activity level changes

Cost objects include ______.

customers organizational subunits anything for which cost data is desired

Fantastic Furniture makes custom order couches. The material used to make a couch is a(n) _______ cost of the customer placing the order.

direct

Prime costs are:

direct materials and direct labor

Manufacturing costs can be divided into three categories:

direct materials, direct labor, and manufacturing overhead

Manufacturing costs include ______.

direct materials, direct labor, manufacturing overhead

Administrative costs include:

executive compensation and public relations costs

Other names for manufacturing overhead include:

factory burden factory overhead indirect manufacturing costs

Period costs are always expensed on the income statement in the period in which:

incurred

Salaries of factory supervisors and factory maintenance personnel are examples of ______ labor costs.

indirect

A manufacturing cost that cannot be easily traced to a specific cost object is a(n)

indirect cost

Manufacturing overhead costs include ______.

indirect materials, factory supervisors' salaries, and factory depreciation

Common activity bases include:

machine hours units sold direct labor hours

A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of ______.

manufacturing overhead, indirect materials

The components of prime costs are direct __________costs and direct ________________costs

material and labor

Indirect materials include ______.

nails, glue and thread

There are two broad classifications of costs: manufacturing costs and costs

non manufacturing cost

The materials that go into the final product are called

raw material

Which type of cost changes in total, in direct proportion to changes in activity level?

variable

Units that are partially complete are found in:

work in progress