Smartbook quiz 7

True or false: Determining a product's cost is necessary to value the units, purchased or manufactured, of that product either as cost of goods sold or as ending inventory for any units unsold.

True

Indirect costs describe costs that:

are not traceable to a cost object

A predetermined overhead rate is used to:

assign indirect costs to cost objects.

Overapplied overhead represents a _________ (debit/credit) balance in the Manufacturing overhead account that results from applied overhead in excess of actual overhead costs.

credit

Underapplied overhead represents a ________ (debit/credit) balance in the Manufacturing overhead account that results from actual overhead costs in excess of applied overhead.

debit

In an activity-based costing system, a cost _________ is an activity that causes the incurrence of a manufacturing cost.

driver

The difference between absorption costing and direct (or variable) costing is in the accounting for:

fixed manufacturing overhead

A cost that is not clearly traceable to a product or activity under consideration such that the cost would continue to be incurred if the product or activity were discontinued is known as a(n) ____________cost.

indirect

The product cost accounting system used when discrete products are manufactured is known as a _________ (job/process) costing system.

job

The product cost accounting system used when discrete products are manufactured is known as a __________ (job/process) costing system.

job

The finished goods inventory account is increased for the cost of goods____________ (manufactured/sold) and is decreased for the cost of goods _____________ (manufactured/sold).

manufactured sold

Match the following elements of a product's cost that appropriately apply to a manufacturing firm and a merchandising firm. Ingredients : ______________ Purchased product: __________

manufacturing firm merchandising firm

For a manufacturing firm, _________ costs are inventoried and treated as assets until inventory is sold while _____________ costs are recorded as expense in the accounting period incurred.

product period

Cost accounting _____.

relates primarily to the accumulation and determination of product, process, or services costs

Which of the following manufacturing environments would use a job order costing system?

textbook printing

On the statement of cost of goods manufactured, the sum of raw materials used + direct labor incurred + manufacturing overhead applied is known as:

total manufacturing costs

An organization's __________ ____________is the sequence of functions and related activities that adds value for the customer over the life of a product or service.

value chain

A term used synonymously with direct costing is __________ costing.

variable

A predetermined overhead application rate is established to apply manufacturing overhead to __________.

work in process

Identify the correct sequence of steps in the cost accumulation and assignment process, which allows managers to observe costs for different organizational cost objects. Instructions

- accumulate costs - identify cost objects - pool costs - assign costs

Identify the cost elements reported on the statement of cost of goods manufactured.

- manufacturing overhead - raw materials - direct labor

Which of the following costs would be classified as a period cost?

- selling - general - administrative (operating expenses) - advertising expense for the product

List the following organizational functions in the right sequence, with the first function on the top. Instructions

-Research and development -Design -Production -Marketing -Distribution -Customer Service

From the following list of activities, identify those that could represent cost drivers in an activity-based costing system.

-matching setup for production runs - raw material handling -quality inspection -production order preparation

Identify the correct cost flow sequence as product costs move through the manufacturing process. Instructions

1. Raw materials inventory 2. Work in Process 3 Finished Goods 4. Cost of goods sold

Which of the following process steps occurs first for managers to observe costs for different organizational reference points?

Cost accumulation

Identify the true statements about cost accounting.

- It is a subset of both financial and managerial accounting. - It reports the cost of goods manufactured and sold, as well as the cost of goods manufactured and not sold.