Deck 2: Basic Managerial Accounting Concepts

Question 1

Assigning costs tells the accountant who spent the money.

Answer 1

False

Question 2

It is beneficial to assign indirect costs to cost objects.

Answer 2

True

Question 3

Indirect costs are costs that are not easily and accurately traced to a cost object.

Answer 3

True

Question 4

Expired costs are called assets.

Question 5

A cost object is any item such as products,customers,departments,regions,and so on,for which costs are measured and assigned.

Question 6

Cost is a dollar measure of the resources used to achieve a given benefit.

Question 7

A variable cost is one that does not increase in total as output increase and does not decrease in total as output decreases.

Question 8

An opportunity cost is the benefit given up or sacrificed when one alternative is chosen over another.

Question 9

Price must be greater than cost in order for the firm to generate revenue.

Question 10

Allocation means that an indirect cost is assigned to a cost object using a reasonable and convenient method.

Question 11

Costs are directly,not indirectly,associated with cost objects.

Question 12

As costs are used up in the production of revenues,they are said to expire.Expired costs are called expenses.

Question 13

Accumulating costs is the way that costs are measured and recorded.

Question 14

The revenue per unit is called cost.

Question 15

Reducing the cost required to achieve a given benefit means that a company is becoming less efficient.

Question 16

Assigning costs involves the way that a cost is linked to some cost object.

Question 17

Direct costs are those costs that cannot be easily and accurately traced to a cost object.

Question 18

Costs are incurred to produce future benefits.

Question 19

A fixed cost is a cost that does not increase in total as output increases and does not decrease in total as output decreases.

Question 20

A cost object is something for which a company wants to know the cost.

Question 21

Research and development costs would be classified as product cost.

Question 22

Cost of goods manufactured represents the cost of direct materials,direct labor,and overhead incurred during the current accounting period.

Question 23

Employees who convert direct materials into a product or who provide a service to customers are classified as indirect labor.

Question 24

Product costs include direct materials,direct labor,and selling costs.

Question 25

All manufacturing costs are classified as overhead.

Question 26

Cost of goods sold is the total product cost of the units sold during a period.

Question 27

Property taxes on a factory building would normally be classified as a fixed cost.

Question 28

Any costs associated with storing,selling,and delivering the product are classified as product costs.

Question 29

Prime cost is the sum of direct materials cost and direct labor cost.

Question 30

All product costs other than direct materials and indirect labor are called overhead.

Question 31

Period costs are all costs that are not product costs,such as office supplies.

Question 32

Direct materials can be directly traced to the goods or services being produced.

Question 33

Product costs are carried in inventory until the goods are finished.

Question 34

Industries that provide intangible services do not normally have direct contact with their customers.

Question 35

Costs can be assigned to cost objects in only one way.

Question 36

The cost of janitorial services for a factory building would be classified as indirect labor.

Question 37

Marketing costs would be classified as period costs.

Question 38

For external reporting purposes,costs must be classified into only three categories.

Question 39

Sales revenue equals the product cost per unit times the number of units sold.

Question 40

Glue used in the manufacture of cabinets would be an example of a fixed cost.

Question 41

________________ are those costs,both direct and indirect,of producing a product in a manufacturing firm or of acquiring a product in a merchandising firm and preparing it for sale.

Question 42

Materials that become part of a product usually are classified as _______________.

Question 43

___________________ is the cost of the partially completed goods that are still on the factory floor at the end of a time period.

Question 44

The process of assigning an indirect cost to a cost object by using a reasonable and convenient method is called _____________.

Question 45

_________________ equals the sum of direct materials,direct labor,and manufacturing overhead.

Question 46

A(n)_________________ is the benefit given up or sacrificed when one alternative is chosen over another.

Question 47

________________ and _________________ costs are considered period costs.

Question 48

Costs that can be easily and accurately traced to a cost object are called __________.

Question 49

Expired costs are called ____________.

Question 50

All product costs other than direct materials and direct labor are put into a category called _________________________.

Question 51

______________________ is the sum of direct labor cost and manufacturing overhead cost.

Question 52

A(n)________________ is a cost that does not increase in total as output increase and does not decrease in total as output decreases.

Question 53

Insurance coverage,medical care,and accounting are examples of _________________ performed for customers.

Question 54

______________is the amount of cash or cash equivalent sacrificed for goods and/or services that are expected to bring a current or future benefit to the organization.

Question 55

The difference between sales revenue and cost of goods sold is known as the ______________.

Question 56

_____________________ is the way that a cost is linked to some cost object.

Question 57

Gross margin is the difference between sales revenue and cost of goods sold.

Question 58

Organizations that produce products are called _______________________.

Question 59

Employees who convert direct materials into a product are classified as _____________.

Question 60

A __________________ is any item such as a product,customer,department,project,geographic region,plan and so on,for which costs are measured and assigned.

Question 61

Which of the following would not be a period cost?

A)research and development
B)direct materials
C)advertising costs
D)office supplies

Question 62

Costs are subdivided into what two major functional categories?

A)opportunity and allocation
B)fixed and variable
C)product and non-production
D)direct and indirect

Question 63

Which of the following is an example of a tangible product?

A)lawn care
B)accounting services
C)customer service
D)computer

Question 64

A variable cost in total

A)increases as output increases and decreases as output decreases.
B)increases as output increases and/or decreases.
C)remains constant no matter the level of output.
D)increases as output decreases and decreases as output increases.

Question 65

The ____________________________ represents that total product cost of goods completed during the current period and transferred to finished goods inventory.

Question 66

Assigning costs

A)involves the way that a cost is linked to some cost object.
B)tells the company why the money was spent.
C)to a cost object using a reasonable and convenient method is allocation.
D)all of these.

Question 67

Product costs consist of

A)period costs.
B)indirect materials,indirect labor,and administrative costs.
C)direct materials,direct labor,and selling costs.
D)direct materials,direct labor,and overhead.

Question 68

Which of the following is an example of an intangible product?

A)motorcycle
B)eye exam
C)stereo
D)television

Question 69

Assigning costs to cost objects

A)provides information for decision making.
B)can be accomplished in a number of ways.
C)can be a simple or complex process.
D)do all of these.

Question 70

Cost is:

A)the difference between sales revenue and cost of goods sold.
B)the benefit given up or sacrificed when on alternative is chosen over another.
C)the amount of cash or cash equivalent sacrificed for goods and/or services that are expected to bring a current or future benefit to the organization.
D)the revenue per unit.

Question 71

An indirect cost

A)can be easily and accurately traced to a cost object.
B)is hard to trace.
C)should never be assigned to a cost object.
D)do none of these.

Question 72

Non-manufacturing costs include

A)marketing and administration.
B)direct materials.
C)indirect materials.
D)overhead.

Question 73

Which of the following is an example of direct labor?

A)vice president of marketing
B)assembly line worker for televisions
C)staff accountant
D)supervisor at a manufacturing plant

Question 74

Which of the following would be an example of a direct materials cost?

A)engine on an airplane
B)screws used to manufacture a lighting fixture
C)glue used to build cabinets
D)nails used to manufacture a table

Question 75

Materials in the raw materials account do not become direct materials

A)until they are withdrawn from inventory for use in production.
B)until the finished product is sold.
C)until they are purchased from a vendor.
D)none of these are correct.

Question 76

Which of the following is not an example of a direct materials cost?

A)shelves on a bookcase
B)engine in a car
C)tires on a bicycle
D)nail used to manufacture a desk

Question 77

Expired costs are called

A)fixed.
B)costs.
C)expenses.
D)profit.

Question 78

Price is not:

A)the revenue per unit.
B)greater than cost in order for the firm to earn income.
C)the same as cost.
D)the same as cost per unit plus the income per unit.

Question 79

Product costs

A)are costs that are included in the determining the value of the inventory.
B)are manufacturing costs.
C)include direct materials,direct labor,and overhead.
D)are all of these.

Question 80

An opportunity cost is:

A)the benefit given up or sacrificed when one alternative is chosen over another.
B)the cost to market,distribute,and service a product or service.
C)the total product cost of goods completed during the current period and transferred to finished goods inventory.
D)the difference between sales revenue and cost of goods sold.