Deck 2: Basic Managerial Accounting Concepts

Question 1

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

Answer 1

True

Question 2

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

Answer 2

True

Question 3

The revenue per unit is called cost.

Answer 3

False

Question 4

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

Question 5

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

Question 6

Assigning costs tells the accountant who spent the money.

Question 7

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

Question 8

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

Question 9

Costs are incurred to produce future benefits.

Question 10

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

Question 11

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

Question 12

Expired costs are called assets.

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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 19

It is beneficial to assign indirect costs to cost objects.

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

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

Question 34

Research and development costs would be classified as product cost.

Question 35

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

Question 36

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

Question 37

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

Question 38

All manufacturing costs are classified as overhead.

Question 39

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

Question 40

Marketing costs would be classified as period costs.

Question 41

Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles.
a.direct materials
b.direct labor
c.overhead
d.selling expense
e.administrative expense
factory security costs

Question 42

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

Question 43

Select the appropriate classification for each of the following costs.
a.Period
b.Product
Factory supervisor's salary

Question 44

Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles.
a.direct materials
b.direct labor
c.overhead
d.selling expense
e.administrative expense
general accounting costs

Question 45

Select the appropriate classification for each of the items listed below.
a.Product cost
b.Period cost
Sugar used in soft drink production

Question 46

Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles.
a.direct materials
b.direct labor
c.overhead
d.selling expense
e.administrative expense
cost of windshields used in the production process

Question 47

Select the appropriate classification for each of the following costs.
a.Period
b.Product
Supplies for factory washroom

Question 48

Select the appropriate classification for each of the following costs.
a.Period
b.Product
Cost accountant's salary

Question 49

Select the appropriate classification for each of the following costs.
a.Period
b.Product
Research and development costs

Question 50

Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles.
a.direct materials
b.direct labor
c.overhead
d.selling expense
e.administrative expense
depreciation of vehicles used by sales personnel

Question 51

Select the appropriate classification for each of the items listed below.
a.Product cost
b.Period cost
Cost of nails used by a home builder

Question 52

Select the appropriate classification for each of the following costs.
a.Period
b.Product
Assembly line worker's wages

Question 53

Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles.
a.direct materials
b.direct labor
c.overhead
d.selling expense
e.administrative expense
salary of chief executive officer

Question 54

Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles.
a.direct materials
b.direct labor
c.overhead
d.selling expense
e.administrative expense
cost of tires

Question 55

Select the appropriate classification for each of the items listed below.
a.Product cost
b.Period cost
Fees paid to an advertising firm

Question 56

Select the appropriate classification for each of the following costs.
a.Period
b.Product
Cost of shipping products to customers

Question 57

Select the appropriate classification for each of the following costs.
a.Period
b.Product
Marketing costs

Question 58

Select the appropriate classification for each of the following costs.
a.Period
b.Product
Advertising costs

Question 59

Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles.
a.direct materials
b.direct labor
c.overhead
d.selling expense
e.administrative expense
factory janitorial costs

Question 60

Select the appropriate classification for each of the costs incurred by a manufacturer of automobiles.
a.direct materials
b.direct labor
c.overhead
d.selling expense
e.administrative expense
factory supplies

Question 61

Select the appropriate classification of the items listed below.
a.selling expense
b.administrative expense
c.direct materials
d.direct labor
e.overhead
Chief of surgery's salary at a hospital

Question 62

Select the appropriate classification of the items listed below.
a.selling expense
b.administrative expense
c.direct materials
d.direct labor
e.overhead
Glue used in the manufacture of furniture

Question 63

Select the appropriate definition for each of the items listed below.

-(total manufacturing costs + work in process beginning - work in process ending)/units produced

A)per-unit prime cost
B)per-unit conversion cost
C)per-unit cost of goods manufactured

Question 64

Select the appropriate classification for each of the items listed below.
a.Product cost
b.Period cost
Fees paid to outside auditing firm

Question 65

Select the appropriate definition for each of the items listed below.
a.per-unit prime cost
b.per-unit conversion cost
c.per-unit cost of goods manufactured
(direct labor + overhead)/units produced

Question 66

Select the appropriate classification for each of the items listed below.
a.Product cost
b.Period cost
Cost of conference for sales team

Question 67

Select the appropriate definition for each of the items listed below.
a.per-unit prime cost
b.per-unit conversion cost
c.per-unit cost of goods manufactured
(direct materials + direct labor)/units produced

Question 68

Select the appropriate definition for each of the items listed below.
a.period cost
b.direct cost
c.opportunity cost
d.variable cost
e.indirect cost
f.fixed cost
g.product cost
A manufacturing cost

Question 69

Select the appropriate definition for each of the items listed below.
a.period cost
b.direct cost
c.opportunity cost
d.variable cost
e.indirect cost
f.fixed cost
g.product cost
A cost that can be easily traced to a cost object

Question 70

Select the appropriate classification of the items listed below.
a.selling expense
b.administrative expense
c.direct materials
d.direct labor
e.overhead
Wages of assembly line workers in an automobile plant

Question 71

Select the appropriate classification of the items listed below.
a.selling expense
b.administrative expense
c.direct materials
d.direct labor
e.overhead
Cost of shipping goods to customers

Question 72

Select the appropriate classification for each of the items listed below.
a.Product cost
b.Period cost
Factory supervisor's salary

Question 73

Select the appropriate classification for each of the items listed below.
a.Product cost
b.Period cost
Factory security costs

Question 74

Select the appropriate definition for each of the items listed below.
a.period cost
b.direct cost
c.opportunity cost
d.variable cost
e.indirect cost
f.fixed cost
g.product cost
A cost that is difficult to trace to a cost object

Question 75

Select the appropriate definition for each of the items listed below.
a.period cost
b.direct cost
c.opportunity cost
d.variable cost
e.indirect cost
f.fixed cost
g.product cost
A cost that stays the same in total regardless of changes in output

Question 76

Select the appropriate classification for each of the items listed below.
a.Product cost
b.Period cost
Rental cost of executive Lear jet

Question 77

Select the appropriate definition for each of the items listed below.
a.period cost
b.direct cost
c.opportunity cost
d.variable cost
e.indirect cost
f.fixed cost
g.product cost
A benefit given up when one alternative is chosen over another

Question 78

Select the appropriate definition for each of the items listed below.
a.period cost
b.direct cost
c.opportunity cost
d.variable cost
e.indirect cost
f.fixed cost
g.product cost
A cost that is not inventoried

Question 79

Select the appropriate classification of the items listed below.
a.selling expense
b.administrative expense
c.direct materials
d.direct labor
e.overhead
Cost of lubricating factory machinery

Question 80

Select the appropriate definition for each of the items listed below.
a.period cost
b.direct cost
c.opportunity cost
d.variable cost
e.indirect cost
f.fixed cost
g.product cost
A cost that increases in total as output increases