Managerial Accounting and Cost Concepts
True / False Questions
1. Managerial accounting is primarily concerned with the organization as a whole rather than with segments of the organization. True False
2. Managerial accounting places less emphasis on nonmonetary data than financial accounting. True False
3. Direct labor is a part of both prime cost and conversion cost. True False
4. Wages paid to production supervisors would be considered direct labor. True False
5. Direct material cost combined with manufacturing overhead cost is known as conversion cost. True False
6. Advertising is a product cost as long as it promotes specific products. True False
7. Although depreciation is always a period cost in a merchandising firm, it can be a product cost in a manufacturing firm. True False
8. In a manufacturing firm, all costs are product costs.
9. The cost of shipping parts from a supplier is considered a product cost. True False
10. If the finished goods inventory increases between the beginning and the end of a period, then the cost of goods manufactured for the period is larger than the cost of goods sold. True False
11. The inventory of finished goods on hand at the end of a period is considered an asset, but inventories of raw materials and work-in-process are not considered assets until production is completed. True False
12. The cost of goods manufactured for a period is the amount transferred from work in process inventory to finished goods inventory during the period. True False
13. Differential costs can be either fixed or variable.
14. A fixed cost is constant per unit of product.
15. The variable cost per unit is constant and does not depend on how many units are produced. True False
16. The cost of napkins put on each person's tray at a fast food restaurant is a fixed cost. True False
17. A factory supervisor's salary would be classified as a direct cost of a unit of product. True False
Multiple Choice Questions
18. Managerial accounting:
A. has its primary emphasis on the future.
B. is required by regulatory bodies such as the SEC.
C. focuses on the organization as a whole, rather than on the organization's segments. D. Responses a, b, and c are all correct.
19. The plans of management are expressed formally in:
A. the annual report to shareholders.
B. Form 10-Q submitted to the Securities and Exchange Commission. C. performance reports.
20. Which of the following IS a characteristic of financial accounting? A. not mandatory
B. must follow GAAP
C. emphasis on relevance of data, rather than precision
D. both A and C above
21. The corporate controller's salary would be considered a(n): A. manufacturing cost.
B. product cost.
C. administrative cost.
D. selling expense.
22. The costs of direct materials are classified as:
23. Manufacturing overhead:
A. can be either a variable cost or a fixed cost.
B. includes the costs of shipping finished goods to customers. C. includes all factory labor costs.
D. includes all fixed costs.
24. The three basic elements of manufacturing cost are direct materials, direct labor, and: A. cost of goods manufactured.
B. cost of goods sold.
C. work in process.
D. manufacturing overhead.
25. Prime cost consists of direct materials combined with: A. direct labor.
B. manufacturing overhead.
C. indirect materials.
D. cost of goods manufactured.
26. Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice?
27. The cost of fire insurance for a manufacturing plant is generally considered to be a: ...