Chap1 Solman

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Chapter 01
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. 
True    False

 

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. 
True    False

 

14. A fixed cost is constant per unit of product. 
True    False

 

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.
D. budgets.

 

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:

 [pic]  
A. A
B. B
C. C
D. D

 

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?

 [pic]  
A. A
B. B
C. C
D. D

 

27. The cost of fire insurance for a manufacturing plant is generally considered to be a: ...
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