Chapter01 - Chapter 1 An Introduction to Managerial...

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Chapter 1 An Introduction to Managerial Accounting and Cost Concepts 12.  Indirect labor is a part of: B) Conversion cost. 13. The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n): C) indirect material cost. 14. The salary paid to the president of King Company would be classified on the income statement as a(n): A) administrative expense. 15. Direct labor cost is a part of: C) C above 16. Direct material cost is a: B) B above 17. Prime cost and conversion cost share what common element of total cost? B) Direct labor. 18. Prime cost consists of: C) direct materials and direct labor. 19. Wages paid to a timekeeper in a factory are a: D) D above 20. Property taxes on a company’s factory building would be classified as a(n): A) product cost. 21. Depreciation on a personal computer used in the marketing department of a manufacturing firm would be classified as: B) a period cost that is fixed with respect to the company’s output. Brewer, Introduction to Managerial Accounting, 3/e 1
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22. The nursing station on the fourth floor of Central Hospital is responsible for the care of patients who have undergone orthopedic surgery. The costs of drugs administered by the nursing station to patients would be classified as: A) direct costs of the patients. 23. All of the following would be classified as product costs except: C) salaries of the advertising staff. 24. Product costs appear on the balance sheet: C) only if goods are partially completed or are unsold at the end of a period. 25. Ross Corporation shipped finished goods to a customer on credit, but the sale was not recorded and the costs of the finished goods were incorrectly included on the period’s balance sheet as part of the finished goods inventory. Which one of the following statements is correct concerning the effects of this error? D) Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was understated. 26. Data for Cost A and Cost B are as follows: Which of the above best describes the behavior of Costs A and B? B) Cost A is variable, Cost B is fixed. 27. Fixed costs expressed on a per unit basis: B) will decrease with increases in activity. 28. The costs of staffing and operating the accounting department at Central Hospital would be considered by the Department of Surgery to be: B) indirect costs. 29. A cost incurred in the past that is not relevant to any current decision is classified as a(n): C) sunk cost. 30. Differential costs can: C) be either fixed or variable. Brewer, Introduction to Managerial Accounting, 3/e 2
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31. John Johnson decided to leave his former job where he earned $12 per hour to go to a new job where he will earn $13 per hour. In the decision process, the former wage of $12 per hour would be classified as a(n): D) opportunity cost.
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