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chap001 - Chapter 001 An Introduction to Managerial...

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Chapter 001, An Introduction to Managerial Accounting and Cost Concepts True / False Questions 1. The sum of all costs of manufacturing costs except direct materials is called manufacturing overhead. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Easy 2. Conversion cost is the sum of direct labor and manufacturing overhead. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Easy 3. Prime cost is the sum of direct labor and manufacturing overhead. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Easy 4. Thread used in the production of mattresses, an indirect material, is classified as manufacturing overhead. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Easy 1-1
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Chapter 001, An Introduction to Managerial Accounting and Cost Concepts 5. Period costs are also known as inventoriable costs. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 2 Level: Easy 6. All costs in a merchandising company are period costs. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 2 Level: Easy 7. The cost of goods sold of a manufacturing company equals beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement AICPA FN: Reporting Learning Objective: 3 Level: Easy 8. A variable cost is constant if expressed on a per unit basis but the total dollar amount changes as the number of units increases or decreases. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 5 Level: Easy 1-2
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Chapter 001, An Introduction to Managerial Accounting and Cost Concepts 9. As activity increases within the relevant range, fixed costs remain constant on a per unit basis. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 5 Level: Easy 10. Direct costs are often difficult to trace to the specific cost object under consideration. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 6 Level: Easy 11. All of the following are examples of opportunity costs: salary given up to start a business; rental income given up when you live in a house you own; interest income that could be earned on money spent for a car. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 7 Level: Medium 12. The amount that was paid by a company for a building to house its operations is an example of a sunk cost.
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