.png){kind=logo}
1 © 2016 Pearson Canada Inc.Cost Accounting, Cdn. Ed., 7e (Horngren) Chapter 2 An Introduction to Cost Terms and Purposes
2.1 Identify and distinguish between two manufacturing cost classification systems: direct and indirect, prime and conversion.
1) "Cost" is defined by accountants as a resource sacrificed or foregone to achieve a specific objective.
Answer: TRUE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
2) Costs of Sales is another way of phrasing Cost of Goods Sold.
Answer: TRUE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
3) An actual cost is a predicted cost.
Answer: FALSE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
4) Nearly all accounting systems accumulate forecasted costs.
Answer: FALSE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
5) A cost object is anything for which a separate measurement of costs is desired.
Answer: TRUE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
6) Indirect costs cannot be economically traced directly to the cost objective.
Answer: TRUE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
7) Delivery charges are typically considered to be an indirect cost because it cannot be traced to each customer.
Answer: FALSE
Diff: 2 Type: TF
Skill: Understand
Objective: LO 2-1
Cost Accounting A Managerial Emphasis Canadian 7th Edition Horngren Test Bank Visit TestBankDeal.com to get complete for all chapters
2 © 2016 Pearson Canada Inc.8) A cost is classified as a direct or indirect cost based on the applicable cost object.
Answer: TRUE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
9) Cost tracing assigns indirect costs to the chosen cost object.
Answer: FALSE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
10) Factors affecting direct/indirect cost classifications are the materiality of the cost in question, the information-gathering technology used, and the operations.
Answer: TRUE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
11) Rent for the building that contains the manufacturing and engineering departments can all be charged as manufacturing overhead costs.
Answer: FALSE
Diff: 2 Type: TF
Skill: Understand
Objective: LO 2-1
12) The plant supervisor's salary is a direct labour cost.
Answer: FALSE
Diff: 2 Type: TF
Skill: Understand
Objective: LO 2-1
13) Conversion costs include all direct manufacturing costs.
Answer: FALSE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
14) Prime costs consist of direct and indirect manufacturing labour.
Answer: FALSE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
3 © 2016 Pearson Canada Inc.15) Conversion costs are all manufacturing costs other than direct materials.
Answer: TRUE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-1
16) Products, services, departments, and customers may be cost objects.
Answer: TRUE
Diff: 2 Type: TF
Skill: Understand
Objective: LO 2-1
17) Costs are accounted for in two basic stages: assignment followed by accumulation.
Answer: FALSE
Explanation: Costs are accounted for in two basic stages: accumulation followed by assignment.Diff: 2 Type: TF
Skill: Understand
Objective: LO 2-1
18) A cost object is always either a product or a service.
Answer: FALSE
Explanation: A cost object could be anything management wishes to determine the cost of, for example, a department.Diff: 2 Type: TF
Skill: Remember
Objective: LO 2-1
19) Assigning direct costs poses more problems than assigning indirect costs.
Answer: FALSE
Explanation: Tracing direct costs is quite straightforward, whereas assigning indirect costs to a number of different cost objects can be very challenging.Diff: 2 Type: TF
Skill: Understand
Objective: LO 2-1
20) A department could be considered a cost object.
Answer: TRUE
Diff: 2 Type: TF
Skill: Understand
Objective: LO 2-1
4 © 2016 Pearson Canada Inc.21) Cost assignment is a term that refers solely to allocating indirect costs among diverse cost objects.
Answer: FALSE
Explanation: Cost assignment is a general term that encompasses both (1) tracing direct costs to a distinct cost object and (2) allocating indirect costs among diverse cost objects.Diff: 2 Type: TF
Skill: Remember
Objective: LO 2-1
22) Materiality refers to the significance of the cost in question.
Answer: TRUE
Diff: 1 Type: TF
Skill: Remember
Objective: LO 2-5
23) Anything for which a separate measurement of costs is desired is known as
- a cost item.
- a cost object.
- a fixed cost item.
- a variable cost object.
- a cost driver.
Answer: B
Diff: 1 Type: MC
Skill: Remember
Objective: LO 2-1
24) Which of the following is a cost object?
- direct materials
- customers
- conversion costs
- cost assignments
- indirect labour
Answer: B
Diff: 2 Type: MC
Skill: Understand
Objective: LO 2-1
25) Which of the following is an indirect production cost?
- materials placed into production
- calibrating factory equipment
- labour placed into production
- cost of shipping a product to the customer
- advertising
Answer: B
Diff: 2 Type: MC
.png)