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Chapter 2—Basic Managerial Accounting Concepts
TRUE/FALSE
- It is beneficial to assign indirect costs to cost objects.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Price must be greater than cost in order for the firm to generate revenue.
ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry | IMA: Business Economics | ACBSP: APC-09-Financial Statements KEY: Bloom's: Knowledge NOT: 1 min.
- Accumulating costs is the way that costs are measured and recorded.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Assigning costs involves the way that a cost is linked to some cost object.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Assigning costs tells the accountant who spent the money.
ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge NOT: 1 min.
- A cost object is any item such as products, customers, departments, regions, and so on, for which costs
are measured and assigned.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Costs are directly, not indirectly, associated with cost objects.
Cornerstones of Managerial Accounting 5th Edition Mowen Test Bank Visit TestBankDeal.com to get complete for all chapters
ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Direct costs are those costs that cannot be easily and accurately traced to a cost object.
ANS: F
Direct costs are those costs that can be easily and accurately traced to a cost object.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Indirect costs are costs that are not easily and accurately traced to a cost object.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Cost Management | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Allocation means that an indirect cost is assigned to a cost object using a reasonable and convenient
method.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- A variable cost is one that does not increase in total as output increase and does not decrease in total as
output decreases.
ANS: F
A variable cost is one that does increase in total as output increase and does not decrease in total as output decreases.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-28-Variable and Fixed Costs KEY: Bloom's: Knowledge NOT: 1 min.
- A fixed cost is a cost that does not increase in total as output increases and does not decrease in total as
output decreases.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-28-Variable and Fixed Costs KEY: Bloom's: Knowledge NOT: 1 min.
- An opportunity cost is the benefit given up or sacrificed when one alternative is chosen over another.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Decision Modeling | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Cost is a dollar measure of the resources used to achieve a given benefit.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge NOT: 1 min.
- A cost object is something for which a company wants to know the cost.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry |AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- The revenue per unit is called cost.
ANS: F
The revenue per unit is called price.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry | IMA: Business Economics | ACBSP: APC-09-Financial Statements KEY: Bloom's: Knowledge NOT: 1 min.
- As costs are used up in the production of revenues, they are said to expire. Expired costs are called
expenses.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement |AICPA: FN-Reporting | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs | ACBSP: APC-09-Financial Statements KEY: Bloom's: Knowledge NOT: 1 min.
- Costs are incurred to produce future benefits.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge NOT: 1 min.
- Expired costs are called assets.
ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic
STA: AICPA: BB-Industry |AICPA: FN-Reporting | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Reducing the cost required to achieve a given benefit means that a company is becoming less efficient.
ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: FN-Measurement |AICPA: FN-Decision Modeling | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Costs can be assigned to cost objects in only one way.
ANS: F
Costs can be assigned to cost objects in a number of ways.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry |AICPA: FN-Measurement | IMA: Business Economics | ACBSP: APC-27-Managerial Accounting Features/Costs KEY: Bloom's: Knowledge
NOT: 1 min.
- Property taxes on a factory building would normally be classified as a fixed cost.
ANS: T PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry | IMA: Business Economics | ACBSP: APC-28-Variable and Fixed Costs KEY: Bloom's: Knowledge NOT: 1 min.
- Glue used in the manufacture of cabinets would be an example of a fixed cost.
ANS: F
Glue used in the manufacture of cabinets would be an example of a variable cost.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-1 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry | IMA: Business Economics | ACBSP: APC-28-Variable and Fixed Costs KEY: Bloom's: Knowledge NOT: 1 min.
- Industries that provide intangible services do not normally have direct contact with their customers.
ANS: F PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-2 NAT: BUSPROG: Analytic STA: AICPA: BB-Industry | IMA: Business Economics | ACBSP: APC-25-Managerial Characteristics/Terminology KEY: Bloom's: Knowledge
NOT: 1 min.
- Research and development costs would be classified as product cost.
ANS: F
Research and development costs would be classified as period costs.
PTS: 1 DIF: Difficulty: Easy OBJ: LO: 2-2
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