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Powered by Cognero Page 1 ch 1 Indicate whether the statement is true or false.

1.For a construction contractor, the wages of carpenters would be classified as factory overhead cost.

• True
• False

2.If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as direct materials cost.

• True
• False

3.Only the value of the inventory that is sold will appear on the income statement.

• True
• False

4.A diagram of the operating structure of an organization is called an organization chart.

• True
• False

5.Period costs are operating costs that are expensed in the period in which the goods are sold.

• True
• False

6.Goods that are partway through the manufacturing process, but not yet complete, are referred to as materials inventory.

• True
• False

7.The costs of materials and labor that do not enter directly into the finished product are classified as factory overhead.

• True
• False

8.Prime costs are the combination of direct labor costs and factory overhead costs.

• True
• False

9.Operating expenses are product costs and are expensed when the product is sold.

• True
• False

10.On the balance sheet for a manufacturing business, the cost of direct materials, direct labor, and factory overhead are categorized as either materials inventory, work in process inventory, or finished goods inventory.

• True
• False

11.Prime costs are the combination of direct materials and direct labor costs.

• True

Managerial Account ing, 15e Carl Warren, James Reeve, Jonathan Duchac (Test B ank All Chapters, 100% Original Verified, A+ Grade) Answers At The End Of Each Chapter 1 / 4

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• False

• Indirect labor and indirect materials would be part of factory overhead.
• True
• False

• Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as

factory overhead cost.

• True
• False

• Managerial accounting information includes both historical and estimated data.
• True
• False

• Product costs include direct labor and advertising expense.
• True
• False

• Although finance and accounting professionals often work within verticals and other horizontals, they do not normally

report directly to the heads of those units or departments.

• True
• False

• Period costs include direct materials and direct labor.
• True
• False

• The cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.
• True
• False

• Factory overhead is an example of a product cost.
• True
• False

• A performance report that identifies the amount of employee downtime is a financial accounting report.
• True
• False

• Managers use managerial information to evaluate performance of a company’s operation.
• True
• False

• Prime costs consist of direct materials, indirect materials, and direct labor.
• True 2 / 4

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• False

• Planning is the process of monitoring operating results and comparing actual results with the expected results.
• True
• False

• Conversion cost is the combination of direct materials cost and factory overhead cost.
• True
• False

• Controlling is the process of monitoring operating results and comparing actual results with the expected results.
• True
• False

• Prime costs consist of factory overhead and direct labor.
• True
• False

• Managerial accounting provides useful information to managers on product costs.
• True
• False

• Indirect labor would be included in factory overhead.
• True
• False

• Manufacturers use machinery and labor to convert direct materials into finished products.
• True
• False

• Lower utilization rates are considered favorable, while higher utilization rates are considered unfavorable.
• True
• False

• A cost object indicates how costs are related or identified.
• True
• False

• Conversion costs consist of product costs and period costs.
• True
• False

• Planning is the process of developing the company’s objectives or goals and translating these objectives into courses

of action.

• True
• False
• / 4

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• Managerial accounting reports are designed to meet the specific needs of a company’s management.
• True
• False

• Direct costs can be specifically traced to a cost object.
• True
• False

• The plant manager’s salary in a manufacturing business would be considered an indirect cost.
• True
• False

• Factory overhead cost is sometimes referred to as factory burden.
• True
• False

• If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of

factory overhead cost.

• True
• False

• Product costs are not expensed until the product is sold.
• True
• False

• A report analyzing the dollar savings of purchasing new equipment to speed up the production process is a managerial

accounting report.

• True
• False

• Managerial accounting uses only past data in reports to aid management in the decision-making process.
• True
• False

• The functions reporting to the CFO sometimes are grouped together and referred to as corporate finance.
• True
• False

• The statement of cost of goods manufactured is an extension of the income statement for a manufacturing company.
• True
• False

• A staff department or unit is one that provides services, assistance, and advice to the departments with line or other

staff responsibilities.

• True
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