True False Questions

Chapter 02 - Basic Cost Management Concepts and Accounting for Mass Customization Operations 2-1 Chapter 02 Basic Cost Management Concepts and Accounting for Mass Customization Operations

True / False Questions

• Inventoriable costs are expensed when incurred.

True False

• Finished goods inventory is ordinarily held for sale by a manufacturing company.

True False

• Indirect labor is not a component of manufacturing overhead.

True False

• The following equation -- Beginning finished goods + cost of goods manufactured - ending

finished goods -- is used to calculate cost of goods sold during the period.True False

• A suitable cost driver for the amount of direct materials used is the number of direct labor

hours worked.True False

Multiple Choice Questions

Managerial Accounting Creating Value In A Dynamic Business Environment 9th Edition Hilton Test Bank Visit TestBankDeal.com to get complete for all chapters

Chapter 02 - Basic Cost Management Concepts and Accounting for Mass Customization Operations 2-2

• Which of the following statements is true?
• The word "cost" has the same meaning in all situations in which it is used.
• Cost data, once classified and recorded for a specific application, are appropriate for use in

any application.

• Different cost concepts and classifications are used for different purposes.
• All organizations incur the same types of costs.
• Costs incurred in one year are always meaningful in the following year.

7. Product costs are:

• expensed when incurred.
• inventoried.
• treated in the same manner as period costs.
• treated in the same manner as advertising costs.
• subtracted from cost of goods sold.

• Which of the following is a product cost?
• Glass in an automobile.
• Advertising.
• The salary of the vice president-finance.
• Rent on a factory.
• Both "A" and "D."

• Which of the following would not be classified as a product cost?
• Direct materials.
• Direct labor.
• Indirect materials.
• Insurance on a manufacturing plant.
• Sales commissions.

Chapter 02 - Basic Cost Management Concepts and Accounting for Mass Customization Operations 2-3

• The accounting records of Georgia Company revealed the following costs: direct materials

used, $250,000; direct labor, $425,000; manufacturing overhead, $375,000; and selling and

administrative expenses, $220,000. Georgia's product costs total:

A. $1,050,000.

B. $830,000.

C. $895,000.

D. $1,270,000.

• some other amount.

11. Costs that are expensed when incurred are called:

• product costs.
• direct costs.
• inventoriable costs.
• period costs.
• indirect costs.

• Which of the following is a period cost?
• Direct material.
• Advertising expense.
• Indirect Labor.
• Miscellaneous supplies used in production activities.
• Both "B" and "C."

• Which of the following is not a period cost?
• Legal costs.
• Public relations costs.
• Sales commissions.
• Wages of assembly-line workers.
• The salary of a company's chief financial officer (CFO).

Chapter 02 - Basic Cost Management Concepts and Accounting for Mass Customization Operations 2-4

• The accounting records of Reynolds Corporation revealed the following selected costs:

Sales commissions, $65,000; plant supervision, $190,000; and administrative expenses,

$185,000. Reynolds's period costs total:

A. $250,000.

B. $440,000.

C. $375,000.

D. $255,000.

E. $185,000.

• Yang Corporation recently computed total product costs of $567,000 and total period

costs of $420,000, excluding $35,000 of sales commissions that were overlooked by the company's administrative assistant. On the basis of this information, Yang's income statement

should reveal operating expenses of:

A. $35,000.

B. $420,000.

C. $455,000.

D. $567,000.

E. $602,000.

• Which of the following entities would most likely have raw materials, work in process,

and finished goods?

• Exxon Corporation.
• Macy's Department Store.
• Wendy's.
• Southwest Airlines.
• Columbia University.

• Selling and administrative expenses would likely appear on the balance sheet of:
• The Gap.
• Texas Instruments.
• Turner Broadcasting System.
• All of these firms.
• None of these firms.