Deck 17: Managerial Accounting and Cost Concepts

Question 1

Management accounting information demands more objectivity than financial accounting information.

Answer 1

False

Question 2

Management accounting exists primarily for the benefit of people inside a company.

Answer 2

True

Question 3

Financial accounting information is confidential and private.

Answer 3

False

Question 4

Managerial accounting primarily provides information on past performance.

Question 5

Management accounting provides reports that are future oriented.

Question 6

Management accounting is a profession that involves partnering in management decision making.

Question 7

Similar to financial accounting reports,management accounting reports are standardized in format.

Question 8

Management accounting data must be expressed in historical dollars.

Question 9

Management accounting information is determined objectively and is verifiable,whereas financial accounting is more subjective.

Question 10

Management accounting information is objective and verifiable for decision making.

Question 11

The overall guideline or limit for management accounting information is that the report or analysis must be meaningful and must answer the questions or issues under review.

Question 12

Managerial accounting's main emphasis is on full and accurate accounting for and disclosure of a company's operating results.

Question 13

Financial accounting relies on the criterion of usefulness rather than formal guidelines in reporting information.

Question 14

Financial accounting reports are prepared on a periodic basis.

Question 15

Primary users of managerial accounting include governmental agencies.

Question 16

Managerial accounting reports should be prepared when they are needed,without regard to calendar dates or regularity of issue.

Question 17

Accounting rules applicable to management accounting are the same as those used for financial accounting.

Question 18

Reporting format of managerial accounting is flexible and driven by user's needs.

Question 19

Management accounting is a subordinate activity to financial accounting.

Question 20

The reporting format of financial accounting information is based on generally accepted accounting principles.

Question 21

Inventoriable cost is a synonym of product cost.

Question 22

Direct costs can be conveniently traced to a cost object.

Question 23

Management accounting formats are identical for all companies.

Question 24

Building depreciation is an example of a direct product cost in a manufacturing company.

Question 25

Costs can also be classified as value-adding or non-value-adding costs.

Question 26

Non-value-adding costs increase the cost of a product.

Question 27

Neither the amount of detail nor the format of a management accounting report is affected by those to whom the report is sent.

Question 28

Direct materials cost is a fixed cost because it always occurs in a production process.

Question 29

Total variable costs remain constant within a defined time period or range of activity.

Question 30

The two primary types of cost behavior are fixed and variable.

Question 31

Fixed costs remain constant within a defined range of activity or time period.

Question 32

Period costs are also called noninventoriable costs.

Question 33

Manufacturing costs behave as variable or fixed costs.

Question 34

Cost of sugar is an indirect cost in the manufacture of candy bars.

Question 35

Variable costs per unit change in an inversely proportional rate to changes in volume.

Question 36

In a manufacturing company,an accountant's salary is a value-adding cost.

Question 37

Product unit cost is made up of direct materials and indirect materials only.

Question 38

Direct materials are the only materials used in a product.

Question 39

Minor materials and other production supplies that cannot be conveniently traced to specific products are accounted for as indirect materials.

Question 40

Lubrication used for machines is an example of a direct material.

Question 41

The costs of materials used in production are transferred from the Materials Inventory account directly to the Cost of Goods Sold account.

Question 42

Property taxes and equipment depreciation are examples of indirect manufacturing costs.

Question 43

Period costs are charged against the revenue of the current period.

Question 44

The costs of labor for maintenance and inspections are examples of direct labor.

Question 45

At the end of an accounting period,the balance in the Finished Goods Inventory account is the sum of costs of products completed and the cost of goods sold as of that date.

Question 46

Period cost and product cost are synonymous terms.

Question 47

Both indirect materials and indirect labor are overhead costs.

Question 48

Factory employees' wages are recorded into the Work in Process Inventory account.

Question 49

Product costs for a manufacturing company consist of cost of direct materials,direct labor,and overhead.

Question 50

Both direct and indirect labor costs can be directly traced to finished products.

Question 51

A materials request form is prepared whenever the purchasing department orders materials.

Question 52

Both direct labor and indirect labor are recorded in the Work in Process Inventory account as the product is being manufactured.

Question 53

Direct labor cannot be traced to products as it is invisible.

Question 54

As units are completed,their costs are transferred from the Materials Inventory account to the Finished Goods Inventory account.

Question 55

A job order cost card can be used to record all product costs incurred during production.

Question 56

All product costs are expensed in the period in which they are paid in cash.

Question 57

Both product costs and period costs could appear on the balance sheet.

Question 58

Indirect product costs incurred are charged directly to the Cost of Goods Sold account.

Question 59

Materials costs flow from the Materials Inventory account to the Work in Process Inventory account to the Finished Goods Inventory account.

Question 60

The product is the cost object when assigning indirect product costs.

Question 61

Total manufacturing costs and the change in the Work in Process Inventory are used to compute the cost of goods sold.

Question 62

Some period costs can be found in inventory accounts on the balance sheet.

Question 63

Total manufacturing costs decrease the balance of the Work in Process Inventory account.

Question 64

Overhead costs can be directly traced to products once the products are completed.

Question 65

Period costs flow through three types of inventory accounts before becoming part of the cost of goods sold amount.

Question 66

A production cost is classified as an overhead cost if it is not directly traceable to an end product or a cost object.

Question 67

Total manufacturing costs include all direct materials used as well as all direct labor costs and overhead costs incurred during a period.

Question 68

Standard costing combines actual direct costs of materials and labor with estimated overhead costs to determine a product unit cost.

Question 69

Overhead costs are traced to products in the same way that direct materials and direct labor are traced.

Question 70

Salaries of supervisory production personnel should be classified as direct labor costs.

Question 71

Cost of goods manufactured appears on the income statement of a manufacturing company in a similar manner as purchases appear on the income statement of a merchandising company.

Question 72

In a manufacturing company,the cost of direct materials,direct labor,and overhead will most likely become a part of the Cost of Goods Sold account balance.

Question 73

Wages of machine operators and other workers involved in actually shaping the product are classified as indirect labor costs.

Question 74

The standard costing method uses the sum of actual direct materials,actual direct labor,and actual overhead to determine the product unit cost.

Question 75

Product costs can be found on both the balance sheet and the income statement.

Question 76

Recording cost of goods manufactured increases the Work in Process Inventory account.

Question 77

The cost of goods sold decreases the balance in the Finished Goods Inventory account.

Question 78

Overhead costs are not recorded in the Work in Process Inventory account.

Question 79

The costs of marketing and delivering a product are recorded in the Work in Process Inventory account.

Question 80

Product unit cost is the sum of direct materials,direct labor,and overhead divided by the total number of units produced.