Updated Latest Introduction to Managerial Accounting 7th Edition Test Bank Comprehensive Study Guide With Cost Accounting Concepts Budgeting Systems Variance Analysis CVP Analysis Break-Even Analysis Activity Based Costing Job Order and Process Costing Pe

Test bank -Introduction To Manageria F




Accounting 7th Edition by Peter Brewer,
Ray Garrison, NOREEN-latest 2022




1-1

, Introduction To Manageria Accounting 7th Edition Test Bank
F




by Peter Brewer, Ray Garrison, NOREEN




Chapter 01


Manageria Accounting and Cost Concepts
F




True / False Questions



1. Selling costs can be either!!direct!!or!!indirect!!costs.
F F F




True False


2. A!!direct!!cost!!is!!a!!cost!!that!!cannot!!be!!easily!!traced!!to!!the!!particular!!cost!!object!!unde
r!!consideration.


True False
3. Property!!taxes!!and!!insurance!!premiums!!paid!!on!!a!!factory!!building!!are!!examples!!of!!period!!costs.


True False


4. Conversion!!cost!!equals!!product!!cost!!less!!direct!!labor!!cost.


True False


5. Thread!!that!!is!!used!!in!!the!!production!!of!!mattresses!!is!!an!!indirect!!material!!that!!is!!therefor
e!!classified!!as!!manufacturing!!overhead.


True False


6. Direct!!labor!!is!!a!!part!!of!!prime!!cost,!!but!!not!!conversion!!cost.
1-2

, True False


7. Conversion!!cost!!is!!the!!sum!!of!!direct!!labor!!cost!!and!!direct!!materials!!cost.


True False


8. Direct!!material!!costs!!are!!generally!!fixed!!costs.


True False


9. Product costs are recorded as expenses in the period in which the related products are sold.
F F F F F F F F F F F F F F F




True False


10. Depreciation on manufacturing equipment is a product cost.
F F F F F F F




True False


11. Manufacturing salaries and wages incurred in the factory are period costs.
F F F F F F F F F F




True False
12. Depreciation on office equipment would be included in product costs.
F F F F F F F F F




True False


13. Rent on a factory building used in the production process would be classified as a product cost
F F F F F F F F F F F F F F F F F




and as a fixed cost.
F F F F




True False


14. A fixed cost remains constant if expressed on a unit basis.
F F F F F F F F F F




True False


15. Total variable cost is expected to remain unchanged as activity changes within the relevant
F F F F F F F F F F F F F F




range.


True False

1-3

,16. Country Charm Restaurant is open 24 hours a day and always has a fire going in the fireplace in
F F F F F F F F F F F F F F F F F F F




the middle of its dining area. The cost of the firewood for this fire is fixed with respect to the
F F F F F F F F F F F F F F F F F F F F




number of meals served at the restaurant.
F F F F F F




True False


17. Committed fixed costs represent organizational investments with a multi-year planning horizon
F F F F F F F F F F F




that can't be significantly reduced even for short periods.
F F F F F F F F




True False


18. Commissions paid to salespersons are a variable selling expense.
F F F F F F F F




True False
19. Variable costs are costs that vary, in total, in direct proportion to changes in the volume or level of
F F F F F F F F F F F F F F F F F F F




activity.


True False


20. The planning horizon for a committed fixed cost usually encompasses many years.
F F F F F F F F F F F




True False


21. Cost behavior is considered linear whenever a straight line is a reasonable approximation for the
F F F F F F F F F F F F F F F




relation between cost and activity.
F F F F




True False


22. The high-low method uses cost and activity data from just two periods to establish the formula for
F F F F F F F F F F F F F F F F F




a mixed cost.
F F




True False


23. The engineering approach to the analysis of mixed costs involves a detailed analysis of what cost
F F F F F F F F F F F F F F F F




behavior should be, based on an industrial engineer's evaluation of the production methods to be
F F F F F F F F F F F F F F F




used, the materials specifications, labor requirements, equipment usage, production efficiency,
F F F F F F F F F F




power consumption, and so on.
F F F F




1-4

, True False


24. The contribution margin is the amount remaining from sales revenues after variable expenses
F F F F F F F F F F F F F




have been deducted.
F F




True False


25. A contribution format income statement for a merchandising company organizes costs into two
F F F F F F F F F F F F F




categories—cost of goods sold and selling and administrative expenses.
F F F F F F F F




True False
26. The traditional format income statement provides managers with an income statement that clearly
F F F F F F F F F F F F F




distinguishes between fixed and variable costs and therefore aids planning, control, and decision
F F F F F F F F F F F F F




making.


True False


27. In a contribution format income statement, the gross margin minus selling and administrative
F F F F F F F F F F F F F




expenses equals net operating income.
F F F F




True False


28. A traditional format income statement organizes costs on the basis of behavior.
F F F F F F F F F F F




True False


29. In a traditional format income statement for a merchandising company, the selling and
F F F F F F F F F F F F F




administrative expenses report all period costs that have been expensed as incurred.
F F F F F F F F F F F




True False


30. The contribution format is widely used for preparing external financial statements.
F F F F F F F F F F




True False


31. Contribution margin equals revenue minus all fixed costs.
F F F F F F F




True False


1-5

,32. The potential benefit that is given up when one alternative is selected over another is called an
F F F F F F F F F F F F F F F F F




opportunity cost. F




True False


33. A cost that differs from one month to another is known as a differential cost.
F F F F F F F F F F F F F F




True False




1-6

,Multiple Choice Questions
F F




34. The nursing station on the fourth floor of Central Hospital is responsible for the care of orthopedic
F F F F F F F F F F F F F F F F F




surgery patients. The costs of prescription drugs administered by the nursing station to patients
F F F F F F F F F F F F F F




should be classified as:
F F F




A. direct patient costs.
F F




B. indirect patient costs. F F




C. overhead costs of the nursing station.
F F F F F




D. period costs of the hospital.
F F F F




35. All of the following costs would be found in a company's accounting records except:
F F F F F F F F F F F F F




A. sunk cost. F




B. opportunity cost. F




C. indirect costs. F




D. direct costs. F




36. The costs of the Accounting Department at Central Hospital would be considered by the Surgery
F F F F F F F F F F F F F F F




Department to be: F F




A. direct costs. F




B. indirect costs. F




C. incremental costs. F




D. opportunity costs. F




1-7

,37. Which of the following is classified as a direct labor cost?
F F F F F F F F F F




Wages of assembly- F F

Wages of a factory supervisor
F F F F

F line workers
F




A) No No

B) Yes Yes

C) No Yes

D) Yes No




A. Option A F




B. Option B F




C. Option C F




D. Option D F




38. In a manufacturing company, direct labor costs combined with direct materials costs are known
F F F F F F F F F F F F F F




as:



A. period costs. F




B. conversion costs. F




C. prime costs. F




D. opportunity costs. F




1-8

,39. The property taxes on a factory building would be an example of:
F F F F F F F F F F F




Prime Cost Conversion Cost
F F




A) No Yes

B) Yes No

C) Yes Yes

D) No No




A. Option A F




B. Option B F




C. Option C F




D. Option D F




40. Which of the following would most likely be included as part of manufacturing overhead in the
F F F F F F F F F F F F F F F F




production of a wooden table?
F F F F




A. The amount paid to the individual who stains the table.
F F F F F F F F F




B. The commission paid to the salesperson who sold the table.
F F F F F F F F F




C. The cost of glue used in the table.
F F F F F F F




D. The cost of the wood used in the table.
F F F F F F F F




1-9

, 41. Property taxes on a manufacturing facility are classified as:
F F F F F F F F




Conversion cost Period cost
F F




A) Yes No

B) Yes Yes

C) No Yes

D) No No




A. Option A F




B. Option B F




C. Option C F




D. Option D F




42. Indirect labor is a(n):
F F F




A. Prime cost.F




B. Conversion cost. F




C. Period cost. F




D. Opportunity cost. F




1-10