Test Bank for Managerial Accounting, 17th Edition by Carl S. Warren

Chap 01 17e - Warren
Complete Chapters Included ✅

Indicate whether the statement is true or false.
1. Horizontals are departments within a company that are responsible for developing products.
a. True
b. False

ANSWER: False

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

ANSWER: False

3. Period costs can be found on both the balance sheet and the income statement.
a. True
b. False

ANSWER: False

4. A report analyzing how many products need to be sold to cover operating costs is not typically a managerial
accounting report.
a. True
b. False

ANSWER: False

5. A major focus of managerial accounting is the development of costing information.
a. True
b. False

ANSWER: True

6. Indirect labor and indirect materials would be part of manufacturing overhead.
a. True
b. False

ANSWER: True

7. Prime costs are the combination of direct materials and direct labor costs.
a. True
b. False

ANSWER: True




Page 1

,Name: Class: Date:

Chap 01 17e - Warren

8. Control is the process of choosing goals and deciding how to achieve them.
a. True
b. False

ANSWER: False

9. Labor costs that are directly traceable to the product are part of manufacturing overhead.
a. True
b. False

ANSWER: False

10. For an automotive repair shop, the wages of mechanics working on the vehicles would be classified as direct
labor cost.
a. True
b. False

ANSWER: True

11. A cost is a sacrifice made to obtain some benefit.
a. True
b. False

ANSWER: True

12. The cost of materials entering directly into the manufacturing process is classified as manufacturing overhead
cost.
a. True
b. False

ANSWER: False

13. Operating expenses are product costs and are expensed when the product is sold.
a. True
b. False

ANSWER: False

14. Product costs are not expensed until the product is sold.
a. True
b. False

ANSWER: True




Page 2

,Name: Class: Date:

Chap 01 17e - Warren

15. Managerial accounting information includes both historical and estimated data.
a. True
b. False

ANSWER: True

16. Prime costs are the combination of direct labor costs and manufacturing overhead costs.
a. True
b. False

ANSWER: False

17. Finance and accounting professionals often work within vertical business units and other horizontal departments,
but they do not normally report directly to the heads of those business units or departments.
a. True
b. False

ANSWER: True

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

ANSWER: True

19. The cost of a manufactured product generally consists of direct materials cost, direct labor cost, and
manufacturing overhead cost.
a. True
b. False

ANSWER: True

20. Manufacturing overhead includes all manufacturing costs other than direct materials and direct labor.
a. True
b. False

ANSWER: True

21. The costs of materials and labor that cannot be traced directly to the finished product are classified as
manufacturing overhead.
a. True
b. False

ANSWER: True




Page 3

, Name: Class: Date:

Chap 01 17e - Warren

22. Conversion costs consist of product costs and period costs.
a. True
b. False

ANSWER: False

23. While no two company structures are identical, most large companies are organized in terms of verticals and
diagonals.
a. True
b. False

ANSWER: False

24. Prime costs consist of manufacturing overhead and direct labor.
a. True
b. False

ANSWER: False

25. Strategic planning is the process of monitoring operating results and comparing actual results with the expected
results.
a. True
b. False

ANSWER: False

26. The philosophy of focusing on “unexpected” good or bad performance is called management by exception.
a. True
b. False

ANSWER: True

27. Indirect labor would be included in manufacturing overhead.
a. True
b. False

ANSWER: True

28. Prime costs consist of direct materials, indirect materials, and direct labor.
a. True
b. False

ANSWER: False




Page 4