Introduction to
Managerial
Accounting 7th
Edition Peter
Brewer Ray
Garrison Eric
Noreen Test Bank
, Chapter 01
Managerial Accounting and Cost Concepts
True / False Questions
1. Selling costs can be either direct or indirect costs.
True False
2. A direct cost is a cost that cannot be easily traced to the particular cost object under
consideration.
True False
1-1
,Introduction To Managerial Accounting 7th Edition Test Bank by Peter Brewer, Ray
Garrison, Eric Noreen
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 therefore
classified as manufacturing overhead.
True False
6. Direct labor is a part of prime cost, but not conversion cost.
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.
True False
10. Depreciation on manufacturing equipment is a product cost.
True False
11. Manufacturing salaries and wages incurred in the factory are period costs.
True False
1-2
, Introduction To Managerial Accounting 7th Edition Test Bank by Peter Brewer, Ray
Garrison, Eric Noreen
12. Depreciation on office equipment would be included in product costs.
True False
13. Rent on a factory building used in the production process would be classified as a product cost
and as a fixed cost.
True False
14. A fixed cost remains constant if expressed on a unit basis.
True False
15. Total variable cost is expected to remain unchanged as activity changes within the relevant
range.
True False
16. Country Charm Restaurant is open 24 hours a day and always has a fire going in the fireplace in
the middle of its dining area. The cost of the firewood for this fire is fixed with respect to the
number of meals served at the restaurant.
True False
17. Committed fixed costs represent organizational investments with a multi-year planning horizon
that can't be significantly reduced even for short periods.
True False
18. Commissions paid to salespersons are a variable selling expense.
True False
1-3
Managerial
Accounting 7th
Edition Peter
Brewer Ray
Garrison Eric
Noreen Test Bank
, Chapter 01
Managerial Accounting and Cost Concepts
True / False Questions
1. Selling costs can be either direct or indirect costs.
True False
2. A direct cost is a cost that cannot be easily traced to the particular cost object under
consideration.
True False
1-1
,Introduction To Managerial Accounting 7th Edition Test Bank by Peter Brewer, Ray
Garrison, Eric Noreen
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 therefore
classified as manufacturing overhead.
True False
6. Direct labor is a part of prime cost, but not conversion cost.
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.
True False
10. Depreciation on manufacturing equipment is a product cost.
True False
11. Manufacturing salaries and wages incurred in the factory are period costs.
True False
1-2
, Introduction To Managerial Accounting 7th Edition Test Bank by Peter Brewer, Ray
Garrison, Eric Noreen
12. Depreciation on office equipment would be included in product costs.
True False
13. Rent on a factory building used in the production process would be classified as a product cost
and as a fixed cost.
True False
14. A fixed cost remains constant if expressed on a unit basis.
True False
15. Total variable cost is expected to remain unchanged as activity changes within the relevant
range.
True False
16. Country Charm Restaurant is open 24 hours a day and always has a fire going in the fireplace in
the middle of its dining area. The cost of the firewood for this fire is fixed with respect to the
number of meals served at the restaurant.
True False
17. Committed fixed costs represent organizational investments with a multi-year planning horizon
that can't be significantly reduced even for short periods.
True False
18. Commissions paid to salespersons are a variable selling expense.
True False
1-3
