ACC 350 Week 3 Quiz – Strayer
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Chapter 2
An Introduction to Cost Terms and
Purposes
1)
Products,
services, departments, and customers may be cost objects.
2)
Costs
are accounted for in two basic stages: assignment followed by
accumulation.
3)
Actual
costs and budgeted costs are two different terms referring to the same
thing.
4)
Accountants
define a cost as a resource to be sacrificed to achieve a specific
objective.
5)
A cost
object is always either a product or a service.
6)
A
department could be considered a cost object.
7)
The same
cost may be direct for one cost object and indirect for another cost
object.
8)
Assigning
direct costs poses more problems than assigning indirect costs.
9)
Improvements
in information-gathering technologies are making it possible to trace more
costs as direct.
10)
Misallocated
indirect costs may lead to promoting products that are not profitable.
11)
The
materiality of the cost is a factor in classifying the cost as a direct or
indirect cost.
12)
The cost
of a customized machine only used in the production of a single product would
be classified as a direct cost.
13)
Some
fixed costs may be classified as direct manufacturing costs.
14)
The
distinction between direct and indirect costs is clearly set forth in Generally
Accepted Accounting Principles (GAAP).
15)
Fixed
costs have no cost driver in the short run, but may have a cost driver in the
long run.
16)
Costs
that are difficult to change over the short run are always variable over the
long run.
17)
A
decision maker cannot adjust capacity over the short run.
18)
Fixed
costs vary with the level of production or sales volume.
19)
Currently,
most administrative personnel costs would be classified as fixed costs.
20)
Fixed
costs depend on the resources used, not the resources acquired.
21)
The
variable cost per unit of a product should stay the same throughout the
relevant range of production.
22)
An
appropriate cost driver for shipping costs might be the number of units
shipped.
23)
When
making decisions using fixed costs, the focus should be on total costs and not
unit costs.
24)
When
50,000 units are produced the fixed cost is $10 per unit. Therefore, when
100,000 units are produced fixed costs will remain at $10 per unit.
25)
A unit
cost is computed by dividing total cost by the number of units.
26)
Unit
costs and average costs are really the same thing.
27)
Service-sector
companies provide services or intangible products to their customers.
28)
America
on Line (AOL) would be an example of a merchandising company.
29)
Merchandising
companies purchase products and sell them to customers without changing their
basic form.
30)
Merchandising
companies only hold two types of inventories: merchandise inventory, and direct
material.
31)
Manufacturing
sector firms normally hold three types of inventory: direct materials
inventory, work-in-process inventory, and finished goods inventory.
32)
Work-in-process
inventory are goods partially worked on but not yet completed.
33)
Direct
material costs are the acquisition costs of all materials that eventually
become part of the cost object and cannot be traced to the cost object in an
economically feasible way.
34)
Acquisition
costs of direct materials include freight-in charges, sales taxes, and custom
duties.
35)
Indirect
manufacturing costs include the compensation of all manufacturing labor that
can be traced to the cost object in an economically feasible way.
36)
Direct
manufacturing labor includes wages and fringe benefits paid to machine
operators.
37)
Inventoriable
costs are reported as an asset when incurred and expensed on the income
statement when the product is sold.
38)
Cost of
goods sold refers to the products brought to completion, whether they were
started before or during the current accounting period.
39)
Operating
income is sales revenue minus cost of goods manufactured.
40)
All
manufacturing costs are inventoriable costs.
41)
All
costs reported on the income statement of a service-sector company are period
costs.
42)
Period
costs are never included as part of inventory.
43)
Conversion
costs include all direct manufacturing costs.
44)
Inventory
of a manufacturing firm includes goods partially worked on but not yet fully
completed.
45)
The
wages of a plant supervisor would be classified as a period cost.
46)
For
external reporting, GAAP requires that costs be classified as either variable
or fixed.
47)
Depreciation
can be classified as either an inventoriable cost or a period cost, depending
on what is being depreciated.
48)
Insurance
on a factory can be classified as a period cost.
49)
Overtime
premium consists of the wages paid to all workers (for both direct labor and
indirect labor) in excess of their straight-time wage rates.
50)
A
product cost that is useful for one decision may not be useful information for
another decision.
51)
For
external reporting purposes, indirect manufacturing costs must be allocated to
individual units.
52)
Overtime
premium is normally considered as a component of direct labor.
53)
If a
worker is paid for 8 hours, but is idle for 1 of those 8 hours, the 1 hour of
idle time would be considered a component of direct labor.
54)
The role
of the cost accountant is to tailor the cost calculation to fit the current
decision situation.
55)
Cost
accounting and cost management include calculating various costs, obtaining
financial and nonfinancial information, and analyzing relevant information for
decision making.
56)
A
costing system traces direct costs and allocates indirect costs to
products.
57)
Management
accountants help managers identify which information is relevant to a
particular decision.
58)
When
making strategic decisions about which products to produce, managers do not
need to know how revenues and costs vary with changes in output level.
59)
Cost
objects include:
A)
products
B)
customers
C)
departments
D)
All of
these answers are correct.
60)
Actual
costs are:
A)
the
costs incurred
B)
budgeted
costs
C)
estimated
costs
D)
forecasted
costs
61)
The
general term used to identify both the tracing and the allocation of
accumulated costs to a cost object is:
A)
cost
accumulation
B)
cost
assignment
C)
cost
tracing
D)
conversion
costing
62)
In order
to make decisions, managers need to know:
A)
actual
costs
B)
budgeted
costs
C)
both
costs
D)
neither
cost
63)
The
collection of accounting data in some organized way is:
A)
cost
accumulation
B)
cost
assignment
C)
cost
tracing
D)
conversion
costing
64)
Budgeted
costs are:
A)
the
costs incurred this year
B)
the
costs incurred last year
C)
planned
or forecasted costs
D)
competitor's
costs
65)
Cost
assignment is:
A)
always
arbitrary
B)
includes
tracing and allocating
C)
the same
as cost accumulation
D)
finding
the difference between budgeted and actual costs
66)
A cost
system determines the cost of a cost object by:
A)
accumulating
and then assigning costs
B)
accumulating
costs
C)
assigning
and then accumulating costs
D)
assigning
costs
67)
Which of
the following does NOT affect the direct/indirect classification of a
cost?
A)
the
level of budgeted profit for the next year
B)
the
materiality of the cost in question
C)
available
technology to gather information about the cost
D)
the
design of the operation
68)
Which of
the following statements about the direct/indirect cost classification is NOT
true?
A)
Direct
costs are always traced.
B)
Direct
costs are always allocated.
C)
The
design of operations affects the direct/indirect classification.
D)
The
direct/indirect classification depends on the choice of cost object.
69)
Cost
tracing is:
A)
the
assignment of direct costs to the chosen cost object
B)
a
function of cost allocation
C)
the
process of tracking both direct and indirect costs associated with a cost
object
D)
the
process of determining the actual cost of the cost object
70)
Cost
allocation is:
A)
the
process of tracking both direct and indirect costs associated with a cost
object
B)
the
process of determining the actual cost of the cost object
C)
the
assignment of indirect costs to the chosen cost object
D)
a
function of cost tracing
71)
The
determination of a cost as either direct or indirect depends upon the:
A)
accounting
system
B)
allocation
system
C)
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