ACCT Summary Chap 1-3

When the cost object is a specific product’s manufacturing process, which of the following costs is an indirect cost?

Cost of the salary for the plant foreman, who supervises the production of that line and several
others

Which of the following costs is not considered a product cost

Cost of the salary for the vice president of finance

Which of the following costs should be expensed as incurred, never being recorded as an asset, for
financial reporting purposes

Advertising Costs

Which of the following is NOT a period cost

Depreciation on factory equipment

Which of the following is an example of a sunk cost when deciding between expanding production capacity at a presently operating manufacturing plant and retaining the current production capacity at this plant?

Direct labor cost for the manufacturing plant during the previous calendar year

Which of the following statements about contribution format income statements is false?

Contribution format income statements compute Gross Margin as the difference between Sales
and Total Variable Costs

Prime costs consist of

direct materials and direct labor.

Managerial accounting applies to all types of business-service, merchandising, and manufacturing and to
all forms of business organizations.

True

As the level of activity increases within the relevant range, which of these is true about a fixed cost?

The cost per unit will
decrease

Which of these costs will change with a decrease in activity within the relevant range?

Unit fixed costs and total variable costs

Which one of the following is not a manufacturing cost?

Advertising cost

Product costs include each of the following except:

selling and administrative expenses

Each of the following is a period cost except:

indirect labor

For a manufacturing company, which of the following is an example of a period cost rather than a product
cost?

Wages of salespersons

Which group of costs consists of only product costs?

Direct labor, indirect labor, factory utilities.

Indirect labor is a

product cost

Which of the following costs would be included in manufacturing overhead of a computer manufacturer

Depreciation on testing equipment.

Which of the following is not an element of manufacturing overhead

Sales manager’s salary.

Companies assign manufacturing overhead to work in process on an
estimated basis through the use of a(n)

predetermined overhead rate

Manufacturing overhead is underapplied if

Actual overhead is greater than applied

Most companies debit underapplied overhead to

cost of goods sold.

Having underapplied manufacturing overhead at the end of the period mean

The adjusted cost of goods sold will be higher than the unadjusted cost of goods sold.