Managerial Accounting, 16e (Garrison)Chapter 1 Managerial Accounting and Cost Concepts

1) A manufacturing facility supervisor"s salary would be classified as an indirect cost with respect to a unit ofproduct.

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2) A straight price is a cost that have the right to be easily traced to the specific price object underconsideration.

3) A expense can be straight or indirect. The classification deserve to readjust if the expense object changes.

4) Wages phelp to production supervisors would be classified as production overhead.

5) Selling prices are indirect costs.

6) The sum of all production costs other than for straight materials and straight labor is calledmanufacturing overhead.

7) The three expense facets ordinarily had in product expenses are direct materials, straight labor,and production overhead.

8) Administrative expenses are indirect expenses.

9) Depreciation is constantly taken into consideration a period price for exterior financial reporting purposes in aproduction agency.

10) Opportunity costs at a production company are not component of production overhead.

11) Conversion expense is the sum of straight labor price and also production overhead expense.

12) In a manufacturing company, all expenses are duration expenses.

13) Advertising is not a thought about a product price also if it promotes a certain product.

14) Selling and administrative costs are period prices under mainly welcomed accountingvalues.

15) Convariation cost equals product price less straight materials expense.

16) Prime expense is the amount of direct materials cost and also straight labor price.

17) Product costs are likewise known as inventoriable prices.

18) Prime cost amounts to production overhead cost.

19) Conversion price is the same thing as manufacturing overhead.

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20) The cost of shipping parts from a supplier is considered a duration cost.

21) Depreciation on devices a company supplies in its offering and also governmental activities wouldbe classified as a period expense.

22) Instraight costs, such as manufacturing overhead, are variable expenses.

23) If the task level rises, then one would certainly intend the addressed cost per unit to boost aswell.

24) A solved cost is a expense whose expense per unit varies as the task level rises and also drops.

25) Cost behavior is considered curvistraight whenever before a right line is a reasonableapproximation for the relation in between expense and activity.

26) A decrease in manufacturing will ordinarily result in a decrease in addressed manufacturing expenses perunit.

27) As task decreases within the appropriate array, resolved expenses remajor constant on a per unitbasis.

28) The variable price per unit depends on how many units are developed.

29) In account evaluation, an account is classified as either variable or addressed based on an analyst"sprior expertise of just how the price in the account behaves.

30) A step-variable price is a cost that is obtained in large chunks and that boosts or decreasesonly in response to reasonably wide changes in activity.

31) Committed solved prices remain greatly unreadjusted in the brief run.

32) Fixed costs expressed on a per unit basis perform not change via changes in activity.

33) A resolved expense is continuous if expressed on a per unit basis yet the full dollar amount transforms asthe variety of devices rises or decreases.

34) If managers are reluctant to lay off straight labor employees once task declines leads to adecrease in the proportion of variable to addressed expenses.

35) Within the relevant range, a readjust in task results in a adjust in variable expense per unitand also full solved cost.

36) When operations are interrupted or cut earlier, committed resolved prices are cut in the brief termbereason the expenses of restoring them later on are likely to be far less than the short-run savings thatare realized

37) The idea of the appropriate variety does not apply to variable prices.

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56) In a traditional format earnings statement, the gross margin minus offering and administrativecosts amounts to net operating income.

57) Many providers use the contribution technique in preparing financial statements for externalreporting purposes.

58) Although the conventional format revenue statement is helpful for exterior reporting functions, ithas actually significant constraints once offered for internal purposes bereason it does not distinguish betweenresolved and variable costs.

59) The contribution format revenue statement is provided as an interior planning and also decision-making tool. Its emphasis on price behavior aids cost-volume-profit evaluation, managementperformance appraisals, and budgeting.

60) A contribution format earnings statement separates prices right into fixed and also variable categories,initially deducting variable prices from sales to achieve the contribution margin.

61) Timeless format earnings statements are commonly offered for preparing outside financialstatements.

62) Which of the following statements concerning straight and also indirect expenses is NOT true?A) Whether a certain cost is classified as straight or indirect does not depend on the expense object.B) A straight price is one that can be easily traced to the specific expense object.C) The manufacturing facility manager"s salary would be classified as an instraight cost of producing one unit ofproduct.D) A specific expense might be direct or indirect, depending on the cost object.

63) Direct costs:A) are incurred to benefit a certain bookkeeping period.B) are incurred due to a particular decision.C) have the right to be quickly traced to a specific cost object.D) are the variable costs of developing a product.

64) Which of the adhering to would a lot of most likely NOT be contained as manufacturing overhead in afurniture factory?A) The cost of the glue in a chair.B) The amount phelp to the individual who stains a chair.C) The workman"s compensation insurance of the supervisor who oversees production.D) The manufacturing facility utilities of the department in which manufacturing takes location.

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65) Rotonga Manufacturing Company leases a automobile to deliver its finiburned assets tocustomers. Which of the adhering to terms correctly describes the monthly lease payments madeon the delivery vehicle?

Direct Cost Fixed CostA) Yes YesB) Yes NoC) No YesD) No No

66) The prices of direct products are classified as:

Conversion price Manufacturing expense Prime cost A) Yes Yes Yes B) No No No C) Yes Yes No D) No Yes Yes

A) Choice AB) Choice BC) Choice CD) Choice D

67) Manufacturing overhead includes:A) all direct product, direct labor and also bureaucratic costs.B) all manufacturing costs other than straight labor.C) all production prices except direct labor and straight materials.D) all selling and governmental costs.

68) Materials offered in a factory that are not an integral component of the last product, such as cleaningoffers, should be classified as:A) straight products.B) a period expense.C) administrative price.D) manufacturing overhead.

69) The salary paid to the president of a agency would be classified on the income statement asa(n):A) administrative expense.B) straight labor expense.C) manufacturing overhead expense.D) marketing cost.

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74) A manufacturing facility supervisor"s weras are classified as:

Instraight labor

Fixed manufacturing overheadA) No NoB) Yes YesC) Yes NoD) No Yes

A) Choice AB) Choice BC) Choice CD) Choice D

75) Product prices that have end up being prices have the right to be found in:A) period expenses.B) offering prices.C) cost of products offered.D) governmental costs.

76) The price of straight materials is classified as a:

Convariation price Prime expense A) No No B) Yes No C) No Yes D) Yes Yes

A) Choice AB) Choice BC) Choice CD) Choice D

77) Which of the adhering to prices is classified as both a prime expense and also a conversion cost?A) Direct products.B) Direct labor.C) Variable overhead.D) Fixed overhead.

78) Which of the adhering to is an instance of a period expense in a firm that makes clothing?A) Fabric supplied to develop men"s pants.B) Advertising price for a new line of clothing.C) Factory supervisor"s salary.D) Monthly depreciation on production devices.

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79) All of the complying with are examples of product prices except:A) depreciation on the company"s retail outlets.B) salary of the plant manager.C) insurance on the manufacturing facility equipment.D) rental costs of manufacturing facility tools.

80) Which of the adhering to statements around product costs is true?A) Product prices are deducted from revenue when the manufacturing procedure is completed.B) Product prices are deducted from revenue as expenditures are made.C) Product expenses linked via unsold finished goods and also work in procedure appear on thebalance sheet as assets.D) Product expenses appear on financial statements just as soon as commodities are marketed.

81) Which of the adhering to statements is correct in describing production overhead?A) Manufacturing overhead once linked via direct products expense creates conversion cost.B) Manufacturing overhead is composed of all production price except for prime price.C) Manufacturing overhead is a period cost.D) Manufacturing overhead when linked via direct labor cost creates prime price.

82) Direct labor price is classified as:

Convariation cost Prime Cost A) Yes Yes B) No No C) No Yes D) Yes No

A) Choice AB) Choice BC) Choice CD) Choice D

83) The addressed portion of the price of electricity for a production facility is classified as a:

Period cost Product Cost A) Yes Yes B) No No C) No Yes D) Yes No

A) Choice AB) Choice BC) Choice CD) Choice D

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89) The complying with information have been collected for four different expense items.

Cost Item

Cost at100 units

Cost at140 unitsW $ 8,000 $ 10,X $ 5,000 $ 5,Y $ 6,500 $ 9,Z $ 6,700 $ 8,

Which of the complying with classifications of these expense items by price habits is correct?

The prices of straight products are classified as:

Cost W Cost X Cost Y Cost Z A) variable addressed combined variable B) combined fixed variable combined C) variable fixed variable variable D) blended resolved combined mixed

A) Choice AB) Choice BC) Choice CD) Choice D

90) Within the appropriate array, variable prices deserve to be meant to:A) vary in full in direct propercentage to alters in the activity level.B) remajor constant in full as the task level changes.C) increase on a per unit basis as the activity level boosts.D) rise on a per unit basis as the task level decreases.

91) The family member propercent of variable, addressed, and also combined costs in a company is well-known as thecompany"s:A) contribution margin.B) cost framework.C) product mix.D) appropriate selection.

92) An instance of a committed addressed cost is:A) monitoring training seminars.B) a permanent devices lease.C) research and also advance.D) proclaiming.

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93) For the past 8 months, Jinan Corporation has knowledgeable a stable increase in its cost perunit also though total expenses have continued to be steady. This expense per unit boost might be due to____ prices if the level of task at Jinan is ____.A) resolved, decreasingB) solved, increasingC) variable, decreasingD) variable, increasing

94) Which of the following statements is true once referring to resolved costs?A) Committed addressed prices aclimb from the yearly decisions by monitoring.B) As volume increases, unit solved price and also full solved price will certainly adjust.C) Fixed expenses boost in full throughout the relevant variety.D) Discretionary resolved expenses deserve to frequently be reduced to zero for short periods of time withoutseriously impairing the long-run goals of the company.

95) Which expenses will certainly readjust through a decrease in activity within the relevant range?A) Total addressed expenses and also complete variable expense.B) Unit solved expenses and complete variable expense.C) Unit variable cost and unit addressed cost.D) Unit addressed cost and full addressed expense.

96) Which of the adhering to is correct concerning reactions to INCREASES in activity?

Total Variable Cost Variable Cost Per Unit A) Increase Decrease B) Constant Decrease C) Decrease Constant D) Increase Constant

A) Choice AB) Choice BC) Choice CD) Choice D

97) For an vehicle manufacturer, the price of a driver"s side air bag purchased from a supplierand mounted in every auto would certainly best be explained as a:A) fixed price.B) combined cost.C) step-variable price.D) variable cost.

98) Fixed prices expressed on a per unit basis:A) rise through rises in activity.B) decrease with boosts in activity.C) are not influenced by task.D) have to be ignored in making decisions considering that they cannot adjust.

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106) One full time clerical worker is essential for eexceptionally 750 accounts receivable. The total wagesof the accounts receivable clerks is an example of a:A) addressed price.B) step-variable cost.C) mixed expense.D) curvidirect expense.

107) Which of the adhering to is unmost likely to be classified as a fixed expense via respect to the numberof units produced and sold?A) Property taxes on a headquarters structure.B) Legal department salaries.C) Cost of leasing the company"s mainframe computer system.D) Production offers.

108) Which of the following prices could contain both variable and addressed expense facets withrespect to the total output of the company?A) Sales commissions.B) Manufacturing overhead.C) Direct products.D) Administrative salaries.

109) A cost incurred in the past that is not relevant to any kind of current decision is classified as a(n):A) duration price.B) possibility cost.C) sunk price.D) differential expense.

110) The term that refers to prices incurred in the past that are not appropriate to a decision is:A) marginal cost.B) instraight price.C) duration price.D) sunk cost.

111) Differential costs can:A) just be solved expenses.B) only be variable costs.C) be either fixed or variable.D) be sunk costs.

112) All of the complying with can be differential expenses except:A) variable prices.B) sunk expenses.C) opportunity prices.D) addressed expenses.

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113) Contribution margin is:A) Sales less expense of goods marketed.B) Sales less variable manufacturing, variable marketing, and variable bureaucratic prices.C) Sales less variable production price.D) Sales much less all variable and fixed costs.

114) Which of the complying with approaches to preparing an income statement has a calculationof the gross margin?

Timeless Approach

Contribution ApproachA) Yes YesB) Yes NoC) No YesD) No No

A) Choice AB) Choice BC) Choice CD) Choice D

115) Meginnis Corporation"s relevant variety of activity is 3,000 systems to 7,000 systems. When itproduces and sells 5,000 units, its average prices per unit are as follows:

Median Cost per UnitDirect materials $ 5.Direct labor $ 3.Variable manufacturing overhead $ 1.Fixed production overhead $ 2.Fixed offering cost $ 0.Fixed administrative price $ 0.Sales comgoals $ 1.Variable governmental cost $ 0.

If 6,000 systems are created, the full amount of direct production cost incurred is closest to:A) $79,B) $63,C) $62,D) $53,

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118) Ouelette Corporation"s relevant variety of task is 3,000 units to 7,000 systems. When itproduces and sells 5,000 devices, its average costs per unit are as follows:

AverageCost per UnitDirect products $ 5.Direct labor $ 4.Variable manufacturing overhead $ 1.Fixed production overhead $ 3.Fixed offering expense $ 0.Fixed administrative cost $ 0.Sales comgoals $ 0.Variable bureaucratic expense $ 0.

If 6,000 systems are developed, the total amount of indirect manufacturing cost incurred is closest to:A) $15,B) $22,C) $7,D) $25,

119) The following costs were incurred in May:

Direct products $ 41,Direct labor $ 13,Manufacturing overhead $ 46,Selling expenses $ 18,Administrative costs $ 15,

Conversion expenses during the month totaled:A) $54,B) $133,C) $59,D) $87,

120) Abburi Company"s production overhead is 60% of its full convariation prices. If directlabor is $52,000 and also if straight products are $28,000, the manufacturing overhead is:A) $34,B) $78,C) $42,D) $120,

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121) During the month of May, direct labor cost totaled $10,000 and straight labor cost was 40%of prime price. If total manufacturing costs during May were $86,000, the manufacturingoverhead was:A) $76,B) $25,C) $61,D) $15,

122) In May direct labor was 60% of convariation cost. If the manufacturing overhead for themonth was $54,000 and also the direct products expense was $30,000, the straight labor expense was:A) $36,B) $20,C) $81,D) $45,

123) The following expenses were incurred in May:

Direct materials $ 33,Direct labor $ 13,Manufacturing overhead $ 23,Selling prices $ 16,Administrative cost $ 34,

Prime costs during the month totaled:A) $36,B) $119,C) $69,D) $46,

124) Kneeland Corporation has gave the adhering to information:

Cost per Unit Cost per PeriodDirect products $ 6.Direct labor $ 4.Variable manufacturing overhead $ 1.Fixed manufacturing overhead $ 121,Sales comgoals $ 1.Variable administrative cost $ 0.Fixed selling and also governmental cost $ 40,

If 10,000 systems are developed, the complete amount of manufacturing overhead expense is closest to:

A) $186,B) $138,C) $162,D) $150,

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127) Sassist Corporation has actually gave the following information:

Cost per Unit Cost per PeriodDirect products $ 7.Direct labor $ 3.Variable production overhead $ 1.Fixed manufacturing overhead $ 81,Sales comgoals $ 0.Variable governmental expense $ 0.Fixed selling and also governmental cost $ 40,

For financial reporting functions, the total amount of duration prices incurred to offer 9,000 devices isclosest to:

A) $33,B) $9,C) $40,D) $49,

128) Phaup Corporation"s pertinent array of task is 3,000 units to 7,000 units. When itproduces and also sells 5,000 systems, its average costs per unit are as follows:

AverageCost per UnitDirect products $ 4.Direct labor $ 4.Variable manufacturing overhead $ 1.Fixed production overhead $ 3.Fixed offering price $ 0.Fixed administrative cost $ 0.Sales comobjectives $ 0.Variable administrative price $ 0.

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For financial reporting purposes, the complete amount of duration expenses incurred to sell 5,000 units isclosest to:A) $8,B) $12,C) $7,D) $4,

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129) Bressette Corporation has offered the complying with information:

Cost per Unit Cost per PeriodDirect materials $ 6.Direct labor $ 3.Variable manufacturing overhead $ 1.Fixed production overhead $ 10,Sales comobjectives $ 1.Variable governmental price $ 0.Fixed offering and bureaucratic cost $ 5,

For financial reporting objectives, the complete amount of product costs incurred to make 5,000 unitsis closest to:

A) $65,B) $10,C) $70,D) $55,

130) Landmann Corporation"s pertinent array of task is 7,000 devices to 11,000 systems. When itproduces and also sells 9,000 devices, its average expenses per unit are as follows:

AverageCost per UnitDirect products $ 6.Direct labor $ 4.Variable production overhead $ 1.Fixed production overhead $ 13.Fixed marketing price $ 2.Fixed governmental expense $ 1.Sales commissions $ 1.Variable administrative expense $ 0.

For financial reporting objectives, the total amount of product costs incurred to make 9,000 unitsis closest to:A) $106,B) $236,C) $121,D) $227,