42 Free Test Bank for Managerial Accounting 1st Edition by Whitecotton

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Nonmanufacturing costs are generally classified into what two groups?

•  A. Conversion costs and prime costs.
•  B. Direct materials and direct labor.
•  C. Marketing costs and administrative costs.
•  D. Direct labor and manufacturing overhead.

Manufacturing costs are generally classified into which of the following categories?

•  A. Relevant costs and irrelevant costs
•  B. Direct materials, direct labor, and manufacturing overhead
•  C. Prime costs and conversion costs
•  D. Conversion costs, marketing costs and administrative costs

GAAP reporting rules require that all manufacturing costs be treated as

•  A. period costs.
•  B. product costs.
•  C. value-added costs.
•  D. relevant costs.

Product costs are

•  A. expensed on the income statement when incurred.
•  B. treated as an asset and depreciated.
•  C. inventoried until the units are sold.
•  D. considered current liabilities until paid.

Which of the following is true about product and period costs?

•  A. Product costs are usually manufacturing costs, and period costs are usually nonmanufacturing costs.
•  B. Product costs are usually nonmanufacturing costs, and period costs are usually manufacturing costs.
•  C. Both product and period costs are usually manufacturing costs.
•  D. Both product and period costs are usually nonmanufacturing costs.

Manufacturing costs are

•  A. always relevant.
•  B. always fixed.
•  C. the costs incurred to produce a final product.
•  D. split into prime costs and conversion costs.

Product costs are sometimes called

•  A. relevant costs.
•  B. sunk costs.
•  C. differential costs.
•  D. inventoriable costs.

A cost that has already been incurred is called a(n) _______________ cost.

•  A. indirect
•  B. sunk
•  C. relevant
•  D. opportunity

Prime costs are the same as

•  A. Manufacturing costs minus non-manufacturing costs.
•  B. Manufacturing costs minus manufacturing overhead.
•  C. Manufacturing costs minus fixed costs.
•  D. Manufacturing costs minus direct materials.

Which of the following is not a manufacturing cost?

•  A. Raw materials cost.
•  B. Marketing cost.
•  C. Direct labor cost.
•  D. Manufacturing overhead cost.

For a cost to be relevant, it must meet which of the following criteria?

•  A. It must not differ between the decision alternatives and it must be incurred in the future rather than in the past.
•  B. It must differ between the decision alternatives and it must be incurred in the future rather than in the past.
•  C. It must not differ between the decision alternatives and it must have occurred in the past rather than in the future.
•  D. It must differ between the decision alternatives and it must have occurred in the past rather than in the future.

You are to receive five gold coins from your great uncle as an incentive to study hard. The coins were originally purchased in 1982. Your great uncle will deliver the coins the week after finals (assuming your grades are "acceptable"). The amount your great uncle paid for the coins is a(n)

•  A. opportunity cost
•  B. indirect cost
•  C. sunk cost
•  D. overhead cost

For a cost to be relevant, it must be

•  A. a differential cost and a sunk cost.
•  B. a differential cost, but not a sunk cost.
•  C. a sunk cost, but not a differential cost.
•  D. neither a differential cost nor a sunk cost.

Prime costs are defined as

•  A. Manufacturing costs plus non-manufacturing costs
•  B. Direct labor plus direct materials
•  C. Variable costs equal fixed costs
•  D. Manufacturing overhead plus direct labor

When are period costs counted as inventory?

•  A. Before products are sold.
•  B. After products are sold.
•  C. After products are completed, but before they are sold.
•  D. Never.

Which of the following costs is not relevant to the decision whether to replace an old computer with a new one?

•  A. The cost of the new computer.
•  B. The cost of the old computer.
•  C. The cost of a service plan on the new computer.
•  D. The cost to repair the old computer if a new computer is not purchased.

Product costs are reported

•  A. only on the balance sheet.
•  B. only on the income statement.
•  C. on the balance sheet before goods are sold, and on the income statement after goods are sold.
•  D. on the income statement before goods are sold, and on the balance sheet after goods are sold.

What determines the difference between a product cost and a period cost?

•  A. Whether it changes when activity levels change.
•  B. Whether it is relevant to a particular decision.
•  C. Whether it can be traced to a specific cost object.
•  D. When the cost will be matched up against revenue on the income statement.