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Test Bank for Cornerstones of Managerial Accounting 4th Edition by Mowen
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Test Bank forCornerstones of
Managerial Accounting
th
4 Edition by Mowen
Chapter 2--Basic Managerial Accounting Concepts
Student:
,1. It is beneficial to assign indirect costs to cost objects.
True False
2. Price must be greater than cost in order for the firm to generate revenue.
True False
3. Accumulating costs is the way that costs are measured and recorded.
True False
4. Assigning costs involves the way that a cost is linked to some cost object.
True False
5. Assigning costs tells the accountant who spent the money.
True False
6. A cost object is any item such as products, customers, departments, regions, and so on, for which costs are
measured and assigned.
True False
7. Costs are directly, not indirectly, associated with cost objects.
True False
8. Direct costs are those costs that cannot be easily and accurately traced to a cost object.
True False
,9. Indirect costs are costs that are not easily and accurately traced to a cost object.
True False
10. Allocation means that an indirect cost is assigned to a cost object using a reasonable and convenient
method.
True False
11. A variable cost is one that does not increase in total as output increase and does not decrease in total as
output decreases.
True False
12. A fixed cost is a cost that does not increase in total as output increases and does not decrease in total as
output decreases.
True False
13. An opportunity cost is the benefit given up or sacrificed when one alternative is chosen over another.
True False
14. Cost is a dollar measure of the resources used to achieve a given benefit.
True False
15. A cost object is something for which a company wants to know the cost.
True False
16. The revenue per unit is called cost.
True False
17. As costs are used up in the production of revenues, they are said to expire. Expired costs are called
expenses.
True False
, 18. Costs are incurred to produce future benefits.
True False
19. Expired costs are called assets.
True False
20. Reducing the cost required to achieve a given benefit means that a company is becoming less efficient.
True False
21. Costs can be assigned to cost objects in only one way.
True False
22. Property taxes on a factory building would normally be classified as a fixed cost.
True False
23. Glue used in the manufacture of cabinets would be an example of a fixed cost.
True False
24. Industries that provide intangible services do not normally have direct contact with their customers.
True False
25. Research and development costs would be classified as product cost.
True False
26. Product costs include direct materials, direct labor, and selling costs.
True False
27. All product costs other than direct materials and indirect labor are called overhead.
True False
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