TEST BANK FOR INTRODUCTION TO MANAGERIAL ACCOUNTING FIFTH CANADIAN EDITION
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Managerial Accounting for Managers
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TEST BANK FOR INTRODUCTION TO
MANAGERIAL ACCOUNTING FIFTH CANADIAN
EDITION
,Exam
Name___________________________________
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
1) All costs incurred in a merchandising firm are considered to be period costs. 1) _______
2) Depreciation is always considered a product cost for external financial reporting 2) _______
purposes in a manufacturing firm.
3) Advertising costs are considered product costs for external financial reports since they 3) _______
are incurred in order to promote specific products.
4) Property taxes and insurance premiums paid on a factory building are examples of 4) _______
manufacturing overhead.
5) Manufacturing overhead combined with direct materials is known as conversion cost. 5) _______
6) If the ending inventory of finished goods is understated, net income will be overstated. 6) _______
7) In a manufacturing company, goods available for sale equals the sum of the cost of 7) _______
goods manufactured and the beginning finished goods inventory.
8) Variable costs are costs whose per unit costs vary as the activity level rises and falls. 8) _______
9) On a per unit basis, a fixed cost varies inversely with the level of activity. 9) _______
10) All the following would typically be considered indirect costs of manufacturing a 10) ______
particular Boeing 747 to be delivered to Singapore Airlines: electricity to run production
equipment, the factory manager's salary, and the cost of the General Electric jet engines
installed on the aircraft.
11) All the following costs should be considered direct costs of providing delivery room 11) ______
services to a particular mother and her baby: the costs of drugs administered in the
operating room, the attending physician's fees, and a portion of the liability insurance
carried by the hospital to cover the delivery room.
12) The following costs should be considered by a law firm to be indirect costs of defending 12) ______
a particular client in court: rent on the law firm's offices, the law firm's receptionist's
wages, the costs of heating the law firm's offices, and the depreciation on the personal
computer in the office of the attorney who has been assigned the client.
13) A cost that differs from one month to another is known as a differential cost. 13) ______
14) Opportunity costs are always recorded as expenses in the accounts of an organization. 14) ______
15) Sunk costs are irrelevant in making decisions. 15) ______
16) The inventory accounts reported on the balance sheet of a manufacturing company will 16) ______
differ from those of a merchandising company.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
17) The corporate controller's salary would be considered a(n): 17) ______
, A) administrative cost. B) manufacturing cost.
C) product cost. D) selling expense.
18) The cost of fire insurance for a manufacturing plant is generally considered to be a: 18) ______
A) fixed cost. B) product cost. C) variable cost. D) period cost.
19) The cost of rent for a manufacturing plant is generally considered to be a: 19) ______
Prime cost Product cost
a. No Yes
b. No No
c. Yes No
d. Yes Yes
A) choice a. B) choice b. C) choice c. D) choice d.
20) Each of the following would be a period cost except: 20) ______
A) depreciation of a machine used in manufacturing.
B) the cost of a general accounting office.
C) sales commissions.
D) the salary of the company president's secretary.
21) For a manufacturing company, which of the following is an example of a period rather 21) ______
than a product cost?
A) Wages of machine operators. B) Insurance on factory equipment.
C) Wages of salespersons. D) Depreciation of factory equipment.
22) Which of the following would be considered a product cost for external financial 22) ______
reporting purposes?
A) Cost of travel necessary to sell the manufactured product.
B) Cost of sand spread on the factory floor to absorb oil from manufacturing machines.
C) Cost of a warehouse used to store finished goods.
D) Cost of guided public tours through the company's facilities.
23) Which of the following would NOT be treated as a product cost for external financial 23) ______
reporting purposes?
A) Advertising expenses. B) Indirect labour in the factory.
C) Depreciation on a factory building. D) Salaries of factory workers.
24) Transportation costs incurred by a manufacturing company to ship its product to its 24) ______
customers would be classified as which of the following?
A) Product cost. B) Period cost.
C) Manufacturing overhead. D) Administrative cost.
25) The salary of the president of a manufacturing company would be classified as which of 25) ______
the following?
A) Direct labour. B) Product cost.
C) Manufacturing overhead. D) Period cost.
26) Micro Computer Company has set up a toll-free telephone line for customer inquiries wo be
regarding computer hardware produced by the company. The cost of this toll-free line uld classifi
, ed as 26) ___
which ___
of the
followin
g?
A) Direct labour. B) Product cost.
C) Period cost. D) Manufacturing overhead.
27) The wages of factory maintenance personnel would usually be considered to be: 27) ______
Indirect labour Manufacturing overhead
a. No Yes
b. Yes No
c. Yes Yes
d. No No
A) choice a. B) choice b. C) choice c. D) choice d.
28) Direct materials are a part of: 28) ______
Conversion cost Manufacturing cost Prime cost
a. Yes Yes No
b. Yes Yes Yes
c. No Yes Yes
d. No No No
A) choice a. B) choice b. C) choice c. D) choice d.
29) Manufacturing overhead consists of: 29) ______
A) all manufacturing costs, except direct materials and direct labour.
B) indirect labour but not indirect materials.
C) indirect materials but not indirect labour.
D) all manufacturing costs.
30) Which of the following should NOT be included as part of manufacturing overhead at a 30) ______
company that makes office furniture?
A) Sheet steel in a file cabinet made by the company.
B) Manufacturing equipment depreciation.
C) Taxes on a factory building.
D) Idle time for direct labour.
31) Rossiter Company failed to record a credit sale at the end of the year, although the 31) ______
reduction in finished goods inventories was correctly recorded when the goods were
shipped to the customer. Which one of the following statements is correct?
A) Accounts receivable was understated, inventory was overstated, sales were
understated, and cost of goods sold was overstated.
B) Accounts receivable was understated, inventory was not affected, sales were
understated, and cost of goods sold was not affected.
C) Accounts receivable was not affected, inventory was not affected, sales were
understated, and cost of goods sold was understated.
D) Accounts receivable was not affected, inventory was understated, sales were
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