Accounting Midterm, True And False

Front 1

Managementaccountingprovides informationfor managers of anorganizationwhodirect and controlits operations.

Back 1

True

Front 2

Financialaccountingprovides informationto stockholders,creditors and otherswho are outsidethe organization.

Back 2

True

Front 3

The planning function ensuresthat plans are being followedand is crucial function of the management accountant.

Back 3

False

The control function ensuresthat plans are being followedand is crucial function of the management accountant.

Front 4

Manufacturing (Product) costs include Direct Materials, Direct Labor and Manufacturing Overhead.

Back 4

True

Front 5

Indirect Labor canbe easily traced to individual units of product.

Back 5

False

Direct Labor canbe easily traced to individual units of product.

Front 6

Manufacturingoverhead includes all costs of manufacturing except direct materials and directlabor

Back 6

True

Front 7

DirectMaterials include certain materials which are used to make the product butwhose cost is too difficult to trace directly to the product

Back 7

False

IndirectMaterials include certain materials which are used to make the product butwhose cost is too difficult to trace directly to the product

Front 8

Indirect labor costs are those laborcosts that cannot be easily traced to individual units of product .

Back 8

True

Front 9

Machinebreakdowns, material shortages, power failures and the like, result in idletime. The labor costs incurred during idle time are ordinarily treated asdirect labor.

Back 9

False

Machinebreakdowns, material shortages, power failures and the like, result in idletime. The labor costs incurred during idle time are ordinarily treated asmanufacturing overhead.

Front 10

Theovertime premiums for all factory workers are usually considered to be part ofmanufacturing overhead.

Back 10

True

Front 11

Fringebenefits include employer paid costs for insurance programs, retirement plans,supplemental unemployment programs, Social Security, Medicare, workers’ compensation, and unemploymenttaxes.

Back 11

True

Front 12

Selling costs are allexecutive, organizational, and clerical costs for example rent on the adminoffice or the accountants salary.

Back 12

False

Administrative costs are allexecutive, organizational, and clerical costs for example rent on the adminoffice or the accountants salary.

Front 13

Selling costs include costs necessary to secure the order and deliver the product for examplesales commissions, delivery expenses.

Back 13

True

Front 14

Periodcostsinclude all selling costs and administrative costs

Back 14

True

Front 15

Merchandisers buy and sell finished goods.

Back 15

True

Front 16

Manufacturers buy and sell finished goods.

Back 16

False

Manufacturers buy raw materials and produce and sell finished goods.

Front 17

A variablecost variesin direct proportion to changes in the level of activity see example exhibit2-9 page 35

Back 17

True

Front 18

A fixed cost variesin direct proportion to changes in the level of activity

Back 18

False

A fixed cost is a cost that remains constantregardless of the changes in activity within a relevant range

Front 19

Cost classification is essential to prepare financial statements.

Back 19

True

Front 20

Cost classification is essential to predict cost behavior in response to changes in activity.

Back 20

True

Front 21

Cost classification is essential to make decisions such as product pricing, product mix, make or buy

Back 21

True

Front 22

A step-variable cost is a resource that is obtainable only inlarge chunks (such as maintenance workers) and whose costs remain constantduring a narrow range of activity and then increase or step up suddenly

Back 22

True

Front 23

Committed fixed costs are long term in nature and they can´tbe significantly reduced even for short periods of time without seriouslyimpairing the profitability or long run goals of the organisation.

Back 23

True

Front 24

Committed fixed costs usually arise from annual decisionsby management to spend in certain fixed cost areas

Back 24

False

Discretionary fixed costs usually arise from annual decisionsby management to spend in certain fixed cost areas

Front 25

Mixed cost/semi-variable cost isone that contains both variable and fixed cost elements.

Back 25

True

Front 26

The high-low method is based oncalculating the slope formula of a straight line using only two data points.

Back 26

True

Front 27

Acompany would use a job order costing system when many different products areproduced each period

Back 27

True

Front 28

POHR is the estimatedtotal manufacturingoverhead cost for the coming period divided by estimated cost of goods sold for the period.

Back 28

False

POHR is the estimatedtotal manufacturingoverhead cost for the coming period divided by the estimatedtotal units in theallocation base for the coming period

Front 29

Overheadapplied = POHR × Actual amount of the allocation base used on the job

Back 29

True

Front 30

Underapplied overhead exists when the amount ofoverhead applied to jobs during the period using the predetermined overheadrate is less thanthe total amount of overhead actually incurred during the period.

Back 30

True

Front 31

Overapplied overhead exists when the amount ofoverhead applied to jobs during the period using the predetermined overheadrate is less thanthe total amount of overhead actually incurred during the period.

Back 31

False

Overapplied overhead exists when the amount of overheadapplied to jobs during the period using the predetermined overhead rate is greater than the total amount of overhead actuallyincurred during the period.

Front 32

Job Order costing is used when a single product is produced on a continuing basis or forlong periods of time whereas Job-Order costing is used when many different jobshaving different production requirements are worked on each period.

Back 32

False

Processcosting is used when a single product is produced on a continuing basis or forlong periods of time whereas Job-Order costing is used when many different jobshaving different production requirements are worked on each period.

Front 33

Processcosting systems accumulate costs by department while Job-Order costing systemsaccumulate costs by individual jobs.

Back 33

True

Front 34

Process costing systems compute unit costs by job using a job cost sheet.

Back 34

False

Job-Order costing systems compute unit costs by job using a job cost sheet.

Front 35

Aprocessing department is any unit in an organization where materials, labor oroverhead are added to the product.

Back 35

True

Front 36

Cost-volume-profit(CVP) analysis helps managers understand the interrelationships among cost,volume, and profit by focusing their attention on the interactions among theprices of products, volume of activity, per unit variable costs, total fixedcosts, and mix of products sold

Back 36

True

Front 37

Contributionmargin is used first to cover fixed expenses. Any remaining contribution margin contributes to operating expenses.

Back 37

Contributionmargin is used first to cover fixed expenses. Any remaining contribution margin contributes to net operating income.

Front 38

Cost structure refers to therelative proportion of fixed and variable costs in an organization. Managersoften have some latitude in determining their organization’scost

Back 38

True

Front 39

Operatingleverage is a measure of how sensitive net operating income is to percentagechanges in sales

Back 39

True