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chapiter 2 :Test bank Managerial Accounting 15th edition by Ray H. Garrison, Eric Noreen

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chapiter 2 :Test bank Managerial Accounting 15th edition by Ray H. Garrison, Eric Noreen

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Managerial Accounting and Cost Concepts

True / False Questions

1. Selling costs can be either direct or indirect costs.

True    False

 

2. A direct cost is a cost that cannot be easily traced to the particular cost object under consideration.

True    False

 

3. Property taxes and insurance premiums paid on a factory building are examples of period costs.

True    False

 

4. Conversion cost equals product cost less direct labor cost.

True    False

 

5. Thread that is used in the production of mattresses is an indirect material that is therefore classified as manufacturing overhead.

True    False

 

6. Direct labor is a part of prime cost, but not conversion cost.

True    False

 

7. Conversion cost is the sum of direct labor cost and direct materials cost.

True    False

 

8. Direct material costs are generally fixed costs.

True    False

 

9. Product costs are recorded as expenses in the period in which the related products are sold.

True    False

 

10. Depreciation on manufacturing equipment is a product cost.

True    False

 

11. Manufacturing salaries and wages incurred in the factory are period costs.

True    False

 

12. Depreciation on office equipment would be included in product costs.

True    False

 

13. Rent on a factory building used in the production process would be classified as a product cost and as a fixed cost.

True    False

 

14. A fixed cost remains constant if expressed on a unit basis.

True    False

 

15. Total variable cost is expected to remain unchanged as activity changes within the relevant range.

True    False

 

16. Country Charm Restaurant is open 24 hours a day and always has a fire going in the fireplace in the middle of its dining area. The cost of the firewood for this fire is fixed with respect to the number of meals served at the restaurant.

True    False

 

17. Committed fixed costs represent organizational investments with a multi-year planning horizon that can’t be significantly reduced even for short periods.

True    False

 

18. Commissions paid to salespersons are a variable selling expense.

True    False

 

19. Variable costs are costs that vary, in total, in direct proportion to changes in the volume or level of activity.

True    False

 

20. The planning horizon for a committed fixed cost usually encompasses many years.

True    False

 

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