9/5/23,b11:54bA TestbBankbandbSolutionsbForbFundamentalsbofbCostbAccountingb7thbEditionb
M …
ForbAllbChapters bb àbb
FundamentalsbofbCostbAccounting,b 7eb(Lanen)bChap
terb2b Costb Conceptsb andb Behavior
1) Thebcostbofbanbitemb isbthebsacrificebofbresourcesb madebtobacquireb it.
Answer:b TRUE
Explanation:bThisbstatementb isbtrue.bThisb statementb isb thebdefinitionbofbcost.bDiffic
ulty:b1bEasy
Topic:bWhatbisbabCost?
LearningbObjective:b 02-
01bExplainbthebbasicbconceptbofb "cost."bBloom's:bRemember
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
2) Anbexpenseb isbabcostbchargedbagainstb revenueb inbanbaccountingbperiod.
Answer:b TRUE
Explanation:b Thisbstatementb isbtheb definitionbofbanbexpense.bDiffi
culty:b1bEasy
Topic:bWhatbisbabCost?
LearningbObjective:b 02-
01bExplainbthebbasicbconceptbofb "cost."bBloom's:bRemember
AACSB:b Analyticalb Thinking
Accessibility:b Keyboardb Navigation
3) Ifbabcostb isbrecordedbasbanbassetb (forbexample,bprepaidb rentb forbanbofficeb building), b itb bec
omesbanbexpensebwhenbthebassetbhasbbeenbconsumed.
Answer:b TRUE
Explanation:b Thisbstatementb isb true.bThisb statementb describesb thebappropriateb transitionb betwe
enbassetsbandbexpenses.
Difficulty:b2bMediumb
Topic:b WhatbisbabCost
?
LearningbObjective:b 02-
01bExplainbthebbasicbconceptbofb "cost."bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
1
about:blank 1/140
,9/5/23,b11:54bA TestbBankbandbSolutionsbForbFundamentalsbofbCostbAccountingb7thbEditionb
M …
ForbAllbChapters bb àbb
4) Accountingb systems b typicallyb recordb opportunityb costsb asb assetsb andb treatb themb asb intangi
blebitemsbonbthebfinancialbstatements.
Answer:b FALSE
Explanation:b Opportunitybcostsb areb notbreflectedb inb thebaccountingb system—
theyb arebwhatb didbnotbhappen.
Difficulty:b2bMediumb
Topic:b WhatbisbabCost
?
LearningbObjective:b 02-
01bExplainbthebbasicbconceptbofb "cost."bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
5) Totalbcostbofb goodsb purchasedb minusbbeginningb merchandiseb inventorybplusbendi
ngbmerchandisebinventorybequalsbcostbofbgoodsbsold.
Answer:b FALSE
Explanation:b Thisbstatementb isb false.b Purchasesb plusbbeginningb inventoryb minusbendingbinven
torybequalsbcostbofbgoodsbsold.
Difficulty:b2bMedium
Topic:b PresentationbofbCostsb inb Financialb Statements
LearningbObjective:b 02-
02b Explainb howbcostsbarebpresentedb inb financialbstatements.bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
6) Costbofb goodsbsoldb includesbthebactualbcostsbofbtheb goodsbsoldbandbthebcostsb requiredbto
bsellbthembtobthe bcustomer.
Answer:b FALSE
Explanation:b Thisbstatementb isb false.bCostbofb goodsbsoldbdoesb notb includebsellingbcosts.bDiffic
ulty:b2bMedium
Topic:b PresentationbofbCostsb inb Financialb Statements
LearningbObjective:b 02-
02b Explainb howbcostsbarebpresentedb inb financialbstatements.bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
2
about:blank 2/140
,9/5/23,b11:54bA TestbBankbandbSolutionsbForbFundamentalsbofbCostbAccountingb7thbEditionb
M …
ForbAllbChapters bb àbb
7) Periodbcostsbarebthosebcostsbassignedbtob unitsbofbproductionb inbthebperiodb inbwhichb the
ybarebincurred.
Answer:b FALSE
Explanation:b Thisbstatementb isb false.b Thisb statementb describesb productbcosts,b notb periodb costs
.bDifficulty:b2bMedium
Topic:b PresentationbofbCostsb inb Financialb Statements
LearningbObjective:b 02-
02b Explainb howbcostsbarebpresentedb inb financialbstatements.bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
8) Onlybdirectbcostsbcanb bebclassifiedbasbproductbcosts;b indirectbcostsbarebclassifiedbasbpe
riodbcosts.
Answer:b FALSE
Explanation:b Thisbstatementb isb false.bProductbcostsbcanb includebbothb directbandb indirectbcosts.
bDifficulty:b2bMedium
Topic:b PresentationbofbCostsb inb Financialb Statements
LearningbObjective:b 02-
02b Explainb howbcostsbarebpresentedb inb financialbstatements.bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
9) Thebthreebcategoriesb ofb productb costsbareb directb materials,b directb labor,bandb manufactur
ingboverhead.
Answer:b TRUE
Explanation:bThisbstatementb isbtrue.b Thisb statementb isbthebdefinitionbofbproductbco
st.bDifficulty:b1bEasy
Topic:b PresentationbofbCostsb inb Financialb Statements
LearningbObjective:b 02-
02b Explainb howbcostsbarebpresentedb inb financialbstatements.bBloom's:bRemember
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
3
about:blank 3/140
, 9/5/23,b11:54bA TestbBankbandbSolutionsbForbFundamentalsbofbCostbAccountingb7thbEditionb
M …
ForbAllbChapters bb àbb
10) Thebfirstbstepb inbdeterminingb whetherbabcostb isbdirectborb indirectb isb tobspecifyb the
bcostballocationbrule.
Answer:b FALSE
Explanation:b Theb firstbstepb inbdeterminingbwhetherbabcostb isbdirectborb indirectb isbdefiningb thebco
stbobject.
Difficulty:b2bMediumb
Topic:b CostbAllocatio
n
LearningbObjective:b 02-
03b Explainbtheb processbofbcostballocation.bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
11) Totalbwork-in-processbduringbtheb periodb isbtheb sumb ofb thebbeginningb work-in-
processbinventorybandbthebtotalbmanufacturingbcostsbincurredbduringbthebperiod.
Answer:b TRUE
Explanation:b Thisbstatementb isbtrue.b Thisb isbthebcorrectb formulab forbtotalbwork-in-
process.bDifficulty:b2bMedium
Topic:b HowbCostsb FlowbthroughbthebStatements
LearningbObjective:b 02-
04bUnderstandb howb material, b labor,bandboverheadbcostsbarebaddedb tobabproductbatbeachbstageb
ofbthebproductionbprocess.
Bloom's:b Understand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
12) Costbofb goodsbsoldb plusbthebendingb finishedb goodsb inventoryb minusbthebbeginningb finis
hedbgoodsbinventorybequals bthebcostbofbgoodsbmanufactured.
Answer:b TRUE
Explanation:b Thisbstatementb isbtrue.b Thisb statementb worksbbackwardsb fromb costbofb goodsbsoldb t
obcostbofbgoodsbmanufactured.
Difficulty:b2bMedium
Topic:b HowbCostsb FlowbthroughbthebStatements
LearningbObjective:b 02-
04bUnderstandb howb material, b labor,bandboverheadbcostsbarebaddedb tobabproductbatbeachbstageb
ofbthebproductionbprocess.
Bloom's:b UnderstandbAACS
B:b Analyticalb Thinking
Accessibility:b Keyboardb Navigation
4
about:blank 4/140
M …
ForbAllbChapters bb àbb
FundamentalsbofbCostbAccounting,b 7eb(Lanen)bChap
terb2b Costb Conceptsb andb Behavior
1) Thebcostbofbanbitemb isbthebsacrificebofbresourcesb madebtobacquireb it.
Answer:b TRUE
Explanation:bThisbstatementb isbtrue.bThisb statementb isb thebdefinitionbofbcost.bDiffic
ulty:b1bEasy
Topic:bWhatbisbabCost?
LearningbObjective:b 02-
01bExplainbthebbasicbconceptbofb "cost."bBloom's:bRemember
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
2) Anbexpenseb isbabcostbchargedbagainstb revenueb inbanbaccountingbperiod.
Answer:b TRUE
Explanation:b Thisbstatementb isbtheb definitionbofbanbexpense.bDiffi
culty:b1bEasy
Topic:bWhatbisbabCost?
LearningbObjective:b 02-
01bExplainbthebbasicbconceptbofb "cost."bBloom's:bRemember
AACSB:b Analyticalb Thinking
Accessibility:b Keyboardb Navigation
3) Ifbabcostb isbrecordedbasbanbassetb (forbexample,bprepaidb rentb forbanbofficeb building), b itb bec
omesbanbexpensebwhenbthebassetbhasbbeenbconsumed.
Answer:b TRUE
Explanation:b Thisbstatementb isb true.bThisb statementb describesb thebappropriateb transitionb betwe
enbassetsbandbexpenses.
Difficulty:b2bMediumb
Topic:b WhatbisbabCost
?
LearningbObjective:b 02-
01bExplainbthebbasicbconceptbofb "cost."bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
1
about:blank 1/140
,9/5/23,b11:54bA TestbBankbandbSolutionsbForbFundamentalsbofbCostbAccountingb7thbEditionb
M …
ForbAllbChapters bb àbb
4) Accountingb systems b typicallyb recordb opportunityb costsb asb assetsb andb treatb themb asb intangi
blebitemsbonbthebfinancialbstatements.
Answer:b FALSE
Explanation:b Opportunitybcostsb areb notbreflectedb inb thebaccountingb system—
theyb arebwhatb didbnotbhappen.
Difficulty:b2bMediumb
Topic:b WhatbisbabCost
?
LearningbObjective:b 02-
01bExplainbthebbasicbconceptbofb "cost."bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
5) Totalbcostbofb goodsb purchasedb minusbbeginningb merchandiseb inventorybplusbendi
ngbmerchandisebinventorybequalsbcostbofbgoodsbsold.
Answer:b FALSE
Explanation:b Thisbstatementb isb false.b Purchasesb plusbbeginningb inventoryb minusbendingbinven
torybequalsbcostbofbgoodsbsold.
Difficulty:b2bMedium
Topic:b PresentationbofbCostsb inb Financialb Statements
LearningbObjective:b 02-
02b Explainb howbcostsbarebpresentedb inb financialbstatements.bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
6) Costbofb goodsbsoldb includesbthebactualbcostsbofbtheb goodsbsoldbandbthebcostsb requiredbto
bsellbthembtobthe bcustomer.
Answer:b FALSE
Explanation:b Thisbstatementb isb false.bCostbofb goodsbsoldbdoesb notb includebsellingbcosts.bDiffic
ulty:b2bMedium
Topic:b PresentationbofbCostsb inb Financialb Statements
LearningbObjective:b 02-
02b Explainb howbcostsbarebpresentedb inb financialbstatements.bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
2
about:blank 2/140
,9/5/23,b11:54bA TestbBankbandbSolutionsbForbFundamentalsbofbCostbAccountingb7thbEditionb
M …
ForbAllbChapters bb àbb
7) Periodbcostsbarebthosebcostsbassignedbtob unitsbofbproductionb inbthebperiodb inbwhichb the
ybarebincurred.
Answer:b FALSE
Explanation:b Thisbstatementb isb false.b Thisb statementb describesb productbcosts,b notb periodb costs
.bDifficulty:b2bMedium
Topic:b PresentationbofbCostsb inb Financialb Statements
LearningbObjective:b 02-
02b Explainb howbcostsbarebpresentedb inb financialbstatements.bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
8) Onlybdirectbcostsbcanb bebclassifiedbasbproductbcosts;b indirectbcostsbarebclassifiedbasbpe
riodbcosts.
Answer:b FALSE
Explanation:b Thisbstatementb isb false.bProductbcostsbcanb includebbothb directbandb indirectbcosts.
bDifficulty:b2bMedium
Topic:b PresentationbofbCostsb inb Financialb Statements
LearningbObjective:b 02-
02b Explainb howbcostsbarebpresentedb inb financialbstatements.bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
9) Thebthreebcategoriesb ofb productb costsbareb directb materials,b directb labor,bandb manufactur
ingboverhead.
Answer:b TRUE
Explanation:bThisbstatementb isbtrue.b Thisb statementb isbthebdefinitionbofbproductbco
st.bDifficulty:b1bEasy
Topic:b PresentationbofbCostsb inb Financialb Statements
LearningbObjective:b 02-
02b Explainb howbcostsbarebpresentedb inb financialbstatements.bBloom's:bRemember
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
3
about:blank 3/140
, 9/5/23,b11:54bA TestbBankbandbSolutionsbForbFundamentalsbofbCostbAccountingb7thbEditionb
M …
ForbAllbChapters bb àbb
10) Thebfirstbstepb inbdeterminingb whetherbabcostb isbdirectborb indirectb isb tobspecifyb the
bcostballocationbrule.
Answer:b FALSE
Explanation:b Theb firstbstepb inbdeterminingbwhetherbabcostb isbdirectborb indirectb isbdefiningb thebco
stbobject.
Difficulty:b2bMediumb
Topic:b CostbAllocatio
n
LearningbObjective:b 02-
03b Explainbtheb processbofbcostballocation.bBloom's:bUnderstand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
11) Totalbwork-in-processbduringbtheb periodb isbtheb sumb ofb thebbeginningb work-in-
processbinventorybandbthebtotalbmanufacturingbcostsbincurredbduringbthebperiod.
Answer:b TRUE
Explanation:b Thisbstatementb isbtrue.b Thisb isbthebcorrectb formulab forbtotalbwork-in-
process.bDifficulty:b2bMedium
Topic:b HowbCostsb FlowbthroughbthebStatements
LearningbObjective:b 02-
04bUnderstandb howb material, b labor,bandboverheadbcostsbarebaddedb tobabproductbatbeachbstageb
ofbthebproductionbprocess.
Bloom's:b Understand
AACSB:bAnalyticalbThinkingbAccessibilit
y:b KeyboardbNavigation
12) Costbofb goodsbsoldb plusbthebendingb finishedb goodsb inventoryb minusbthebbeginningb finis
hedbgoodsbinventorybequals bthebcostbofbgoodsbmanufactured.
Answer:b TRUE
Explanation:b Thisbstatementb isbtrue.b Thisb statementb worksbbackwardsb fromb costbofb goodsbsoldb t
obcostbofbgoodsbmanufactured.
Difficulty:b2bMedium
Topic:b HowbCostsb FlowbthroughbthebStatements
LearningbObjective:b 02-
04bUnderstandb howb material, b labor,bandboverheadbcostsbarebaddedb tobabproductbatbeachbstageb
ofbthebproductionbprocess.
Bloom's:b UnderstandbAACS
B:b Analyticalb Thinking
Accessibility:b Keyboardb Navigation
4
about:blank 4/140
