,DOWNLOAD THE Test Bank for Introduction to Managerial Accounting 5th
Edition Brewer
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) All costs incurred in a merchandising firm are considered to be period costs.
A) True
B) False
Answer: B
2) Depreciation is always considered a product cost for external financial reporting purposes in a
manufacturing firm.
A) True
B) False
Answer: B
3) Advertising costs are considered product costs for external financial reports since they are incurred
in order to promote specific products.
A) True
B) False
Answer: B
4) Property taxes and insurance premiums paid on a factory building are examples of manufacturing
overhead.
A) True
B) False
Answer: A
5) Manufacturing overhead combined with direct materials is known as conversion cost.
A) True
B) False
Answer: B
6) If the ending inventory of finished goods is understated, net income will be overstated.
A) True
B) False
Answer: B
7) In a manufacturing company, goods available for sale equals the sum of the cost of goods
manufactured and the beginning finished goods inventory.
A) True
B) False
Answer: A
8) Variable costs are costs whose per unit costs vary as the activity level rises and falls.
A) True
B) False
Answer: B
1
nursytestbank.store
,DOWNLOAD THE Test Bank for Introduction to Managerial Accounting 5th
Edition Brewer
9) On a per unit basis, a fixed cost varies inversely with the level of activity.
A) True
B) False
Answer: A
10) All the following would typically be considered indirect costs of manufacturing a 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.
A) True
B) False
Answer: B
11) All the following costs should be considered direct costs of providing delivery room 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.
A) True
B) False
Answer: B
12) The following costs should be considered by a law firm to be indirect costs of defending 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.
A) True
B) False
Answer: A
13) A cost that differs from one month to another is known as a differential cost.
A) True
B) False
Answer: B
14) Opportunity costs are always recorded as expenses in the accounts of an organization.
A) True
B) False
Answer: B
15) Sunk costs are irrelevant in making decisions.
A) True
B) False
Answer: A
16) The inventory accounts reported on the balance sheet of a manufacturing company will differ from
those of a merchandising company.
A) True
B) False
Answer: A
2
nursytestbank.store
, DOWNLOAD THE Test Bank for Introduction to Managerial Accounting 5th
Edition Brewer
17) The corporate controller's salary would be considered a(n):
A) administrative cost. B) product cost.
C) selling expense. D) manufacturing cost.
Answer: A
18) The costof fire insurance for a manufacturing plant is generally considered to be a:
A) period cost. B) variable cost. C) product cost. D) fixed cost.
Answer: C
19) The cost of rent for a manufacturing plant is generally considered to be a:
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.
Answer: A
20) Each of the following would be a period cost except:
A) the cost of a general accounting office.
B) the salary of the company president's secretary.
C) sales commissions.
D) depreciation of a machine used in manufacturing.
Answer: D
21) Fora manufacturing company, which of the following is an example of a period rather than a
product cost?
A) Wages of machine operators. B) Insurance on factory equipment.
C) Depreciation of factory equipment. D) Wages of salespersons.
Answer: D
22) Which of the following would be considered a product cost for external financial reporting
purposes?
A) Cost of a warehouse used to store finished goods.
B) Cost of guided public tours through the company's facilities.
C) Cost of sand spread on the factory floor to absorb oil from manufacturing machines.
D) Cost of travel necessary to sell the manufactured product.
Answer: C
3
nursytestbank.store
Edition Brewer
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) All costs incurred in a merchandising firm are considered to be period costs.
A) True
B) False
Answer: B
2) Depreciation is always considered a product cost for external financial reporting purposes in a
manufacturing firm.
A) True
B) False
Answer: B
3) Advertising costs are considered product costs for external financial reports since they are incurred
in order to promote specific products.
A) True
B) False
Answer: B
4) Property taxes and insurance premiums paid on a factory building are examples of manufacturing
overhead.
A) True
B) False
Answer: A
5) Manufacturing overhead combined with direct materials is known as conversion cost.
A) True
B) False
Answer: B
6) If the ending inventory of finished goods is understated, net income will be overstated.
A) True
B) False
Answer: B
7) In a manufacturing company, goods available for sale equals the sum of the cost of goods
manufactured and the beginning finished goods inventory.
A) True
B) False
Answer: A
8) Variable costs are costs whose per unit costs vary as the activity level rises and falls.
A) True
B) False
Answer: B
1
nursytestbank.store
,DOWNLOAD THE Test Bank for Introduction to Managerial Accounting 5th
Edition Brewer
9) On a per unit basis, a fixed cost varies inversely with the level of activity.
A) True
B) False
Answer: A
10) All the following would typically be considered indirect costs of manufacturing a 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.
A) True
B) False
Answer: B
11) All the following costs should be considered direct costs of providing delivery room 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.
A) True
B) False
Answer: B
12) The following costs should be considered by a law firm to be indirect costs of defending 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.
A) True
B) False
Answer: A
13) A cost that differs from one month to another is known as a differential cost.
A) True
B) False
Answer: B
14) Opportunity costs are always recorded as expenses in the accounts of an organization.
A) True
B) False
Answer: B
15) Sunk costs are irrelevant in making decisions.
A) True
B) False
Answer: A
16) The inventory accounts reported on the balance sheet of a manufacturing company will differ from
those of a merchandising company.
A) True
B) False
Answer: A
2
nursytestbank.store
, DOWNLOAD THE Test Bank for Introduction to Managerial Accounting 5th
Edition Brewer
17) The corporate controller's salary would be considered a(n):
A) administrative cost. B) product cost.
C) selling expense. D) manufacturing cost.
Answer: A
18) The costof fire insurance for a manufacturing plant is generally considered to be a:
A) period cost. B) variable cost. C) product cost. D) fixed cost.
Answer: C
19) The cost of rent for a manufacturing plant is generally considered to be a:
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.
Answer: A
20) Each of the following would be a period cost except:
A) the cost of a general accounting office.
B) the salary of the company president's secretary.
C) sales commissions.
D) depreciation of a machine used in manufacturing.
Answer: D
21) Fora manufacturing company, which of the following is an example of a period rather than a
product cost?
A) Wages of machine operators. B) Insurance on factory equipment.
C) Depreciation of factory equipment. D) Wages of salespersons.
Answer: D
22) Which of the following would be considered a product cost for external financial reporting
purposes?
A) Cost of a warehouse used to store finished goods.
B) Cost of guided public tours through the company's facilities.
C) Cost of sand spread on the factory floor to absorb oil from manufacturing machines.
D) Cost of travel necessary to sell the manufactured product.
Answer: C
3
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