Test bank -Introduction To Managerial
Accounting 7th Edition by Peter Brewer,
Ray Garrison, NOREEN-latest 2022
1-1
, Introduction To Managerial Accounting 7th Edition Test Bank
by Peter Brewer, Ray Garrison, NOREEN
Chapter 01
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!!unde
r!!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!!therefor
e!!classified!!as!!manufacturing!!overhead.
True False
6. Direct!!labor!!is!!a!!part!!of!!prime!!cost,!!but!!not!!conversion!!cost.
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, 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!!cos
t!!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!!relevan
t!!range.
True False
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, 16. Country!!Charm!!Restaurant!!is!!open!!24!!hours!!a!!day!!and!!always!!has!!a!!fire!!going!!in!!the!!fireplace!!i
n!!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!!o
f!!activity.
True False
20. The!!planning!!horizon!!for!!a!!committed!!fixed!!cost!!usually!!encompasses!!many!!years.
True False
21. Cost!!behavior!!is!!considered!!linear!!whenever!!a!!straight!!line!!is!!a!!reasonable!!approximation!!for!!th
e!!relation!!between!!cost!!and!!activity.
True False
22. The!!high-
low!!method!!uses!!cost!!and!!activity!!data!!from!!just!!two!!periods!!to!!establish!!the!!formula!!for!!a!!mixed
!! cost.
True False
23. The!!engineering!!approach!!to!!the!!analysis!!of!!mixed!!costs!!involves!!a!!detailed!!analysis!!of!!what!!co
st!!behavior!!should!!be,!!based!!on!!an!!industrial!!engineer's!!evaluation!!of!!the!!production!!methods!!t
o!!be!!used,!!the!!materials!!specifications,!!labor!!requirements,!!equipment!!usage,!!production!!efficie
ncy,!!power!!consumption,!!and!!so!!on.
1-4
Accounting 7th Edition by Peter Brewer,
Ray Garrison, NOREEN-latest 2022
1-1
, Introduction To Managerial Accounting 7th Edition Test Bank
by Peter Brewer, Ray Garrison, NOREEN
Chapter 01
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!!unde
r!!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!!therefor
e!!classified!!as!!manufacturing!!overhead.
True False
6. Direct!!labor!!is!!a!!part!!of!!prime!!cost,!!but!!not!!conversion!!cost.
1-2
, 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!!cos
t!!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!!relevan
t!!range.
True False
1-3
, 16. Country!!Charm!!Restaurant!!is!!open!!24!!hours!!a!!day!!and!!always!!has!!a!!fire!!going!!in!!the!!fireplace!!i
n!!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!!o
f!!activity.
True False
20. The!!planning!!horizon!!for!!a!!committed!!fixed!!cost!!usually!!encompasses!!many!!years.
True False
21. Cost!!behavior!!is!!considered!!linear!!whenever!!a!!straight!!line!!is!!a!!reasonable!!approximation!!for!!th
e!!relation!!between!!cost!!and!!activity.
True False
22. The!!high-
low!!method!!uses!!cost!!and!!activity!!data!!from!!just!!two!!periods!!to!!establish!!the!!formula!!for!!a!!mixed
!! cost.
True False
23. The!!engineering!!approach!!to!!the!!analysis!!of!!mixed!!costs!!involves!!a!!detailed!!analysis!!of!!what!!co
st!!behavior!!should!!be,!!based!!on!!an!!industrial!!engineer's!!evaluation!!of!!the!!production!!methods!!t
o!!be!!used,!!the!!materials!!specifications,!!labor!!requirements,!!equipment!!usage,!!production!!efficie
ncy,!!power!!consumption,!!and!!so!!on.
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