ACCT 6521 EXAM 1 CHAPTER 2 UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
1. Selling costs can be either direct or indirect costs.
Answer:
TRUE
Question:
2. A direct cost is a cost that cannot be easily traced to the
particular cost object under consideration.
Answer:
FALSE
Question:
3. Property taxes and insurance premiums paid on a factory
building are examples of period costs.
Answer:
FALSE
Question:
4. Conversion cost equals product cost less direct labor
cost.
Answer:
FALSE
Question:
5. Thread that is used in the production of mattresses is an
indirect material that is therefore classified as
manufacturing overhead.
Answer:
TRUE
Question:
6. Direct labor is a part of prime cost, but not conversion
cost.
Answer:
TRUE
,Question:
7. Conversion cost is the sum of direct labor cost and direct
materials cost.
Answer:
FALSE
Question:
8. Direct material costs are generally fixed costs.
Answer:
FALSE
Question:
9. Product costs are recorded as expenses in the period in
which the related products are sold.
Answer:
TRUE
Question:
10. Depreciation on manufacturing equipment is a product
cost.
Answer:
TRUE
Question:
11. Manufacturing salaries and wages incurred in the factory
are period costs.
Answer:
FALSE
Question:
12. Depreciation on office equipment would be included in
product costs.
Answer:
FALSE
Question:
13. Rent on a factory building used in the production process
would be classified as a product cost and as a fixed cost.
Answer:
TRUE
, Question:
14. A fixed cost remains constant if expressed on a unit basis.
Answer:
FALSE
Question:
15. Total variable cost is expected to remain unchanged as
activity changes within the relevant range.
Answer:
FALSE
Question:
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.
Answer:
TRUE
Question:
17. Committed fixed costs represent organizational
investments with a multi-year planning horizon that can't
be significantly reduced even for short periods.
Answer:
TRUE
Question:
18. Commissions paid to salespersons are a variable selling
expense.
Answer:
TRUE
Question:
19. Variable costs are costs that vary, in total, in direct
proportion to changes in the volume or level of activity.
Answer:
TRUE
QUESTIONS AND CORRECT ANSWERS
Question:
1. Selling costs can be either direct or indirect costs.
Answer:
TRUE
Question:
2. A direct cost is a cost that cannot be easily traced to the
particular cost object under consideration.
Answer:
FALSE
Question:
3. Property taxes and insurance premiums paid on a factory
building are examples of period costs.
Answer:
FALSE
Question:
4. Conversion cost equals product cost less direct labor
cost.
Answer:
FALSE
Question:
5. Thread that is used in the production of mattresses is an
indirect material that is therefore classified as
manufacturing overhead.
Answer:
TRUE
Question:
6. Direct labor is a part of prime cost, but not conversion
cost.
Answer:
TRUE
,Question:
7. Conversion cost is the sum of direct labor cost and direct
materials cost.
Answer:
FALSE
Question:
8. Direct material costs are generally fixed costs.
Answer:
FALSE
Question:
9. Product costs are recorded as expenses in the period in
which the related products are sold.
Answer:
TRUE
Question:
10. Depreciation on manufacturing equipment is a product
cost.
Answer:
TRUE
Question:
11. Manufacturing salaries and wages incurred in the factory
are period costs.
Answer:
FALSE
Question:
12. Depreciation on office equipment would be included in
product costs.
Answer:
FALSE
Question:
13. Rent on a factory building used in the production process
would be classified as a product cost and as a fixed cost.
Answer:
TRUE
, Question:
14. A fixed cost remains constant if expressed on a unit basis.
Answer:
FALSE
Question:
15. Total variable cost is expected to remain unchanged as
activity changes within the relevant range.
Answer:
FALSE
Question:
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.
Answer:
TRUE
Question:
17. Committed fixed costs represent organizational
investments with a multi-year planning horizon that can't
be significantly reduced even for short periods.
Answer:
TRUE
Question:
18. Commissions paid to salespersons are a variable selling
expense.
Answer:
TRUE
Question:
19. Variable costs are costs that vary, in total, in direct
proportion to changes in the volume or level of activity.
Answer:
TRUE
