TEST BANK FOR MANAGERIAL ACCOUNTING 16TH EDITION BY GARRISON

TEST BANK FOR MANAGERIAL ACCOUNTING 16TH EDITION BY GARRISON. A factory supervisor's salary would be classified as an indirect cost with respect to a unit of product. Answer: T Difficulty: 2 Medium Learning Objective: 01-01 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 2. A direct cost is a cost that can be easily traced to the particular cost object under consideration. Answer: T Difficulty: 1 Easy Learning Objective: 01-01 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 3. A cost can be direct or indirect. The classification can change if the cost object changes. Answer: T Difficulty: 2 Medium Learning Objective: 01-01 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 4. Wages paid to production supervisors would be classified as manufacturing overhead. Answer: T Difficulty: 1 Easy Learning Objective: 01-02 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 5. Selling costs are indirect costs. Answer: F Difficulty: 2 Medium Learning Objective: 01-02 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 6. The sum of all manufacturing costs except for direct materials and direct labor is called manufacturing overhead. Answer: T Difficulty: 2 Medium Learning Objective: 01-02 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 7. The three cost elements ordinarily included in product costs are direct materials, direct labor, and manufacturing overhead. Answer: T Difficulty: 1 Easy Learning Objective: 01-02 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 8. Administrative costs are indirect costs. Answer: F Difficulty: 2 Medium Learning Objective: 01-02 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 9. Depreciation is always considered a period cost for external financial reporting purposes in a manufacturing company. Answer: F Difficulty: 2 Medium Learning Objective: 01-02 Learning Objective: 01-03 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 10. Opportunity costs at a manufacturing company are not part of manufacturing overhead. Answer: T Difficulty: 3 Hard Learning Objective: 01-02 Learning Objective: 01-05 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 11. Conversion cost is the sum of direct labor cost and manufacturing overhead cost. Answer: T Difficulty: 1 Easy Learning Objective: 01-03 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 12. In a manufacturing company, all costs are period costs. Answer: F Difficulty: 1 Easy Learning Objective: 01-03 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 13. Advertising is not a considered a product cost even if it promotes a specific product. Answer: T Difficulty: 2 Medium Learning Objective: 01-03 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 14. Selling and administrative expenses are period costs under generally accepted accounting principles. Answer: T Difficulty: 1 Easy Learning Objective: 01-03 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 15. Conversion cost equals product cost less direct materials cost. Answer: T Difficulty: 3 Hard Learning Objective: 01-03 Topic Area: Blooms: Analyze AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 16. Prime cost is the sum of direct materials cost and direct labor cost. Answer: T Difficulty: 1 Easy Learning Objective: 01-03 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 17. Product costs are also known as inventoriable costs. Answer: T Difficulty: 1 Easy Learning Objective: 01-03 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 18. Prime cost equals manufacturing overhead cost. Answer: F Difficulty: 3 Hard Learning Objective: 01-03 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 19. Conversion cost is the same thing as manufacturing overhead. Answer: F Difficulty: 1 Easy Learning Objective: 01-03 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 20. The cost of shipping parts from a supplier is considered a period cost. Answer: F Difficulty: 3 Hard Learning Objective: 01-03 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 21. Depreciation on equipment a company uses in its selling and administrative activities would be classified as a period cost. Answer: T Difficulty: 1 Easy Learning Objective: 01-03 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 22. Indirect costs, such as manufacturing overhead, are variable costs. Answer: F Difficulty: 2 Medium Learning Objective: 01-04 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 23. If the activity level increases, then one would expect the fixed cost per unit to increase as well. Answer: F Difficulty: 2 Medium Learning Objective: 01-04 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 24. A fixed cost is a cost whose cost per unit varies as the activity level rises and falls. Answer: T Difficulty: 2 Medium Learning Objective: 01-04 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 25. Cost behavior is considered curvilinear whenever a straight line is a reasonable approximation for the relation between cost and activity. Answer: F Difficulty: 2 Medium Learning Objective: 01-04 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement [QUESTION] 26. A decrease in production will ordinarily result in a decrease in fixed production costs per unit. Answer: F Difficulty: 2 Medium Learning Objective: 01-04 Topic Area: Blooms: Understand AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 27. As activity decreases within the relevant range, fixed costs remain constant on a per unit basis. Answer: F Difficulty: 1 Easy Learning Objective: 01-04 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 28. The variable cost per unit depends on how many units are produced. Answer: F Difficulty: 2 Medium Learning Objective: 01-04 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 29. In account analysis, an account is classified as either variable or fixed based on an analyst’s prior knowledge of how the cost in the account behaves. Answer: T Difficulty: 1 Easy Learning Objective: 01-04 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 30. A step-variable cost is a cost that is obtained in large chunks and that increases or decreases only in response to fairly wide changes in activity. Answer: T Difficulty: 1 Easy Learning Objective: 01-04 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 31. Committed fixed costs remain largely unchanged in the short run. Answer: T Difficulty: 1 Easy Learning Objective: 01-04 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 32. Fixed costs expressed on a per unit basis do not change with changes in activity. Answer: F Difficulty: 1 Easy Learning Objective: 01-04 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 33. A fixed cost is constant if expressed on a per unit basis but the total dollar amount changes as the number of units increases or decreases. Answer: F Difficulty: 1 Easy Learning Objective: 01-04 Topic Area: Blooms: Remember AACSB: Analytical Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 34. If managers are reluctant to lay off direct labor employees when activity declines leads to a decrease in the ratio of variable to fixed costs. Answer: T Difficulty: 3 Hard Learning Objective: 01-04 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 35. Within the relevant range, a change in activity results in a change in variable cost per unit and total fixed cost. Answer: F Difficulty: 2 Medium Learning Objective: 01-04 Topic Area: Blooms: Understand AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 36. When operations are interrupted or cut back, committed fixed costs are cut in the short term because the costs of restoring them later are likely to be far less than the short-run savings that are realized Answer: F Difficulty: 1 Easy Learning Objective: 01-04 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement Feedback: [QUESTION] 37. The concept of the relevant range does not apply to variable costs. Answer: F Difficulty: 1 Easy Learning Objective: 01-04 Topic Area: Blooms: Remember AACSB: Reflective Thinking AICPA: BB Critical Thinking AICPA: FN Measurement