ACNT 2402 Chapter 01 - Questions and Answers 2023& study guide with complete solution

Chapter 01 Managerial Accounting and Cost Concepts 1. Selling costs can be either direct or indirect costs. TRUE 2. A direct cost is a cost that cannot be easily traced to the particular cost object under consideration. FALSE 3. Property taxes and insurance premiums paid on a factory building are examples of period costs. FALSE 4. Conversion cost equals product cost less direct labor cost. FALSE 5. Thread that is used in the production of mattresses is an indirect material that is therefore classified as manufacturing overhead. TRUE 6. Direct labor is a part of prime cost, but not conversion cost. TRUE 7. Conversion cost is the sum of direct labor cost and direct materials cost. FALSE 8. Direct material costs are generally fixed costs. FALSE 9. Product costs are recorded as expenses in the period in which the related products are sold. TRUE 10. Depreciation on manufacturing equipment is a product cost. TRUE Page 2 of 11 11. Manufacturing salaries and wages incurred in the factory are period costs. FALSE 12. Depreciation on office equipment would be included in product costs. FALSE 13. Rent on a factory building used in the production process would be classified as a product cost and as a fixed cost. TRUE 14. A fixed cost remains constant if expressed on a unit basis. FALSE 15. Total variable cost is expected to remain unchanged as activity changes within the relevant ran