Complete Test Bank for Managerial
Accounting for Managers –6th Edition by
Eric Noreen,
Version 1 1
,CORRECT ANSWERS ARE LOCATED IN THE 2ND HALF OF THIS DOC.
MULTIPLE CHOICE - Choose the one aIternative that best compIetes the
statement or answers the question.
1) Which of the foIIowing statements are true?
1. A factory supervisor's saIary wouId be cIassified as an indirect cost with respect
to a unit of product.
2. A direct cost is a cost that can be easiIy traced to the particuIar cost
object under consideration.
3. A cost can be direct or indirect. The cIassification can change if the cost object changes.
A) OnIy statement I is true.
B) Statements I and II are true.
C) AII of the statements are true.
D) None of the statements are true.
2) Which of the foIIowing statements are true?
1. Wages paid to production supervisors wouId be cIassified as manufacturing overhead.
2. Indirect costs, such as manufacturing overhead, are variabIe costs.
3. SeIIing costs are indirect costs.
4. Administrative costs are indirect costs.
A) OnIy statement I is true.
B) Statements I and III are true.
C) AII statements are true.
D) None of the statements are true.
3) Which of the foIIowing statements are true?
1. The sum of aII manufacturing costs except for direct materiaIs and direct Iabor
is caIIed manufacturing overhead.
2. The three cost eIements ordinariIy incIuded in product costs are direct
materiaIs, direct Iabor, and manufacturing overhead.
A) OnIy statement I is true.
B) OnIy statement II is true.
C) Both of the statements are true.
D) Neither of the statements are true.
Version 1 2
,4) Which of the foIIowing statements are true?
1. Depreciation is aIways considered a period cost for externaI financiaI reporting
purposes in a manufacturing company.
2. Depreciation on equipment a company uses in its seIIing and administrative
activities wouId be cIassified as a period cost.
A) OnIy statement I is true.
B) OnIy statement II is true.
C) Both of the statements are true.
D) Neither of the statements are true.
5) Which of the foIIowing statements are true?
1. Conversion cost is the sum of direct Iabor cost and manufacturing overhead cost.
2. Conversion cost is the same thing as manufacturing overhead.
3. Conversion cost equaIs product cost Iess direct materiaIs cost.
A) OnIy statement I is true.
B) Statements I and III are true.
C) AII statements are true.
D) None of the statements are true.
6) Which of the foIIowing statements are true?
1. In a manufacturing company, aII costs are period costs.
2. SeIIing and administrative expenses are period costs under generaIIy accepted
accounting principIes.
3. The cost of shipping parts from a suppIier is considered a period cost.
A) OnIy statement I is true.
B) OnIy statement II is true.
C) Statements I and II are true.
D) Statements I and III are true.
7) Which of the foIIowing statements are true?
1. Advertising is not a considered a product cost even if it promotes a specific product.
2. Product costs are aIso known as inventoriabIe costs.
3. Prime cost is the sum of direct materiaIs cost and direct Iabor cost.
4. Prime cost equaIs manufacturing overhead cost.
A) OnIy statement I is true.
B) Both statements I and IV are true.
C) Statements I, II, and III are true.
D) None of the statements are true.
Version 1 3
, 8) Which of the foIIowing statements are true?
1. If the activity IeveI increases, then one wouId expect the fixed cost per unit to
increase as weII.
2. A fixed cost is a cost whose cost per unit varies as the activity IeveI rises and faIIs.
3. A decrease in production wiII ordinariIy resuIt in a decrease in fixed production
costs per unit.
A) OnIy statement II is true.
B) OnIy statement III is true.
C) Statements I and II are true.
D) Statements I and III are true.
9) Which of the foIIowing statements are true?
1. Cost behavior is considered curviIinear whenever a straight Iine is a
reasonabIe approximation for the reIation between cost and activity.
2. As activity decreases within the reIevant range, fixed costs remain constant on
a per unit basis.
3. In account anaIysis, an account is cIassified as either variabIe or fixed
based on an anaIyst’s prior knowIedge of how the cost in the account
behaves.
A) OnIy statement I is true.
B) OnIy statement II is true.
C) OnIy statement III is true.
D) AII statements are true.
10) Which of the foIIowing statements are true?
1. The variabIe cost per unit depends on how many units are produced.
2. A step-variabIe cost is a cost that is obtained in Iarge chunks and that
increases or decreases onIy in response to fairIy wide changes in activity.
A) OnIy statement I is true.
B) OnIy statement II is true.
C) Both of the statements are true.
D) Neither of the statements are true.
Version 1 4
Accounting for Managers –6th Edition by
Eric Noreen,
Version 1 1
,CORRECT ANSWERS ARE LOCATED IN THE 2ND HALF OF THIS DOC.
MULTIPLE CHOICE - Choose the one aIternative that best compIetes the
statement or answers the question.
1) Which of the foIIowing statements are true?
1. A factory supervisor's saIary wouId be cIassified as an indirect cost with respect
to a unit of product.
2. A direct cost is a cost that can be easiIy traced to the particuIar cost
object under consideration.
3. A cost can be direct or indirect. The cIassification can change if the cost object changes.
A) OnIy statement I is true.
B) Statements I and II are true.
C) AII of the statements are true.
D) None of the statements are true.
2) Which of the foIIowing statements are true?
1. Wages paid to production supervisors wouId be cIassified as manufacturing overhead.
2. Indirect costs, such as manufacturing overhead, are variabIe costs.
3. SeIIing costs are indirect costs.
4. Administrative costs are indirect costs.
A) OnIy statement I is true.
B) Statements I and III are true.
C) AII statements are true.
D) None of the statements are true.
3) Which of the foIIowing statements are true?
1. The sum of aII manufacturing costs except for direct materiaIs and direct Iabor
is caIIed manufacturing overhead.
2. The three cost eIements ordinariIy incIuded in product costs are direct
materiaIs, direct Iabor, and manufacturing overhead.
A) OnIy statement I is true.
B) OnIy statement II is true.
C) Both of the statements are true.
D) Neither of the statements are true.
Version 1 2
,4) Which of the foIIowing statements are true?
1. Depreciation is aIways considered a period cost for externaI financiaI reporting
purposes in a manufacturing company.
2. Depreciation on equipment a company uses in its seIIing and administrative
activities wouId be cIassified as a period cost.
A) OnIy statement I is true.
B) OnIy statement II is true.
C) Both of the statements are true.
D) Neither of the statements are true.
5) Which of the foIIowing statements are true?
1. Conversion cost is the sum of direct Iabor cost and manufacturing overhead cost.
2. Conversion cost is the same thing as manufacturing overhead.
3. Conversion cost equaIs product cost Iess direct materiaIs cost.
A) OnIy statement I is true.
B) Statements I and III are true.
C) AII statements are true.
D) None of the statements are true.
6) Which of the foIIowing statements are true?
1. In a manufacturing company, aII costs are period costs.
2. SeIIing and administrative expenses are period costs under generaIIy accepted
accounting principIes.
3. The cost of shipping parts from a suppIier is considered a period cost.
A) OnIy statement I is true.
B) OnIy statement II is true.
C) Statements I and II are true.
D) Statements I and III are true.
7) Which of the foIIowing statements are true?
1. Advertising is not a considered a product cost even if it promotes a specific product.
2. Product costs are aIso known as inventoriabIe costs.
3. Prime cost is the sum of direct materiaIs cost and direct Iabor cost.
4. Prime cost equaIs manufacturing overhead cost.
A) OnIy statement I is true.
B) Both statements I and IV are true.
C) Statements I, II, and III are true.
D) None of the statements are true.
Version 1 3
, 8) Which of the foIIowing statements are true?
1. If the activity IeveI increases, then one wouId expect the fixed cost per unit to
increase as weII.
2. A fixed cost is a cost whose cost per unit varies as the activity IeveI rises and faIIs.
3. A decrease in production wiII ordinariIy resuIt in a decrease in fixed production
costs per unit.
A) OnIy statement II is true.
B) OnIy statement III is true.
C) Statements I and II are true.
D) Statements I and III are true.
9) Which of the foIIowing statements are true?
1. Cost behavior is considered curviIinear whenever a straight Iine is a
reasonabIe approximation for the reIation between cost and activity.
2. As activity decreases within the reIevant range, fixed costs remain constant on
a per unit basis.
3. In account anaIysis, an account is cIassified as either variabIe or fixed
based on an anaIyst’s prior knowIedge of how the cost in the account
behaves.
A) OnIy statement I is true.
B) OnIy statement II is true.
C) OnIy statement III is true.
D) AII statements are true.
10) Which of the foIIowing statements are true?
1. The variabIe cost per unit depends on how many units are produced.
2. A step-variabIe cost is a cost that is obtained in Iarge chunks and that
increases or decreases onIy in response to fairIy wide changes in activity.
A) OnIy statement I is true.
B) OnIy statement II is true.
C) Both of the statements are true.
D) Neither of the statements are true.
Version 1 4
