,TESTBANK for Managerial Accounting , 16th Edition
Carl Warren
Notes
1- The file is chapter after chapter.
2- We have shown you 10 or five pages.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many new
editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
True / False
1. Managerial accounting reports must be prepared according to generally accepted accounting principles.
a. True
b. False
ANSWER: False
2. Managerial accounting uses only past data in reports to aid management in the decision-making process.
a. True
b. False
ANSWER: False
3. Managerial accounting information includes both historical and estimated data.
a. True
b. False
ANSWER: True
4. Although finance and accounting professionals often work within verticals and other horizontals, they do not normally
report directly to the heads of those units or departments.
a. True
b. False
ANSWER: True
5. The philosophy of focusing on “unexpected” good or bad performance is called management by exception.
a. True
b. False
ANSWER: True
6. The functions reporting to the CFO sometimes are grouped together and referred to as corporate finance.
a. True
b. False
ANSWER: True
7. In smaller companies, the term controller may be used to refer to the chief financial officer.
a. True
b. False
ANSWER: True
8. The role of horizontals is to provide services, assistance, and advice to the various verticals and other horizontal
departments.
a. True
b. False
ANSWER: True
9. Horizontals are departments within a company that are responsible for developing products.
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,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
a. True
b. False
ANSWER: False
10. While no two company structures are identical, most large companies are organized in terms of verticals and
diagonals.
a. True
b. False
ANSWER: False
11. Verticals prepare their own income statements.
a. True
b. False
ANSWER: True
12. Managerial accounting reports are designed to meet the specific needs of a company’s management.
a. True
b. False
ANSWER: True
13. Strategic planning is the process of monitoring operating results and comparing actual results with the expected
results.
a. True
b. False
ANSWER: False
14. Operational planning is the process of developing the company’s short-term objectives and actions needed to achieve
the company’s long-term, strategic objectives.
a. True
b. False
ANSWER: True
15. Control is the process of choosing goals and deciding how to achieve them.
a. True
b. False
ANSWER: False
16. Evaluation is the process by which management monitors operations by comparing actual and expected results.
a. True
b. False
ANSWER: True
17. A major focus of managerial accounting is the development of costing information.
a. True
b. False
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,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
ANSWER: True
18. Managerial accounting information is for external users as well as company managers.
a. True
b. False
ANSWER: False
19. A report analyzing how many products need to be sold to cover operating costs is not typically a managerial
accounting report.
a. True
b. False
ANSWER: False
20. A report analyzing the dollar savings of purchasing new equipment to speed up the production process is a managerial
accounting report.
a. True
b. False
ANSWER: True
21. A performance report that identifies the amount of employee downtime is a financial accounting report.
a. True
b. False
ANSWER: False
22. Managerial accounting provides useful information to managers on product costs.
a. True
b. False
ANSWER: True
23. In a service company, the cost of services is accumulated and reported as inventory.
a. True
b. False
ANSWER: False
24. A cost is a sacrifice made to obtain some benefit.
a. True
b. False
ANSWER: True
25. Goods that are partway through the manufacturing process, but not yet complete, are referred to as materials
inventory.
a. True
b. False
ANSWER: False
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,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
26. The cost of a manufactured product generally consists of direct materials cost, direct labor cost, and factory overhead
cost.
a. True
b. False
ANSWER: True
27. The cost of materials entering directly into the manufacturing process is classified as factory overhead cost.
a. True
b. False
ANSWER: False
28. The cost of wages paid to employees directly involved in converting materials to finished product is classified as
direct labor cost.
a. True
b. False
ANSWER: True
29. If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as direct
materials cost.
a. True
b. False
ANSWER: False
30. For a construction contractor, the wages of carpenters would be classified as overhead cost.
a. True
b. False
ANSWER: False
31. For an automotive repair shop, the wages of mechanics would be classified as direct labor cost.
a. True
b. False
ANSWER: True
32. Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as
factory overhead cost.
a. True
b. False
ANSWER: True
33. Depreciation on factory plant and equipment is an example of factory overhead cost.
a. True
b. False
ANSWER: True
34. The cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.
Copyright Cengage Learning. Powered by Cognero. Page 4
,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
a. True
b. False
ANSWER: False
35. If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of
factory overhead cost.
a. True
b. False
ANSWER: True
36. Factory overhead cost is sometimes referred to as factory burden.
a. True
b. False
ANSWER: True
37. Conversion cost is the combination of direct labor cost and factory overhead cost.
a. True
b. False
ANSWER: True
38. Conversion cost is the combination of direct materials cost and factory overhead cost.
a. True
b. False
ANSWER: False
39. Factory overhead is an example of a product cost.
a. True
b. False
ANSWER: True
40. Direct labor costs are included in the conversion costs of a product.
a. True
b. False
ANSWER: True
41. The costs of materials and labor that do not enter directly into the finished product are classified as factory overhead.
a. True
b. False
ANSWER: True
42. The costs of materials and labor that do not enter directly into the finished product are classified as cost of goods sold.
a. True
b. False
ANSWER: False
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,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
43. Indirect labor would be included in factory overhead.
a. True
b. False
ANSWER: True
44. A cost object can be anything to which costs are assigned and will vary depending upon the decision-making needs of
management.
a. True
b. False
ANSWER: True
45. Direct costs are identified with and can be traced to a cost object.
a. True
b. False
ANSWER: True
46. Indirect costs are identified with and can be traced to a cost object.
a. True
b. False
ANSWER: False
47. Period (nonmanufacturing) costs are classified into two categories: selling and administrative.
a. True
b. False
ANSWER: True
48. Prime costs are the combination of direct labor costs and factory overhead costs.
a. True
b. False
ANSWER: False
49. Prime costs are the combination of direct materials and direct labor costs.
a. True
b. False
ANSWER: True
50. Conversion costs are the combination of direct labor, direct materials, and factory overhead costs.
a. True
b. False
ANSWER: False
51. Manufacturers use machinery and labor to convert direct materials into finished products.
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 6
,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
52. Period costs include direct materials and direct labor.
a. True
b. False
ANSWER: False
53. Period costs can be found on both the balance sheet and the income statement.
a. True
b. False
ANSWER: False
54. Product costs are not expensed until the product is sold.
a. True
b. False
ANSWER: True
55. The plant manager’s salary in a manufacturing business would be considered an indirect cost.
a. True
b. False
ANSWER: True
56. Operating expenses are product costs and are expensed when the product is sold.
a. True
b. False
ANSWER: False
57. Period costs are operating costs that are expensed in the period in which the goods are sold.
a. True
b. False
ANSWER: False
58. Factory overhead includes all manufacturing costs other than direct materials and direct labor.
a. True
b. False
ANSWER: True
59. Labor costs that are directly traceable to the product are part of factory overhead.
a. True
b. False
ANSWER: False
60. Product costs include direct labor and advertising expense.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 7
, Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
61. Indirect labor and indirect materials would be part of factory overhead.
a. True
b. False
ANSWER: True
62. Prime costs consist of factory overhead and direct labor.
a. True
b. False
ANSWER: False
63. Conversion costs consist of product costs and period costs.
a. True
b. False
ANSWER: False
64. Prime costs consist of direct materials, indirect materials, and direct labor.
a. True
b. False
ANSWER: False
65. Only the value of the inventory that is sold will appear on the income statement.
a. True
b. False
ANSWER: True
66. On the balance sheet for a manufacturing business, the costs of direct materials, direct labor, and factory overhead are
categorized as either materials inventory, work in process inventory, or finished goods inventory.
a. True
b. False
ANSWER: True
67. The statement of cost of goods manufactured is an extension of the income statement for a manufacturing company.
a. True
b. False
ANSWER: True
68. Lower utilization rates are considered favorable, while higher utilization rates are considered unfavorable.
a. True
b. False
ANSWER: False
Multiple Choice
69. In order to be useful to managers, managerial accounting reports should possess which of the following
Copyright Cengage Learning. Powered by Cognero. Page 8
Carl Warren
Notes
1- The file is chapter after chapter.
2- We have shown you 10 or five pages.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many new
editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
True / False
1. Managerial accounting reports must be prepared according to generally accepted accounting principles.
a. True
b. False
ANSWER: False
2. Managerial accounting uses only past data in reports to aid management in the decision-making process.
a. True
b. False
ANSWER: False
3. Managerial accounting information includes both historical and estimated data.
a. True
b. False
ANSWER: True
4. Although finance and accounting professionals often work within verticals and other horizontals, they do not normally
report directly to the heads of those units or departments.
a. True
b. False
ANSWER: True
5. The philosophy of focusing on “unexpected” good or bad performance is called management by exception.
a. True
b. False
ANSWER: True
6. The functions reporting to the CFO sometimes are grouped together and referred to as corporate finance.
a. True
b. False
ANSWER: True
7. In smaller companies, the term controller may be used to refer to the chief financial officer.
a. True
b. False
ANSWER: True
8. The role of horizontals is to provide services, assistance, and advice to the various verticals and other horizontal
departments.
a. True
b. False
ANSWER: True
9. Horizontals are departments within a company that are responsible for developing products.
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
a. True
b. False
ANSWER: False
10. While no two company structures are identical, most large companies are organized in terms of verticals and
diagonals.
a. True
b. False
ANSWER: False
11. Verticals prepare their own income statements.
a. True
b. False
ANSWER: True
12. Managerial accounting reports are designed to meet the specific needs of a company’s management.
a. True
b. False
ANSWER: True
13. Strategic planning is the process of monitoring operating results and comparing actual results with the expected
results.
a. True
b. False
ANSWER: False
14. Operational planning is the process of developing the company’s short-term objectives and actions needed to achieve
the company’s long-term, strategic objectives.
a. True
b. False
ANSWER: True
15. Control is the process of choosing goals and deciding how to achieve them.
a. True
b. False
ANSWER: False
16. Evaluation is the process by which management monitors operations by comparing actual and expected results.
a. True
b. False
ANSWER: True
17. A major focus of managerial accounting is the development of costing information.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 2
,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
ANSWER: True
18. Managerial accounting information is for external users as well as company managers.
a. True
b. False
ANSWER: False
19. A report analyzing how many products need to be sold to cover operating costs is not typically a managerial
accounting report.
a. True
b. False
ANSWER: False
20. A report analyzing the dollar savings of purchasing new equipment to speed up the production process is a managerial
accounting report.
a. True
b. False
ANSWER: True
21. A performance report that identifies the amount of employee downtime is a financial accounting report.
a. True
b. False
ANSWER: False
22. Managerial accounting provides useful information to managers on product costs.
a. True
b. False
ANSWER: True
23. In a service company, the cost of services is accumulated and reported as inventory.
a. True
b. False
ANSWER: False
24. A cost is a sacrifice made to obtain some benefit.
a. True
b. False
ANSWER: True
25. Goods that are partway through the manufacturing process, but not yet complete, are referred to as materials
inventory.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 3
,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
26. The cost of a manufactured product generally consists of direct materials cost, direct labor cost, and factory overhead
cost.
a. True
b. False
ANSWER: True
27. The cost of materials entering directly into the manufacturing process is classified as factory overhead cost.
a. True
b. False
ANSWER: False
28. The cost of wages paid to employees directly involved in converting materials to finished product is classified as
direct labor cost.
a. True
b. False
ANSWER: True
29. If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as direct
materials cost.
a. True
b. False
ANSWER: False
30. For a construction contractor, the wages of carpenters would be classified as overhead cost.
a. True
b. False
ANSWER: False
31. For an automotive repair shop, the wages of mechanics would be classified as direct labor cost.
a. True
b. False
ANSWER: True
32. Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as
factory overhead cost.
a. True
b. False
ANSWER: True
33. Depreciation on factory plant and equipment is an example of factory overhead cost.
a. True
b. False
ANSWER: True
34. The cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.
Copyright Cengage Learning. Powered by Cognero. Page 4
,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
a. True
b. False
ANSWER: False
35. If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of
factory overhead cost.
a. True
b. False
ANSWER: True
36. Factory overhead cost is sometimes referred to as factory burden.
a. True
b. False
ANSWER: True
37. Conversion cost is the combination of direct labor cost and factory overhead cost.
a. True
b. False
ANSWER: True
38. Conversion cost is the combination of direct materials cost and factory overhead cost.
a. True
b. False
ANSWER: False
39. Factory overhead is an example of a product cost.
a. True
b. False
ANSWER: True
40. Direct labor costs are included in the conversion costs of a product.
a. True
b. False
ANSWER: True
41. The costs of materials and labor that do not enter directly into the finished product are classified as factory overhead.
a. True
b. False
ANSWER: True
42. The costs of materials and labor that do not enter directly into the finished product are classified as cost of goods sold.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 5
,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
43. Indirect labor would be included in factory overhead.
a. True
b. False
ANSWER: True
44. A cost object can be anything to which costs are assigned and will vary depending upon the decision-making needs of
management.
a. True
b. False
ANSWER: True
45. Direct costs are identified with and can be traced to a cost object.
a. True
b. False
ANSWER: True
46. Indirect costs are identified with and can be traced to a cost object.
a. True
b. False
ANSWER: False
47. Period (nonmanufacturing) costs are classified into two categories: selling and administrative.
a. True
b. False
ANSWER: True
48. Prime costs are the combination of direct labor costs and factory overhead costs.
a. True
b. False
ANSWER: False
49. Prime costs are the combination of direct materials and direct labor costs.
a. True
b. False
ANSWER: True
50. Conversion costs are the combination of direct labor, direct materials, and factory overhead costs.
a. True
b. False
ANSWER: False
51. Manufacturers use machinery and labor to convert direct materials into finished products.
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 6
,Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
52. Period costs include direct materials and direct labor.
a. True
b. False
ANSWER: False
53. Period costs can be found on both the balance sheet and the income statement.
a. True
b. False
ANSWER: False
54. Product costs are not expensed until the product is sold.
a. True
b. False
ANSWER: True
55. The plant manager’s salary in a manufacturing business would be considered an indirect cost.
a. True
b. False
ANSWER: True
56. Operating expenses are product costs and are expensed when the product is sold.
a. True
b. False
ANSWER: False
57. Period costs are operating costs that are expensed in the period in which the goods are sold.
a. True
b. False
ANSWER: False
58. Factory overhead includes all manufacturing costs other than direct materials and direct labor.
a. True
b. False
ANSWER: True
59. Labor costs that are directly traceable to the product are part of factory overhead.
a. True
b. False
ANSWER: False
60. Product costs include direct labor and advertising expense.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 7
, Name: Class: Date:
Chapter 01: Introduction to Managerial Accounting
61. Indirect labor and indirect materials would be part of factory overhead.
a. True
b. False
ANSWER: True
62. Prime costs consist of factory overhead and direct labor.
a. True
b. False
ANSWER: False
63. Conversion costs consist of product costs and period costs.
a. True
b. False
ANSWER: False
64. Prime costs consist of direct materials, indirect materials, and direct labor.
a. True
b. False
ANSWER: False
65. Only the value of the inventory that is sold will appear on the income statement.
a. True
b. False
ANSWER: True
66. On the balance sheet for a manufacturing business, the costs of direct materials, direct labor, and factory overhead are
categorized as either materials inventory, work in process inventory, or finished goods inventory.
a. True
b. False
ANSWER: True
67. The statement of cost of goods manufactured is an extension of the income statement for a manufacturing company.
a. True
b. False
ANSWER: True
68. Lower utilization rates are considered favorable, while higher utilization rates are considered unfavorable.
a. True
b. False
ANSWER: False
Multiple Choice
69. In order to be useful to managers, managerial accounting reports should possess which of the following
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