Test Bank for Fundamentals of Cost Accounting, 7th Edition by William Lanen

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2-1
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Chapter./02./C


ost./Concepts./and./Behavior



True.//./False./Questions



1. The./cost./of./an./item./is./the./sacrifice./of./resources./made./to./acquire./it.



True False


2. An./expense./is./a./cost./charged./against./revenue./in./an./accounting./period.



True False


3. If./a./cost./is./recorded./as./an./asset./(for./example,./prepaid./rent./for./an./office./building),./it./become

s./an./expense./when./the./asset./has./been./consumed.



True False


4. Accounting./systems./typically./record./opportunity./costs./as./assets./and./treat./them./as./intangi

ble./items./on./the./financial./statements.



True False


5. Total./cost./of./goods./purchased./minus./beginning./merchandise./inventory./plus./ending./merchandi
se./inventory./equals./cost./of./goods./sold.



True False




2-2
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Hill./Education../All./rights./reserved../No./reproduction./or./distribution./without./the./prior./written./consent./of. / McGraw-
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,DOWNLOAD./THE./Test./Bank./for./Fundamentals./of./Cost./Accounting./5th./Edition
./Lanen




6. Cost./of./goods./sold./includes./the./actual./costs./of./the./goods./sold./and./the./costs./required./to./sell./t
hem./to./the./customer.



True False


7. Period./costs./are./those./costs./assigned./to./units./of./production./in./the./period./in./which./they./

are./incurred.



True False


8. Only./direct./costs./can./be./classified./as./product./costs;./indirect./costs./are./classified./as./period./costs.



True False


9. The./three./categories./of./product./costs./are./direct./materials,./direct./labor,./and./manufacturi

ng./overhead.



True False


10. The./first./step./in./determining./whether./a./cost./is./direct./or./indirect./is./to./specify./the./cost./alloca

tion./rule.



True False


11. Total./work-in-process./during./the./period./is./the./sum./of./the./beginning./work-in-

process./inventory./and./the./total./manufacturing./costs./incurred./during./the./period.



True False




2-3
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12. Cost./of./goods./sold./plus./the./ending./finished./goods./inventory./minus./the./beginning./finished./go
ods./inventory./equals./the./cost./of./goods./manufactured.



True False


13. If./the./cost./of./goods./manufactured./during./the./period./exceeds./the./cost./of./goods./sold,./the./en

ding./balance./of./Finished./Goods./Inventory./account./increased.



True False


14. Total./variable./costs./change./inversely./with./changes./in./the./volume./of./activity.



True False


15. Fixed./costs./per./unit./change./inversely./with./changes./in./the./volume./of./activity.



True False


16. The./range./within./which./fixed./costs./remain./constant./as./volume./of./activity./varies./is./known./as./
the./relevant./range.



True False


17. The./term./full./cost./refers./to./the./cost./of./manufacturing./and./selling./a./unit./of./product./and./inclu

des./both./fixed./and./variable./costs.



True False


18. Variable./marketing./and./administrative./costs./are./included./in./determining./full./absorption./costs.



True False




2-4
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Hill./Education../All./rights./reserved../No./reproduction./or./distribution./without./the./prior./written./consent./of. / McGraw-
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