ACC 350 Week 3 Quiz – Strayer
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Chapter 2
An Introduction to Cost Terms and
Purposes
1)
Products,
services, departments, and customers may be cost objects.
2)
Costs
are accounted for in two basic stages: assignment followed by
accumulation.
3)
Actual
costs and budgeted costs are two different terms referring to the same
thing.
4)
Accountants
define a cost as a resource to be sacrificed to achieve a specific
objective.
5)
A cost
object is always either a product or a service.
6)
A
department could be considered a cost object.
7)
The same
cost may be direct for one cost object and indirect for another cost
object.
8)
Assigning
direct costs poses more problems than assigning indirect costs.
9)
Improvements
in information-gathering technologies are making it possible to trace more
costs as direct.
10)
Misallocated
indirect costs may lead to promoting products that are not profitable.
11)
The
materiality of the cost is a factor in classifying the cost as a direct or
indirect cost.
12)
The cost
of a customized machine only used in the production of a single product would
be classified as a direct cost.
13)
Some
fixed costs may be classified as direct manufacturing costs.
14)
The
distinction between direct and indirect costs is clearly set forth in Generally
Accepted Accounting Principles (GAAP).
15)
Fixed
costs have no cost driver in the short run, but may have a cost driver in the
long run.
16)
Costs
that are difficult to change over the short run are always variable over the
long run.
17)
A
decision maker cannot adjust capacity over the short run.
18)
Fixed
costs vary with the level of production or sales volume.
19)
Currently,
most administrative personnel costs would be classified as fixed costs.
20)
Fixed
costs depend on the resources used, not the resources acquired.
21)
The
variable cost per unit of a product should stay the same throughout the
relevant range of production.
22)
An
appropriate cost driver for shipping costs might be the number of units
shipped.
23)
When
making decisions using fixed costs, the focus should be on total costs and not
unit costs.
24)
When
50,000 units are produced the fixed cost is $10 per unit. Therefore, when
100,000 units are produced fixed costs will remain at $10 per unit.
25)
A unit
cost is computed by dividing total cost by the number of units.
26)
Unit
costs and average costs are really the same thing.
27)
Service-sector
companies provide services or intangible products to their customers.
28)
America
on Line (AOL) would be an example of a merchandising company.
29)
Merchandising
companies purchase products and sell them to customers without changing their
basic form.
30)
Merchandising
companies only hold two types of inventories: merchandise inventory, and direct
material.
31)
Manufacturing
sector firms normally hold three types of inventory: direct materials
inventory, work-in-process inventory, and finished goods inventory.
32)
Work-in-process
inventory are goods partially worked on but not yet completed.
33)
Direct
material costs are the acquisition costs of all materials that eventually
become part of the cost object and cannot be traced to the cost object in an
economically feasible way.
34)
Acquisition
costs of direct materials include freight-in charges, sales taxes, and custom
duties.
35)
Indirect
manufacturing costs include the compensation of all manufacturing labor that
can be traced to the cost object in an economically feasible way.
36)
Direct
manufacturing labor includes wages and fringe benefits paid to machine
operators.
37)
Inventoriable
costs are reported as an asset when incurred and expensed on the income
statement when the product is sold.
38)
Cost of
goods sold refers to the products brought to completion, whether they were
started before or during the current accounting period.
39)
Operating
income is sales revenue minus cost of goods manufactured.
40)
All
manufacturing costs are inventoriable costs.
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