Multiple Choice Questions

T/FIndirect material costs are easily traced to products because of their physical association with the finished product.
  • True
  • False
T/F concerning Manufacturing and Merchandising companies' inventories on the balance sheetA merchandiser reports its inventories as a current asset, and a manufacturer reports inventories as an expense.
  • True
  • False
Indirect labor is a
  • Product Cost- YesManufacturing Overhead- NoPeriod Cost- No
  • product cost
  • indirect labor.
  • The value chain
T/FThe costs assigned to beginning work in process inventory are based on the manufacturing costs incurred in the prior period.
  • True
  • False
Trend in managerial accounting?
  • places emphasis on special-purpose information.
  • Direct Materials, Direct Labor, & Manufacturing Overhead
  • Wages paid to a cost accountant department supervisor.
  • Large machines have been replaced with smaller, more flexible ones
T/F concerning Manufacturing and Merchandising companies' inventories on the balance sheetFinished goods is to a manufacturer what merchandise inventory is to a merchandiser.
  • True
  • False
Many companies have significantly lowered inventory levels and costs using
  • Just-in time inventory methods
  • Depreciation on testing equipment.
  • It is highly aggregated.
  • total cost of work in process
The principal difference between a merchandising and a manufacturing income statement is the
  • cost of goods sold section
  • Total manufacturing costs
  • Cost of goods manufactured
  • work in process inventory
A manufacturer may report three inventories in its balance sheet: (1) raw materials, (2) work in process, and (3) finished goods. Indicate in what sequence these inventories generally appear on a balance sheet.
  • Planning
  • direct materials.
  • False
  • 3, 2, 1
T/FManagerial accounting applies to all types of businesses, including service, merchandising, and manufacturing, as well as to all forms of business organizations.
  • True
  • False
Companies compute cost of goods manufactured by subtracting ending work in process inventory from
  • Just-in time inventory methods
  • total cost of work in process
  • cost of goods sold section
  • Cost of goods manufactured
For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to
  • total cost of work in process
  • Cost of goods manufacturing
  • Cost of goods manufactured
  • cost of goods sold section
T/F Trend in industryThe U.S. economy has shifted toward an emphasis on providing services.
  • True
  • False
The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the
  • Activity-based costing.
  • Total manufacturing costs
  • Depreciation on testing equipment.
  • work in process inventory
T/FUnder the just-in-time inventory method, goods are manufactured or purchased just-in-time for use.
  • True
  • False
After passage of the Sarbanes-Oxley Act of 2002
  • Product Cost- YesManufacturing Overhead- NoPeriod Cost- No
  • CEOs and CFOs must certify that financial statements give a fair presentation of the company's operating results.
  • Manufacturing companies use cost of goods manufactured and merchandising companies use cost of goods purchased.
  • increasing global competition and a shift toward providing services rather than goods.
T/F concerning Manufacturing and Merchandising companies' inventories on the balance sheetManufacturer's include raw materials, work in process, finished goods, and cost of goods sold on the balance sheet, while merchandisers include only merchandise inventory and cost of goods sold on their balance sheet.
  • True
  • False
The formula to determine the cost of goods manufactured is
  • Large machines have been replaced with smaller, more flexible ones
  • Raw materials and work in process only
  • The formula to determine the cost of goods manufactured is
  • a merchandising company and a manufacturing company
T/F Companies generally list manufacturing inventories in the order of completion—raw materials, work in process, and finished goods.
  • True
  • False
T/F Trend in industryThe majority of workers in the U.S. are in manufacturing which is growing substantially.
  • True
  • False
T/FManufacturers compute cost of goods sold by adding the beginning finished goods inventory to the cost of goods purchased and subtracting the ending finished goods inventory.
  • True
  • False
T/FManufacturing overhead consists of costs that are indirectly associated with the manufacture of the finished product.
  • True
  • False
On average, studies have shown that the smallest component of total manufacturing cost is
  • Direct Labor
  • Depreciation on testing equipment.
  • independent audits
  • Planning
T/F Trend in industryCompanies now have larger amounts of inventories than in the past.
  • True
  • False
The management function that requires management to look ahead and establish objectives is
  • Planning
  • False
  • Planning, directing, and controlling
  • Total manufacturing costs
All activities associated with providing a product or service is referred to as
  • The value chain
  • Just-in time inventory methods
  • direct materials.
  • Total manufacturing costs
A cost of goods manufactured schedule shows beginning and ending inventories for
  • Total manufacturing costs
  • Raw materials and work in process only
  • direct materials.
  • Keeping the company's activities on track
The cost applicable to units that have been started into production but not completed is shown as
  • Cost of goods manufactured
  • work in process inventory
  • Total manufacturing costs
  • Just-in time inventory methods
T/F Trend in industryLarge batch processing in manufacturing is becoming more common.
  • True
  • False
T/FProduct costs are costs that are a necessary and integral part of producing the finished product.
  • True
  • False
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Multiple Choice Questions
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