chapter18,21 true false

Total variable costs change in proportion to changes in volume of activity.
true
As the volume increases, fixed cost per unit of output remains constant.
false
Cost-volume-profit analysis requires management to classify all costs as either fixed or variable with respect to production or sales volume within the relevant range of operations.
true
The dollar amount of sales needed to achieve a target income is computed by dividing the sum of fixed costs plus the target income by the contribution margin ratio.
true
The contribution margin ratio is the percent of each sales dollar that remains after deducting the total unit variable cost.
true
The high-low method of deriving an estimated cost line uses all the data points available.
false
The break-even point is the sales level at which a company neither earns a profit nor incurs a loss.
true
To calculate the break-even point in units, one must know unit fixed cost, unit variable cost, and sales price.
false
Managerial accounting reports and information are used by external users and financial accounting by internal users.
false
Both financial and managerial accounting affect user’s decisions and actions.
true
The concept of total quality management focuses on continuous improvement.
true
Just-in-time manufacturing is a system that acquires inventory and produces product only when needed for an order.
true
Costs may be classified by many different cost classifications.
true
Straight line depreciation, rent and manager salaries are examples of variable costs.
false
Cost concepts such as variable, fixed, mixed, direct and indirect apply only to manufacturers and not to service companies.
false
A variable cost changes in proportion to changes in the volume in activity.
true
Product costs are capitalized as inventory on the balance sheet and period costs are expenses on the income statement.
true
Selling and administrative expenses are normally period costs.
true
Prime costs consist of direct labor and factory overhead.
false
The collection of cost sheets for unfinished jobs makes up a subsidiary ledger controlled by the Work in Process Inventory account in the general ledger.
true
Job cost sheets are used to track all of the costs assigned to a job, including direct materials, direct labor, overhead, and all selling and administrative costs.
false
Both direct and indirect labor costs are recorded on the individual job cost sheets.
false
The cost of all direct materials issued to production is debited to Work in Process Inventory.
true
The predetermined overhead rate is used to allocate overhead cost to jobs.
true
In a job order costing system, indirect labor costs are debited to the Factory Overhead account.
true
Direct materials and direct labor are examples of costs that are debited to the Factory Overhead account in a job costing system.
false
The schedule of cost of goods manufactured for a job costing system includes total actual factory overhead.
false
The managers of process operations focus on the series of repetitive processes, or steps, resulting in a noncustomized product or service.
true
In a process costing system costs are measured upon completion of each job.
false
Equivalent units of production refer to the number of units that could have been started and completed given the costs incurred during the period.
true
Equivalent units of production for direct materials and direct labor are usually the same.
false
Conversion cost per equivalent unit is the combined costs of direct materials and factory overhead.
false
In a process costing system, the purchase of raw materials is debited to the Raw Materials Inventory.
true
In a process costing system, the entry to record cost of materials assigned to a production department requires a debit to the Raw Materials Inventory account and a credit to the Work in Process Inventory account for that department.
false
If a department that applies process costing starts the reporting period with 40,000 physical units that were 80% complete with respect to direct materials and 50% complete with respect to direct labor, it must add 8,000 equivalent units of direct materials and 20,000 equivalent units of direct labor to complete them.
true
The cost of units transferred from Work in Process Inventory to Finished Goods Inventory is called the cost of goods manufactured.
true
Categories: Managerial Accounting