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44. _____________________ is the way that a cost is linked to some cost object.
45. A(n) __________________ is any item such as a product, customer, department, project, geographic region, and so
on, for which costs are measured and assigned.
46. Costs that can be easily and accurately traced to a cost object are called __________.
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47. The process of assigning an indirect cost to a cost object by using a reasonable and convenient method is called
_____________.
48. A(n)_________________ is the benefit given up or sacrificed when one alternative is chosen over another.
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49. A(n) ________________ is a cost that does not increase in total as output increase and does not decrease in total as
output decreases.
50. Organizations that produce products are called _______________________.
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51. ________________ are those costs, both direct and indirect, of producing a product in a manufacturing firm or of
acquiring a product in a merchandising firm and preparing it for sale.
52. Materials that become part of a product usually are classified as _______________.
53. Insurance coverage, medical care, and accounting are examples of _________________ performed for customers.
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54. _________________ equals the sum of direct materials, direct labor, and manufacturing overhead.
55. All product costs other than direct materials and direct labor are put into a category called
_________________________.
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56. ______________________ is the sum of direct labor cost and manufacturing overhead cost.
57. ________________ and _________________ costs are considered period costs.
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58. Employees who convert direct materials into a product are classified as _____________.
59. ___________________ is the cost of the partially completed goods that are still on the factory floor at the end of a
time period.
60. The difference between sales revenue and cost of goods sold is known as the ______________.
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61. The ____________________________ represents that total product cost of goods completed during the current period
and transferred to finished goods inventory.
62. Which of the following is true of expired costs?
a. Expired costs are reported as fixed assets on a company’s balance sheet.
b. Expired costs are added to revenue to determine income on the income statement.
c. Expired costs are used up in the production of revenue.
d. Expired costs are recognized as liabilities on the balance sheet.
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63. Which of the following is true of assigning costs to cost objects?
a. Assigning costs to cost objects typically is more difficult than cost accumulation.
b. Assigning costs to cost objects can be accomplished in a number of ways.
c. The choice of a method for assigning costs to cost objects depends on a number of factors, such as the need for
accuracy.
d. All of these are true.
64. Which of the following statements best describes an indirect cost?
a. An indirect cost can be easily and accurately traced to a cost object.
b. An indirect cost is assigned to a cost object using allocation.
c. It is not important to assign an indirect cost as it can be traced to a cost object.
d. None of these statements are true.
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65. Which of the following is true of a variable cost?
a. A variable cost in total changes in direct proportion to changes in output within the relevant range.
b. A variable cost is a cost that is not linked to a company’s output.
c. A variable cost in total remains constant regardless of the level of output.
d. A variable cost in total increases as output decreases and decreases as output increases.
66. Which of the following statements is true of cost?
a. Cost is the difference between gross margin and operating expenses.
b. Cost and price are always same for the owner of a company.
c. Cost is a dollar measure of the resources used to achieve a given benefit.
d. Cost is the revenue per unit.
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67. Which of the following is true of price?
a. Price must be greater than cost for a firm to earn income.
b. Price is the difference between gross margin and the cost of goods sold.
c. Price is a dollar measure of the resources used to achieve a given benefit.
d. Price is the difference between cost per unit and income per unit.
68. Which of the following statements is true of assigning costs to a cost object?
a. Assigning costs to a cost object is the way that costs are measured and recorded.
b. Assigning costs to a cost object can be accomplished in a number of ways.
c. Assigning costs to a cost object typically is simpler than cost accumulation.
d. All of these
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69. An opportunity cost is:
a. the benefit given up or sacrificed when one alternative is chosen over another.
b. the cost to market, distribute, and service a product or service.
c. expensed in the period in which it is incurred; it is not inventoried.
d. the difference between gross margin and operating expenses.
70. Non-manufacturing costs include
a. marketing and administration.
b. direct materials.
c. indirect materials.
d. overhead.
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71. Which of the following is an example of a service?
a. motorcycle
b. eye exam
c. stereo
d. television
72. Which of the following is an example of a tangible product?
a. lawn care
b. accounting services
c. customer service
d. computer
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73. Costs are subdivided into what two major functional categories?
a. opportunity and allocation
b. fixed and variable
c. product and non-production
d. direct and indirect
74. Product costs
a. are costs that are included in the determining the value of the inventory.
b. are manufacturing costs.
c. include direct materials, direct labor, and overhead.
d. are all of these.
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75. Which of the following would not be a period cost?
a. research and development
b. direct materials
c. advertising costs
d. office supplies
76. Which of the following would be an example of a direct materials cost?
a. engine on an airplane
b. lubricant used to manufacture a lighting fixture
c. glue used to build cabinets
d. nails used to manufacture a table
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77. Product costs consist of
a. period costs.
b. indirect materials, indirect labor, and administrative costs.
c. direct materials, direct labor, and selling costs.
d. direct materials, direct labor, and overhead.
78. Which of the following is not an example of a direct materials cost?
a. shelves on a bookcase
b. engine in a car
c. tires on a bicycle
d. nails used to manufacture a desk
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79. Materials in the raw materials account do not become direct materials
a. until they are withdrawn from inventory for use in production.
b. until the finished product is sold.
c. until they are purchased from a vendor.
d. none of these are correct.
80. Which of the following is an example of direct labor?
a. vice president of marketing
b. assembly line worker for televisions
c. staff accountant
d. supervisor at a manufacturing plant
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81. Direct labor is a(n)
a. product cost.
b. opportunity cost.
c. administrative cost.
d. fixed cost.
82. Overhead includes
a. indirect labor.
b. indirect materials.
c. factory supplies.
d. all of these.
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83. Which of the following would not be included in overhead?
a. marketing costs
b. property taxes on the factory
c. factory utility costs
d. deprecation on factory machinery
84. Indirect labor would include
a. salary of the vice-president of marketing.
b. salary of CEO.
c. salary of factory supervisor.
d. none of these are correct.
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85. The unit cost
a. is the total product costs divided by the number of units produced.
b. includes period costs.
c. is the total prime costs divided by the number of units produced.
d. is the total conversion costs divided by the number of units produced.
86. Prime cost is
a. indirect materials cost and direct labor cost.
b. direct materials cost and direct labor cost.
c. direct labor cost and indirect labor cost.
d. direct materials cost and indirect labor cost.