Question

MANAGERIAL ACCOUNTING - TRUE OR FALSE?

(IF YOU ARE NOT ABLE TO ANSWER THEM ALL, PLEASE SKIP. THANK YOU)

1. Direct materials costs and indirect materials costs are considered “manufacturing overhead”.

2. All manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing overhead.

3. The total cost of a finished product generally contains equal amounts of materials, labor, and overhead costs.

4. Both direct labor cost and indirect labor cost are product costs.

5. Period costs include selling and administrative expenses.

6. Period costs are not inventoriable costs.

7. Product costs are also called inventoriable costs.

8. Direct materials become a cost of the finished goods manufactured when they are acquired, not when they are used.

9. The sum of the direct materials costs, direct labor costs, and beginning work in process is the total manufacturing costs for the year.

10. In calculating gross profit for a mfg company, the cost of goods manufactured is deducted from net sales.

11. The supply chain is all the activities associated with providing a product or service.

12. When raw materials are received, there is no effort at this point to associate the cost of materials with specific jobs.

13. When raw materials are purchased, the Work in Process Inventory account is debited.

14. Direct materials requisitioned from the storeroom should be charged to the Work In Process Inventory account and the job cost sheets for the individual jobs on which the materials were used.

15. Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.

16. The formula for the predetermined overhead rate is estimated annual overhead costs divided by an expected annual operating activity.

17. Finished Goods Inventory is charged for the cost of jobs completed during a period.

18. Overapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.

19. A job order cost accounting system is appropriate for similar products that are continuously mass produced.

20. Accumulating and assigning manufacturing costs are two important activities in a job order cost system.

21. Overapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.

Answer 1

1. Direct materials costs and indirect materials costs are considered “manufacturing overhead”.

FALSE – Direct material is part of prime cost and not manufacturing overhead

2. All manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing overhead.

TRUE

1. The total cost of a finished product generally contains equal amounts of materials, labor, and overhead costs.

TRUE- product cost consist of direct material, labor and manufacturing overhead

1. Both direct labor cost and indirect labor cost are product costs.

TRUE

1. Period costs include selling and administrative expenses.

TRUE

1. Period costs are not inventoriable costs.

TRUE

1. Product costs are also called Inventoriable costs.

TRUE

1. Direct materials become a cost of the finished goods manufactured when they are acquired, not when they are used.

FALSE. Direct material if not used is part of Material inventory

1. The sum of the direct materials costs, direct labor costs, and beginning work in process is the total manufacturing costs for the year.

FALSE. – sum of direct material, labor cost, manufacturing overhead and beginning work in process is total manufacturing costs for the year

1. In calculating gross profit for a mfg company, the cost of goods manufactured is deducted from net sales.

FALSE. Cost of Goods sold is deducted

1. The supply chain is all the activities associated with providing a product or service.

TRUE

1. When raw materials are received, there is no effort at this point to associate the cost of materials with specific jobs.

TRUE. Material is inventoried when received

1. When raw materials are purchased, the Work in Process Inventory account is debited.

FALSE. Material inventory account is debited

1. Direct materials requisitioned from the storeroom should be charged to the Work in Process Inventory account and the job cost sheets for the individual jobs on which the materials were used.

TRUE

1. Actual manufacturing overhead costs are assigned to each job by tracing each overhead cost to a specific job.

FALSE- Predetermined overhead rate is used

1. The formula for the predetermined overhead rate is estimated annual overhead costs divided by an expected annual operating activity.

TRUE

1. Finished Goods Inventory is charged for the cost of jobs completed during a period.

TRUE Finished goods inventory is charged with jobs completed

1. Over applied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.

FALSE. over applied overhead is when overhead absorbed are greater than actual manufacturing overhead

1. A job order cost accounting system is appropriate for similar products that are continuously mass produced.

FALSE. Process costing is appropriate

1. Accumulating and assigning manufacturing costs are two important activities in a job order cost system.

TRUE

1. Over applied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.

FALSE