Managerial Accounting 14th Edition Test Bank

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Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 1
1. Managerial accounting reports must be prepared according to generally accepted accounting principles.
a. True
b. False
ANSWER: False
DIFFICULTY: Bloom's: Remembering
Easy
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
2. Managerial accounting uses only past data in reports to aid management in the decision making process.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
3. Managerial accounting information includes both historical and estimated data.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
4. Since there are few rules to restrict how an organization chooses to arrange its own internal data for decision making,
managerial accounting provides ample opportunity for developing business strategies.
a. True
b. False
ANSWER: True
DIFFICULTY: Bloom's: Remembering
Easy
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management

Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 2
BUSPROG: Analytic
5. A diagram of the operating structure of an organization is called an organization chart.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
6. In most business organizations, the chief accountant is called the treasurer.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
7. In most business organizations, the chief management accountant is called the controller.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
8. A staff department or unit is one that provides services, assistance, and advice to the departments with line or other staff
responsibilities.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology

Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 3
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
9. The vice presidents of human resources and the controller hold line positions in most large organizations.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
10. A staff department has no direct authority over a line department.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
11. The controller's staff consists of management accountants responsible for systems and procedures, general accounting,
budgets, taxes, and cost accounting.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
12. Managerial accounting reports are designed to meet the specific needs of a company’s management.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering

Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 4
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
13. Planning is the process of monitoring operating results and comparing actual results with the expected results.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
14. Planning is the process of developing the company’s objectives or goals and translating these objectives into courses
of action.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
15. Controlling deals with choosing goals and deciding how to achieve them.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
16. Controlling is the process of monitoring operating results and comparing actual results with the expected results.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy

Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 5
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-01 - 01-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.25 - Managerial Characteristics/Terminology
ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
17. Managerial accounting provides useful information to managers on product costs.
a. True
b. False
ANSWER: True
DIFFICULTY: Bloom's: Remembering
Easy
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
18. The payment of dividends is an example of a cost.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
19. A cost can be a payment of cash for the purpose of generating revenues.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
20. Goods that are part way through the manufacturing process, but not yet complete, are referred to as materials
inventory.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering

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Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 6
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
21. The cost of a manufactured product generally consists of direct materials cost, direct labor cost, and factory overhead
cost.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
22. The cost of materials entering directly into the manufacturing process is classified as factory overhead cost.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
23. The cost of wages paid to employees directly involved in converting materials to finished product is classified as
direct labor cost.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
24. If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as direct
materials cost.
a. True
b.

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Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 7
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
25. For a construction contractor, the wages of carpenters would be classified as factory overhead cost.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
26. For an automotive repair shop, the wages of mechanics would be classified as direct labor cost.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
27. Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as
factory overhead cost.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
28. Depreciation on factory plant and equipment is an example of factory overhead cost.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom's: Remembering

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Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 8
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
29. Cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
30. If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of
factory overhead cost.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
31. Factory overhead cost is sometimes referred to as factory burden.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
32. Conversion cost is the combination of direct labor cost and factory overhead cost.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 -

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Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 9
33. Conversion cost is the combination of direct materials cost and factory overhead cost.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
34. Factory overhead is an example of a product cost.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
35. Direct labor costs are included in the conversion costs of a product.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
36. The costs of materials and labor that do not enter directly into the finished product are classified as factory overhead.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
37. The costs of materials and labor that do not enter directly into the

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Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 10
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
38. Indirect labor would be included in factory overhead.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
39. A cost object indicates how costs are related or identified.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
40. Direct costs can be specifically traced to a cost object.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
41. Indirect costs can be specifically traced to a cost object.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy

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Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 11
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
42. Period (nonmanufacturing) costs are classified into two categories: selling and administrative.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
43. Prime costs are the combination of direct labor costs and factory overhead costs.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
44. Prime costs are the combination of direct materials and direct labor costs.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
45. Conversion costs are the combination of direct labor, direct material, and factory overhead costs.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS:

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Chapter 1 - Introduction to Managerial Accounting.
Copyright Cengage Learning. Powered by Cognero. Page 12
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
46. Manufacturers use machinery and labor to convert direct materials into finished products.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
47. Period costs include direct materials and direct labor.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
48. Period costs can be found on both the balance sheet and the income statement.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
49. Product costs are not expensed until the product is sold.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic

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Chapter 1 - Introduction to Managerial Accounting.
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50. The plant manager’s salary in a manufacturing business would be considered an indirect cost.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
51. Operating expenses are product costs and are expensed when the product is sold.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
52. Period costs are operating costs that are expensed in the period in which the goods are sold.
a. True
b. False
ANSWER: False
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
53. Factory overhead includes all manufacturing costs except direct materials and direct labor.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
54. Labor costs that are directly traceable to the

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Chapter 1 - Introduction to Managerial Accounting.
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ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
55. Product costs include direct labor and advertising expense.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
56. Indirect labor and indirect materials would be part of factory overhead.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
57. Prime costs consist of factory overhead and direct labor.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
58. Conversion costs consist of product costs and period costs.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering

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Chapter 1 - Introduction to Managerial Accounting.
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LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
59. Prime costs consist of direct materials, indirect materials, and direct labor.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-02 - 01-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
60. Only the value of the inventory that is sold will appear on the income statement.
a. True
b. False
ANSWER: True
DIFFICULTY: Bloom's: Remembering
Moderate
LEARNING OBJECTIVES: MANG.WARD.18.01-03 - 01-04
ACCREDITING STANDARDS: ACCT.ACBSP.APC.27 - Managerial Accounting Features/Costs
ACCT.IMA.07 - Cost Management
BUSPROG: Analytic
61. On the balance sheet for a manufacturing business, the cost of direct materials, direct labor, and factory overhead are
categorized as either materials inventory, work in process inventory, or finished goods inventory.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom's: Remembering
LEARNING OBJECTIVES: MANG.WARD.18.01-03 - 01-04
ACCREDITING STANDARDS:

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