Chapter 1

TRUE-FALSE QUESTIONS
1. Reports prepared in financial accounting are general-purpose reports, whereas reports
prepared in managerial accounting are usually special-purpose reports. ​True
2. Managerial accounting internal reports are prepared more frequently than are classified
financial statements. ​True
3. Determining the unit cost of manufacturing product is an output of financial accounting.
False
4. Management accounting applies to all forms of business organizations. ​True
5. Controlling is the process of determining whether planned goals are being met. ​False
6. Managerial accounting information generally pertains to an entity as a whole and is
highly aggregated. ​False
7. Job order costing system is for allocating costs to group of unique product and is
applicable to the production of customer specified products such as the manufacturing
cture of special machine. ​True
8. Process costing is used by companies making one-of-a-kind products.​ False
9. Operation costing is a hybrid costing system often used in repetitive manufacturing
where finished products have common as well as distinguishing characteristics. ​True
10. Cost accounting.procedures help management in gathering the data needed to
determine product costs and thus generate meaningful financial statements and other
reports. ​True

Chapter 2
1. The materials, labor, and overhead costs incurred to produce a product are called period
costs. ​False
2. Marketing, Selling, administrative costs are the three broad classifications of costs
incurred by a manufacturing company. ​False
3. Lumber can be both a finished product and a material.​ True
4. Product cost consists of the sum of prime cost and conversion cost. ​False
5. Total fixed costs decrease with increase in the number of units produced and increase
with decrease in output. ​False
6. Period costs are found in both merchandising and manufacturing firms. ​True
7. The three cost elements of manufactured goods are direct materials, direct labor, and
marketing costs.​ False
8. A cost that is present under one alternative but absent in whole or part under another
alternative is known as a differential cost.​ True
9. Like product costs, period costs are not necessarily treated as expenses in the period in
which they are incurred. ​False
10. Variable costs are costs that change, in total, in direct proportion to changes in the level
of activity. ​True
11. The salary paid to the manager in charge of a warehouse is probably a variable cost.
False
12. Indirect materials/factory supplies are classified as administrative expense. ​False
 13. The salary paid to a factory foreman is classified as factory overhead. ​True
14. In a manufacturing setting, prime costs are fixed. ​False
15. Fixed cost remains constant if expressed on a unit basis. ​False
16. Differential costs can be either fixed or variable. ​True
17. A fixed cost is constant per unit of product. ​False
18. A decrease in production will ordinarily result in an increase in fixed production cost per
unit. ​True
19. A factory supervisor's salary would be classified as a direct cost of a unit of product.
False
20. Factory rent is included in manufacturing overhead, but office rent is a period cost. ​True
21. Product costs are also known as manufacturing costs. ​True
22. Prime costs are always variable. ​False
23. Cost accounting is not needed by a merchandising entity. ​False
24. The statement of financial position of a service business is the same as that of a
manufacturing business. ​False
25. Selling and administrative expenses are sometimes called non-manufacturing costs.
True

Chapter 3 wala

Chapter 5

TRUE OR FALSE
1. Product costs are historical figures and therefore are of little use to the manager. ​False
2. A company producing furniture would probably use a job-order cost system. ​True
3. Both job-order and process costing systems utilize averaging concepts in computing unit
costs. ​True
4. Most factory overhead costs are direct costs and therefore can be easily identified with
specific jobs. ​False
5. The predetermined overhead rate is computed using estimates of cost and activity. ​True
6. The cost of indirect materials used in production is added to the MFG. OH account rather
than added directly to Work in Process. ​True
7. Actual manufacturing overhead costs are charged directly to the Work in Process
account as the costs are incurred. ​False
8. Selling and administrative expenses should be added to the Manufacturing Overhead
Account. ​False
9. If more overhead is applied to Work in Process than is actually incurred, then overhead
will be overapplied. ​True
10. All of the raw materials purchased during a period are included in the cost of goods
manufactured figure. ​False
11. Any balance in the Work in Process account at the end of a period should be closed to
Cost of Goods Sold. ​False
 12. If a job is not completed at year end, then no overhead cost should be applied to that
job. ​False
13. Once production is completed, the job cost sheet can be discarded. ​False
14. In a job order cost system, depreciation of factory equipment should be charged directly
to the Work in Process account. ​False
15. The cost sheet is the support document for materials. ​False
16. A job order cost system identifies costs with a particular job rather than a set time period.
True
17. Manufacturing costs are generally incurred in one period and recorded in a subsequent
period. ​False
18. A job order cost system is most appropriate when a large volume of uniform products are
produced. ​False
19. Job order cost sheets constitute the subsidiary ledger of the control account Work in
Process inventory. ​True
20. When raw materials are purchased, the Work in Process Inventory account is debited.
False

Chapter 9 or 10

1. Process costing is used when identical units are produced through an ongoing series of
uniform steps.​ True
2. A utility such as the water company would typically use a process costing system. ​True
3. If processing departments are arranged in a parallel manner, all units will go through all
departments. ​True (false)
4. Costing is more difficult in a process costing system than it is in a job-order costing
system. ​True
5. In a process costing system, the cost of production report takes the place of the job cost
sheet. ​False
6. Process and job-order costing are similar in that costs are accumulated (and unit costs
are computed) for each separate customer order. ​False
7. In a process costing system, a Work in Process account is maintained for each
department. ​True
8. It is important to identify labor costs with each customer order in a process costing
system. ​True(false)
9. Operation costing employs aspects of both job-order and process costing systems. ​True
10. Since costs are accumulated by department, there is no need for a Finished Goods
inventory account in a process costing system. ​False
11. In a process costing system, costs incurred in one department remain there rather than
being transferred on to the next department. ​False
12. On a production report, labor and overhead costs are often added together and called
conversion costs. ​True
13. If materials are added 100% at the beginning of the process, then the work in process,
end will get 100%. ​True
 14. The purpose of the quantity schedule is to show the costs charged to the department.
True(false)
15. If all units do go through all processing departments, then the departments are probably
arranged in a sequential pattern. ​True

Chapter 10 or 11

1. Using the FIFO method: If, for any period, the beginning Finished Goods Inventory is
zero, then the average ending unit cost in Finished Goods Inventory is either a number
between the unit cost in the beginning WIP inventory and the current period unit costs,
or it is equal to the current period unit cost. ​True
2. Using the FIFO method: If the units transferred out exceeds the equivalent units in WIP
beginning inventory, then the unit cost of the ending WIP inventory will equal the current
period unit cost. ​True
3. Using the FIFO method: If the beginning WIP inventory is zero, then the unit cost of units
transferred out will always equal the unit costs of the units in ending WIP inventory. ​True
4. Using the FIFO method: The number of units transferred out equals the number of units
started and completed plus the equivalent units in the beginning inventory times one
minus the degree of completion. ​False
5. Weighted average costing combines costs and equivalent units of a period with the costs
and equivalent units in beginning inventory for product costing purposes. ​True
6. When using the weighted-average method, the unit cost assigned to the units
transferred out equals the unit costs assigned to the equivalent units in ending
inventory​.True
7. Using the weighted-average method: If the current period unit cost is greater than the
unit cost of the units in the beginning inventory, then the unit cost of the goods
transferred out will exceed the current average period unit cost. ​False
8. Irrespective of whether the FIFO method or the weighted-average method is used, the
total costs to be accounted for are equal for any particular period​. True
9. With zero beginning WIP inventory, the FIFO and weighted-average methods will assign
equal peso amounts to the units transferred out and the units in ending inventory. ​True
10. With zero ending WIP inventory, the FIFO and weighted-average methods will assign
equal peso amounts to the units transferred out. ​True