Fundamentals of Cost Accounting 5th Edition By Lanen - Test Bank

1.

The cost of an item is the sacrifice of resources made to acquire it. 
 
True    False

2.

An expense is a cost charged against revenue in an accounting period. 
 
True    False

3.

If a cost is recorded as an asset (for example, prepaid rent for an office building), it becomes an expense when the asset has been consumed. 
 
True    False

4.

Accounting systems typically record opportunity costs as assets and treat them as intangible items on the financial statements. 
 
True    False

5.

Total cost of goods purchased minus beginning merchandise inventory plus ending merchandise inventory equals cost of goods sold. 
 
True    False

6.

Cost of goods sold includes the actual costs of the goods sold and the costs required to sell them to the customer. 
 
True    False

7.

Period costs are those costs assigned to units of production in the period in which they are incurred. 
 
True    False

8.

Only direct costs can be classified as product costs; indirect costs are classified as period costs. 
 
True    False

9.

The three categories of product costs are direct materials, direct labor, and manufacturing overhead. 
 
True    False

10.

The first step in determining whether a cost is direct or indirect is to specify the cost allocation rule. 
 
True    False

11.

Total work-in-process during the period is the sum of the beginning work-in-process inventory and the total manufacturing costs incurred during the period. 
 
True    False

12.

Cost of goods sold plus the ending finished goods inventory minus the beginning finished goods inventory equals the cost of goods manufactured. 
 
True    False

13.

If the cost of goods manufactured during the period exceeds the cost of goods sold, the ending balance of Finished Goods Inventory account increased. 
 
True    False

14.

Total variable costs change inversely with changes in the volume of activity. 
 
True    False

15.

Fixed costs per unit change inversely with changes in the volume of activity. 
 
True    False

16.

The range within which fixed costs remain constant as volume of activity varies is known as the relevant range. 
 
True    False

17.

The term full cost refers to the cost of manufacturing and selling a unit of product and includes both fixed and variable costs.  
 
True    False

18.

Variable marketing and administrative costs are included in determining full absorption costs. 
 
True    False