1. In determining cost of goods sold, two alternate costing concepts can be used: absorption costing and variable costing.

2. In variable costing, the cost of products manufactured is composed of only those manufacturing costs that increase or decrease as the volume of production rises or falls.

3. In variable costing, fixed costs do not become part of the cost of goods manufactured, but are considered an expense of the period.

4. A formal written statement of management's plans for the future, expressed in financial terms, is called a budget.

5. A budget procedure that provides for the maintenance at all times of a twelve-month projection into the future is called continuous budgeting.

6. The master budget of a small manufacturer would normally include all necessary component budgets except the capital expenditures budget.

7. Standard costs can be used with both the process cost and job order cost systems.

8. In most businesses, cost standards are established principally by accountants.

9. Principle of exceptions allows managers to focus on correcting variances between standard costs and actual costs.

10. A centralized business organization is one in which all major planning and operating decisions are made by top management.

11. A responsibility center in which the authority over and responsibility for costs and revenues is vested in the department manager is termed a profit center.

12. The rates at which services are charged to each division are called service department charge rates.

13. It is beneficial for two related companies to use the cost price approach for transfer pricing when both of the companies operate as cost centers and are not concerned with the revenue.

14. A cost that will not be affected by later decisions is termed a sunk cost.

15. Depending on the capacity of the plant, a company may best be served by further processing some of the product and leaving the rest as is, with no further processing.

16. The excess of the cash flowing in from revenues over the cash flowing out for expenses is termed net cash flow.

17. The expected period of time that will elapse between the date of a capital investment and the complete recovery in cash of the amount invested is called the discount period.

18.Charitable contributions are often used as a means of reducing the amount of income tax expense arising from capital investment projects.

19. When a plantwide factory overhead rate is used, the total overhead costs allocated to all products is the same.

20.If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours).

21. Activity-based costing is much easier to apply than single plantwide factory overhead allocation.

TRUE OR FALSE??? FOR EACH