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1. The cost of ending inventory using full costing is always greater than or equal to variable costing inventory. T/F 2. The cost of goods

1. The cost of ending inventory using full costing is always greater than or equal to variable costing inventory. T/F

2. The cost of goods sold is always higher using variable costing than full costing. T/F

3. The total selling and administrative expense is the same using variable and full costing. T/F

4. Full costing income can be increased by increasing production without increasing sales. T/F

5. Full costing can give higher income than variable coting as long as inventory levels continue to increase. T/F

6. One of the reasons that companies allocate costs is to reduce the frivolous use of common resources. T/F

7. Cost-plus contracts guarantee that the supplier will be paid for production costs plus some fixed amount or precentage of the cost. T/F

8. A cost objective is the product, service or department that will recieve the allocated cost. T/F

9. Allocating actual service department costs allows the dervice departments to pass on the costs or inefficiencies to the production departments. T/F

10. Managers should not be held responsible for controllable costs. T/F

11. In deciding whether to sell or process further, the costs that have been incurred to process the product to this point are incremental costs. T/F

12. In a make or buy decision, direct materials and direct labor are usually incremental costs. T/F

13. If a department is eliminated, the company will avoid the fixed costs that have been allocated to that department. T/F

14. Opportunity costs represent the benefits foregone by selecting one alternative over another. T/F

15. The stage of production at which individual products are indentifiable is referred to as the spin-off point

16. All customers are equally profitable if the same percentage markup is applied to all customers. T/F

17. Chargin a higher price per unit will always lead to higher profits for the company. T/F

18. Only incremental costs and revenues should be used when evaluating a special order

19. Product cost can be largely influenced after design is complete. T/F

20. The target costing process begins with the design of the product. T/F

21. Differences between standard and actual costs are referred to as standard cost variances. T/F

22. Variances are usually constructed for direct materials, direct labor, and manufacturing overhead. T/F

23. The material price variance is equal to the difference between the actual and standard price per unit of material times the actual quantity of material purchased. T/F

24. The labor rate variance is equal to the difference between the actual wage rate and the standard wage rate, times the actual number of labor hous worked. T/F

25. If a management by exception apprach is used to investigate variances, only unfavorable variances will be investigated. T/F

26. In a decentralized organization, performance evaluation should encourage managers to behave as if their own personal goals were congruent with the goals of the company as a whole. T/F

27. Responsibility accounting holds managers responsible for all costs charged to their operation. T/F

28. Profit margin is calculated as income divided by sales. T/F

29. Return on investment can be inproved by increasing income or reducing investment. T/F

30. Managers tend to under invest when profit is used to evaluate them. T/F

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