1.Absorption costing provides incentives for a company to hold excess inventory, which may increase the company's costs.

a.

True

b.False

2.Companies need service and product cost information for both financial reporting and managerial accounting.

a.True

b.

False 3.Recognizing estimated manufacturing overhead costs at the end of a month is a(n):

a	asset source transaction.
b	asset use transaction.
c	asset exchange transaction.
d	claims exchange transaction.

4.Service companies do not incur overhead costs.

	a True
	b False

5.Furst Company pays production workers' salaries on account. The cost will be recognized as an expense when:

	a the goods made by the production workers are sold.
	b the cash is paid to settle the associate account payable.
	c the manufacturing process is complete.
	d none of these.

6. The costs of shipping a job to the buyer are recorded on the job's job cost sheet.

	a True
b	False

7. Under process costing, a cost of production report is prepared to determine the amount of costs that should be transferred to the next department or to finished goods.

	a True
b	False

8. The Purina Company would use a job-order costing system to account for the costs of making its premium dog food.

a	True
b	False

9 Recognition of revenue from sale of finished goods is:

	a An asset exchange transaction.
b	An asset use transaction.
c	An asset source transaction.
d	A claims exchange transaction