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1. Product costs consist of
   1. direct materials and direct labor only.
   2. direct materials, direct labor, and manufacturing overhead.
   3. selling and administrative expenses.
   4. period costs.
2. What is balanced in the balanced scorecard approach?
   1. The number of products produced
   2. The emphasis on financial and non-financial performance measurements
   3. The amount of costs allocated to products
   4. The number of defects found on each product
3. Many companies now focus on reducing defects in finished products with the goal of zero defects. This is called
   1. Activity-based costing.
   2. Balanced scorecard.
   3. Value chain.
   4. Total quality management.

1. Which one of the following is not considered as material costs?
   1. Partially completed motor engines for a motorcycle plant
   2. Bolts used in manufacturing the compressor of an engine
   3. Rivets for the wings of a new commercial jet aircraft
   4. Lumber used to build tables

1. The major reporting standard for presenting managerial accounting information is
   1. relevance.
   2. generally accepted accounting principles.
   3. the cost principle.
   4. the current tax law.

1. The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the
   1. cost of goods manufactured.
   2. total manufacturing overhead.
   3. total manufacturing costs.
   4. total cost of work in process.

1. The entry to record the acquisition of raw materials on account is
   1. (debit) Work in Process Inventory (credit) Accounts Payable
   2. (debit) Manufacturing Overhead (credits) Raw Materials Inventory AND Accounts Payable
   3. (debit) Accounts Payable (credit) Raw Materials Inventory
   4. (debit) Raw Materials Inventory (credit) Accounts Payable

1. A company expected its annual overhead costs to be $1,800,000 and direct labor costs to be $1,000,000. Actual overhead was $1,740,000, and actual labor costs totaled $1,100,000. How much is the companys predetermined overhead rate to the nearest cent?
   1. $1.74
   2. $1.57
   3. $1.80
   4. $1.64

1. Manufacturing overhead is applied to each job
   1. at the time when the overhead cost is incurred.
   2. by means of a predetermined overhead rate.
   3. at the end of the year when actual costs are known.
   4. only if the overhead costs can be directly traced to that job.

1. The predetermined overhead rate is based on the relationship between
   1. estimated annual costs and actual activity.
   2. estimated annual costs and expected annual activity.
   3. actual monthly costs and actual annual activity.
   4. estimated monthly costs and actual monthly activity.