Question
Indicate whether each of the following statements is true or false. Product costs are independent of the particular overhead vehicle selected. Cost drivers in activity-based
Indicate whether each of the following statements is true or false.
-
Product costs are independent of the particular overhead vehicle selected.
-
Cost drivers in activity-based costing are similar to overhead vehicles.
-
Manufacturing companies need cost accounting systems because they convert materials into other states.
-
When we speak of products absorbing overhead, we mean that the manufacturing process has eliminated a portion of the overhead costs.
-
By-products are a special category of joint products.
-
Prime costs are defined as the sum of direct material and direct labor costs only.
-
An auto repair shop generally uses labor hours as its overhead vehicle.
-
Marketing managers are very dependent on cost accounting data in determining the price that should be charged for products.
-
A make-or-buy decision involves the choice between producing a particular part or service within the company, or subcontracting the work to another firm.
-
While some gray area exists between direct and indirect labor, the differentiation between direct and indirect material is unambiguous.
-
The sole reason that an overhead volume variance exists in full absorption costing is because fixed overhead costs are being absorbed.
-
Variable costing provides more useful information for make-or-buy decisions than does full-absorption costing.
-
Overhead volume variances occur frequently in manufacturing environments but seldom in service environments, where full-absorption costing is used.
-
The contribution margin is defined as the difference between revenue and variable manufacturing costs.
-
An argument against the use of variable costing is that it does not comply with generally accepted accounting methods.
-
When manufactured inventory grows during an accounting period, full-absorption costing reports slightly lower earnings than does variable costing.
-
Product standard cost data are often utilized by managers and analysts in departments other than the accounting department.
-
Standard cost accounting systems are expensive to operate.
-
Wage rate variance information is less useful to a production manager than labor efficiency variance information.
-
When standard costs are set tight and inventories are growing, a standard cost accounting system tends to report lower operating profits than does an actual cost accounting system.
-
A company could have a zero balance for total material variance for an accounting period while at the same time report credit variances for both the Material Price and Material Usage Variances accounts.
-
Material price variance information is more useful to the purchasing department than is material usage variance data.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started